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New app could be Hollywood’s Napster moment

(Update: On March 14, Popcorn Time shut down only to reappear again with a new, working version on March 17)

Fifteen years ago, Napster devastated the music business by making song stealing easy. Is it Hollywood’s turn now?

The new free app Popcorn Time looks a lot like a Napster for movies, or maybe Netflix (NFLX). The open-source software runs on almost any computer -- Windows, Mac or Linux -- and acts as an easy-to-use front end to the vast stash of pirated movies and TV shows sloshing around on the Internet.

The pirated videos, often uploaded from copies given out by Hollywood studios, end up online via BitTorrent, a huge but somewhat disorganized network of people sharing files on the Internet. It wasn’t easy to find any particular title until an unknown group of programmers,  who say only that they live in Buenos Aires, created Popcorn Time.

There was plenty of stolen music on the Internet before Napster but it was hard to find. It’s the same with movies today. The most pirated titles include all the major hits but finding those movies and then downloading them is a complex process. And sometimes a 20-minute download ends up with a corrupted or poor quality file.

Related: Next up for Netflix? More profits

Popcorn Time makes it as easy to find an illegal copy of American Hustle as it would be to search for a movie on Netflix or Hulu. And it also lets the user watch the movie streaming, without having to wait for the whole file to download.

The software also creates a free alternative to popular streaming services like Hulu and Netflix, which has been cutting back sharply on its library of classic and hit movies.

Still, there is at least one major practical hurdle preventing Popcorn Time from Napsterizing movies. The software runs only on desktop and laptop computers. That means it doesn’t run on big screen TVs, which most people prefer at home, or tablets, the top platform for watching on the go.

Related: Comcast-Netflix deal could mean lower prices for cable subscribers: PIMCO's Kiesel

It’s also legally risky to download pirated movies. Hollywood studios, like the record labels before them, have been suing ordinary folk who they tracked using BitTorrent to grab pirated videos.

The legality of the software itself may be a bit murkier. There is no fee, no ads, and Popcorn the website isn’t hosting any illegal movies.

The website warns that it may be illegal in some places to download movies via the app. The site’s FAQ also starts with a question about legality. "Depends on where you're from, really,” Popcorn Time states. "Once again: we're using torrents, so if you really care, you'd better google what the legal situation around these protocol is where you live."

Piracy hasn’t hurt Hollywood much so far. The total U.S. box office last year was a record $10.9 billion and the most pirated movies of 2013 were also very successful at the box office: "The Hobbit" was #1 followed by "Django Unchained" and "Fast & Furious 6."

The industry used to throw around huge made up numbers estimating their lost sales due to piracy — like $58 billion — but last year they agreed with some academic research that put the losses at $2 billion to $3 billion, at least in the United States.

But if too many people starting watching Popcorn, that could change — and at Internet speed.

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