On her first day as the new Register of Copyrights, Maria Pallante trekked across the street from the Library of Congress to the Rayburn Office Building for a House Judiciary Committee hearing on whether unauthorized Internet streaming should become a felony. “Copyright policy is never finished,” she told the assembled Representatives, adding that it's time for another tweak to the law.

"It is clear that unauthorized copyrighted content is a significant problem that will only increase in severity if technology outpaces legal reforms," she concluded.

At issue is a proposal from the IP Enforcement Czar, backed by the White House, to upgrade illegal online streaming from a misdemeanor to a felony. The government currently treats unauthorized reproductions and distributions as potential felonies, giving it leeway to go after certain kinds of website operators that offer access to full downloads of music and movies.

Streaming is a little different; an online stream is not necessarily a “reproduction” or “distribution” under the Copyright Act, but is instead a “public performance.” And such unauthorized public performances are currently held to a different legal standard.

Why bother to change the law? In Pallante's view, the disparity only exists because, when Congress previously considered copyright changes, online streaming was not a major problem. Now, with increased bandwidth and more scrutiny of file-sharing networks, easy to use and less-traceable online streaming sites have grown hugely in popularity.

One might ask why it is not sufficient to prosecute streaming as a misdemeanor. The fact is, as a practical matter, prosecutors have little incentive to file charges for a mere misdemeanor. This means that compared to similar infringing conduct involving the large-scale making or distributing copies (e.g. DVDs of a movie), streaming is not only a lesser crime on the books, it is a crime that may never be punished at all. As a matter of policy, the public performance right should enjoy the same measure of protection from criminals as the reproduction and distribution rights; prosecutors should have the option of seeking felony penalties for such activity, when appropriate.

The two other witnesses at the hearings, both representatives of major rightsholders, couldn't agree more. Sandra Aistars, a former Time Warner lawyer now heading the Copyright Alliance, called the proposed change “simply a technical clarification” to the law.

But, in the bigger picture, it's "another phase in the battle between creators and lawful distributors of copyrighted works on one hand, and on the other parasitic websites that expropriate their property, diminish the compensation and pension and health benefits of creators and workers, and harm communities across the United States by depriving them of jobs and diminishing their tax revenues,” Aistars said.

Rightsholders are particularly upset about professional-looking sites like Videocave that link to huge indices of current blockbusters (even noting whether they come from a "DVDRip" or a "BRRip" or elsewhere), where visitors don't need to run obscure searches and use special P2P clients—they just find a film, click, and it starts streaming through Flash.

Some of these sites even offer cash rewards to users who attract others to the site—and sites that offer "$30 for 10,000 views" and encourage users to share movies probably aren't interested in uploads of your daughter's ballet recital.

Despite this sort of obvious bad behavior, just upping the penalties for streaming may have limited effects. As even the rightsholder examples show, most such sites appear to be based overseas already. To get at those sites, something much more draconian is required—hence the ill-conceived PROTECT IP Act currently being considered by Congress.