Beware the Internet UNDERGROUND

Danylo Hawaleshka,Robert Scott November 8 1999

Beware the Internet UNDERGROUND

Danylo Hawaleshka,Robert Scott November 8 1999

Beware the Internet UNDERGROUND


A secret passage is leading kids to stolen software and hard-core porn

By Danylo Hawaleshka and Robert Scott

It is the underbelly of the digital revolution. A netherworld of cyberspace that is cluttered with the obsessions of young teens. Here, bootlegged movies—which have included The Phantom Menace and The Blair Witch Project— can be found and downloaded just as they are released to theatres. Here, kids can grab their own copies of cool video games such as Quake II and Doom II, the latest hip-hop CD releases and pirated software of every description. What Pokémon is to little brother or sister, the awesome stuff on this network is to any teen who can double-click a mouse.

But to get to these hot goods, a kid needs a log-on name and a password. To obtain these, he is directed through a digital detritus of pornographic sites that show every sexual predilection or deviance imaginable. Even by Internet standards, much of this is hard core.

This cyber underground that mingles the peddling of porn with stolen software (dubbed “warez” and “gamez”) is known as Hotline and exists separately from the World Wide Web, which is not the only network available on the Internet. Hotline is a worrisome arrival for software makers, including giants like Microsoft Corp., whose Canadian subsidiary says this country has already spawned a staggering amount of program theft.

At its core, the Hotline network and the Web share the same Internet universe of computer servers and connections. But they part company at the operational level. Instead of familiar Web browsers such as Netscape Navigator and Microsoft Corp.’s Internet Explorer, the “other” network is easily reached using a clever software application called Hotline Connect. It is made and distributed by Hotline Communications Ltd., a small Toronto-based company that has big plans to get its

new technology past the pirates and onto the computers of schools and legitimate businesses (page 47). Unlike Netscape and Explorer, the Hotline program has an unprecedented facility for uploading or downloading large files with the simultaneous ability to chat in real time. It is fast and does not eat up a lot of memory. The application appears to have great potential, but it also comes with considerable baggage—a growing community of thieves who are drawn to the easy transfer of big files—like movies, software and video games. While the Web has a scattered collection of porn and pilfered programs, what distinguishes the Hotline underground is the ease of locating every conceivable pirated software product.

All that anyone needs to enter this seamier cyberspace is a copy of Hotline software, which is easily downloaded for free from the company’s Web page. Once the program is launched, Internet travellers use Hotline to move among “trackers”—

randomly ordered lists of hundreds of sites that are mostly run by individual operators. Each site is identified by a line of text touting the contents. “Game Universe” on one tracker offers “Porn movies . . . teens . . . gamez,” while site “999” is “dedicated to Britney Spears porn (the real stuff)” and the “only” video of wrestler Owen Hart’s fatal plunge. Each site is a server—a computer with enough capacity to upload and download files.

Hotline Communications has high hopes for mainstream acceptance and does not condone the use of its product to commit crimes. But the young firm says there is nothing it can do to stop independent operators from creating sites for illicit ends. (Of about 3,000 sites on the four main trackers on the network, it is rare to find one without porn or piracy in the title.) The company touts its growth, estimating that around the world there are 2.5 million Hotline users, 84 per cent of whom are male. Every month, another 100,000 surfers download the program from the company’s Web site, and 22 per cent of them are under 18 years old. What the company would rather not dwell on is how its program is being used—to swipe applications and ogle porn. “That’s got nothing to do with the software,” says Jason Roks, Hotline Communications’ 30-year-old vice-president of business development. “It’s got to do with people; it mirrors society. People steal, murder, it’s part of human nature. A dumb-ass online,” he says, “is a dumb-ass in person.”

While parents blanch at the thought of children wading through porn to commit copyright crimes, software companies are counting their losses. Over the course of a few evenings, a surfer using Hotline can easily download $ 10,000 worth of programs. No one knows how much software is stolen through this network, says Diana Piquette, the anti-

piracy manager at Microsoft Canada Co. in Mississauga, Ont. But software copying in general is rampant. It is estimated that 40 per cent of business software being used last year in Canada was cloned, compared with 25 per cent in the United States. “If we were to reduce our piracy rate to even that of the U.S.,” Piquette says, “then it would mean $2.5 billion more in software sales in Canada and about 22,000 more jobs.” The Washington-based Business Software Alliance estimates that, worldwide last year, the industry lost $16 billion in retail sales to all forms of program theft (page 48). (This includes Internet copies, sales of CD-ROMs packed with stolen programs and of PCs loaded with cloned software.)

While the cost to business is staggering, the retort by pirates is often: “How rich does Microsoft’s Bill Gates have to be?” But Peter Beruk, vice-president of anti-piracy programs for the Washington-based Software & Information Industry Association, says it’s not the big software firms that feel the pain the most: 60 per cent of the group’s 1,400 members have annual revenues of less than $3 million. He says pirated games have a much shorter lifespan than versions of Microsoft Word and “that has a tremendous impact on the bottom line.”

“It’s up to parents,” Beruk adds, “to monitor where their kids are going.” Anne Taylor, co-director of the Media Awareness Network in Ottawa, agrees: “As kids are growing up, we cant keep them in a bubble—we have to educate them for the Net.” But kids are not the only worry: some adult users of the Hotline network are downright obsessed about getting their software free. Take the 35-year-old professional deejay who goes by the handle HitMan. He chatted on Hotline about living in the suburbs of Auckland, New Zealand, with his

Software piracy is rampant in Canadian business. Forty per cent of programs in use are unauthorized copies.

mother and sister—in a home that has one phone line. When he isn’t spinning records at a local club, HitMan is on his computer, always connected to the Internet. Get up early in the morning and log onto Hotline, and HitMan is there. Check in at lunch at work, HitMan is chatting. Stumble out of bed at 3 a.m., dial up Hotline and HitMan will be there. Never once has he said in a chat: “Gotta go, my sister wants to use the phone.”

HitMan is addicted to software. Like thousands of other pirates on Hotline, there is no end to the search for his Holy Grail—to collect every program he possibly can. MP3 programs (which play back downloaded music), desktop publishing, financial spreadsheets, high-end three-dimensional design applications, he wants it all. Within a few months on Hotline, HitMan said he had downloaded completely free more than 10 gigabytes of software, hundreds of thousands of dollars’ worth, which he saved on dozens of CDs. To HitMan, the whole point is to have everything, no matter how useless it is to him. In fact, having collected virtually every Macintosh program in existence, HitMan moved onto downloading Windows software, “in case I buy a PC.”

HitMan was typical of the early users of Hodine. He and other technically savvy software addicts jumped on Hodine less than a week after Adam Hinkley, an Australian whiz-kid, released the first program on his Web site in late 1996. Within months, hundreds of sites sprang up using Hodine, all warehousing bootleg software. Hodine’s Roks was among those


Studies show that almost 50 per cent of Canadian households with children had an Internet connection last year. The following are Web sites that offer Internet advice to parents and educators:

MEDIA AWARENESS NETWORK: Warns parents about online predators and offers advice on reporting illegal content and teaching a child to surf safely.


Examines various “blocking” programs and recommends sites for children.


The site for the U.S. National Center for Missing and Exploited Children.

who first heard about Hinkleys new software. Impressed by this raw, powerful tool, Roks persuaded Hinkley to join with four others to incorporate Hodine Communications in July, 1997. The small group had dreams of being the next Netscape.

But in the meantime, every software trader on the planet seemed to be climbing onto Hotline, creating a network of program users. And why not? Here was superior news, chat and file-transfer capability, all in a single program. Unlike the anonymous Web, this other network buzzed with activity; a virtual hot-wares party.

From their computers around the world, a more secretive organization of software pirates, known as SiteO (for Site Zero), watched Hotlines progress uneasily. They are not just a bunch of hackers. SiteO is where much of the pirating of specialized software begins. The group is built around a handful of “crackers”—ace programmers who can break the most sophisticated software protection codes the computer industry has developed. The other 80-odd members are “providers,” who upload the latest versions of programs to be cracked. The providers are mostly employees of software companies or computer retail chains or freelance program testers (known in the industry as “beta-testers”). Many subscribe to the credo of “free software for all.” But even for them, Hotline might be just a little too free. It was drawing too many newbies, according to the leader known as zONE, and “too much attention.” Members of this elite group started to find their “cracks”—programs on which they had broken protection codes—on Hotline sites, and later, downloaded onto illicit CDs. The scene, zONE said, was bound to draw industry investigators, and shed unwanted light on SiteO.

But before feeling any heat, Hotline attracted the porn merchants and the fast-buck artists. In early 1997— when the rage for downloadable music and video had yet to hit—the Net underground was frequented mostly by the “traditional pirate community,” according to Simon Swale, a British investigator for Utah-based Novell Inc., a major networking software maker. These elite crackers frown on smut and profiteering, he says. “The vast majority of what you see on a traditional [piracy] site is illegal software, and very little, if any, is pornography,” Swale says.

But by mid-1998, porn, games and movies were starting to proliferate along with cracked programs on Hotline servers. The expansion of bootleg products brought a new generation of site operators who were looking to cash in on the influx of thousands of new Hotline visitors. The most

audacious and profitable means of creating revenue turned out to be banner advertisements, those rectangular boxes that pitch products and services on Web pages. These new ads would also be located on the Web, but linked to Hotline operators’ sites.

Most of the banners were sold to porn sites, but mainstream clients also bought spaces. Legitimate advertisers, of course, wouldn’t want to promote themselves near offers for illicit software or pornography. So Hotline site operators devised a clever ruse—a cyber shell game of sorts. The deception works like this: a Hotline operator sets up a page on the Web that purports, for instance, to be a home page for a computer club. Back at his Hotline site, the operator promises visitors loads of pirated wares, but first they need to retrieve a log-in name and a password. To do so, they must locate a certain banner ad at the fake computer club’s Web site, click on it (which opens the advertiser’s home page), then find the log-in and password. A typical directive would be: “Go to the bottom of the page. It’s the last word in black letters and starts with R.” The visitors return to the Hotline site, enter the password and start downloading their booty.

Unwitting advertisers believe their banners are getting “hits” from potential customers. And every time a visitor clicks through on an ad, the site operator is owed at least 10 cents. “Ten cents or 25 cents a click may not sound like a lot,” says Mike Flynn, manager of Internet and international anti-

piracy programs at the Software & Information Industry Association. “But if you think of all the clicks in a week, potentially it could be quite a bit of revenue.” Banner ad agencies like San Jose, Calif.-based Click Agents Inc. pay fees on the assumption that ads are reaching their target audience. While Macleans observed dozens of examples of Click Agents’ banners on Hotline-linked Web pages, Greg Jones, the western marketing manager, had never heard of this “other” network. With banners from hundreds of advertisers on 37,000 Web pages, Jones says monitoring individual sites is almost impossible. “You can bet that if we knew this was happening,” says Jones, “they’d be kicked off in a second.” But the money’s not the half of it, according to Novell’s Swale. “The more disturbing side,” he says, “is the way it’s done: a young person looking to

‘It’s the tattoos and piercing people of the Internet. It’s people trying to screw the big guy.’

find that game crack’ ends up clicking through pornography, with windows popping up that can be both offensive and damaging.”

For the regular Hotline user, clicking through all the banner ads wears thin. But a 32year-old hairdresser in Toronto who calls himself Dogger and has been using Hotline for about a year, says the quality of the cracked software can make the aggravation worthwhile.

“It’s definitely a subculture,” Dogger says of the mosdy younger Hodine surfers he’s met online.

“It’s the tattoos and the piercing people of the Internet. It’s people trying to screw the big guy.”

A few of those big guys have started taking a look at Hotline, and as the crackers at SiteO predicted, the firms are looking at ways to fight back. Adobe Systems Inc. of San Jose,

Calif., a well-known maker of high-end graphics programs, has good reason to be concerned.

“Cracked” Adobe programs litter Hodine. Overall, the company estimates that at least one-third of its software is pirated in North America. An Adobe investigator told Macleans he does not like drawing attention to Hotline—that could lead to more visits—but says his firm is zeroing in on some sites. On the side of the company’s piracy squad is the fact that law-breaking Hotline operators feel immune because few authorities know about the network. “But we’re out there

gathering evidence now,” he says, “and it’s going to be a rude awakening when prosecutors start knocking on their doors.”

The other tack being taken is educational, getting the message out that ripping off software is illegal, costs jobs, deprives governments of sales tax and is simply wrong. While that won’t hit home with hard-core pirates, Batur Oktay, Adobe’s corporate counsel, remains optimistic. “When I was a kid,” he says, “nobody wore seat-belts in cars. Then, the message got out. Now, you never see anybody without their seat-belt on. When people understand what this is truly about, they’ll start obeying the law.”

Maybe, but in the meantime, random crackdowns and appeals to do the right thing are not likely to hold back the flood of piracy and pornograto compete with teens’ overwhelming desire to have the latest cool video game or movie. Taylor stresses that kids have to be taught what is and is not appropriate Internet use—because the temptations are not about to diminish in number. Even as Hotline is becoming known, clones of the program are starting to appear. That will mean new systems, more headaches for the software police and more reason for parents to watch where the household mouse is pointed. G3

For additional information and to join a discussion with Online Editor Robert Scott, please go to tbe Macleans Web site: