Back in Phil's world, they can't quite cope with
              the idea of this ferocious brag-driven barter
              economy cloaked in courtesy. The SPA and the
              BSA just don't believe it. "Considering the
              amount of time they dedicate, they must be
              making a return to justify it," says Phil.
              Casual observers of the BSA's Web site may well
              be convinced, if only because they're stunned by
              the money that's involved - or seems to be.
              Fifteen point five billion dollars a year! But
              those figures are based on the assumption that
              if piracy were stopped, someone would be
              willing to pay for every pirated copy in
              circulation. 

              "Billions of dollars?" scoffs East London BBS
              operator Time Bandit. "I know guys who have
              thousands and thousands of pounds worth of
              software, but the values are meaningless. Win95
              may cost, like, £75 in the shops, but in warez,
              it's worthless. It's just another file that you
              might swap for another program, which might
              cost four grand. How much it costs in real money
              is meaningless."

              How do you ram home sales figures and quarterly
              losses to a bunch of teenagers who see warez
              trading as their passport to acceptance on the
              scurrilous side of a brave new world? How do
              you convince middle-aged men who see
              incandescently expensive software as monopoly
              money in a vast, global boardgame that what
              they're doing is "harmful"? In the software
              industry's latest campaign, you scare them - or
              try. The BSA's mandate used to be "not to
              capture pirates, but to eradicate piracy." Now
              exemplary punishment is the big thing.

              To do that, the BSA and the SPA are willing to
              push the law to its limits. Prosecuting clear
              offenders - warez-vending BBS operators and
              FTP-site pirates, for instance - is one thing;
              suing ISPs for carrying Web pages containing
              pirate links and cracks is another. A typical case
              was against C2Net, a Buffalo, New York-based
              ISP that the SPA sued for doing just that. In
              what smacked of a token prosecution - or, in the
              words of C2Net's president, Sameer Parekh,
              "legal terrorism" - the action by Adobe, Claris,
              and Traveling Software, under the aegis of the
              SPA, held the provider responsible as
              "publishers" for the contents of its server, and
              for the activities of individual account holders.
              The SPA eventually backed off but threatens to
              revive the suit if C2Net and other ISPs don't
              agree to monitor their users for copyright
              infringement. C2Net says it will not give in to
              litigious "bullying."

              And then there are straightforward busts. On
              January 12, 1996, Microsoft and Novell jointly
              announced a settlement with Scott W. Morris,
              who was "doing business as the Assassin's Guild
              BBS ... billed ... as the worldwide headquarters
              for two large pirate groups, Pirates With
              Attitude (PWA) and Razor 1911." According to
              the statement, "marshals seized 13 computers,
              11 modems, a satellite dish, 9 gigabytes of
              online data, and over 40 gigabytes of offline
              data storage dating back to 1992.... Mr. Morris
              agrees to assist Microsoft and Novell in their
              continuing BBS investigations."

              Phil, our undercover Internet detective, wasn't
              responsible for that particular drama, but he's
              been integral to others. His latest victory was in
              Zürich - "a landmark case against individuals
              and organizations distributing unlicensed
              software on the Internet," he calls it. A
              27-year-old computer technician who helpfully
              called himself "The Pirate" was running an FTP
              site filled to the brim with warez, including
              US$60,000 worth of unlicensed Novell software.
              Phil, impersonating a trader, infiltrated the site
              (admittedly no great feat), collected evidence,
              then handed it over to the Swiss police. He
              accompanied them on the raid to ensure no
              evidence was damaged. "He was one of a new
              breed who advertise on the Internet," says Phil.
              "He made his files available via email requests
              and telnet." Swiss police also raided the home of
              a BBS called M-E-M-O, run by "The Shadow," a
              friend of The Pirate. Unfortunately, The Shadow
              was on holiday with his parents. The family
              returned two weeks later to find their front
              door broken down; the son was arrested. If
              convicted, the young pirates face up to three
              years in jail and possible $80,000 fines.

              The Pirate's mistake - aside from his suicidal
              choice of nickname - was to plant himself
              geographically. Phil, a former corporate network
              manager, was able to trace him through his FTP
              site's IP address. Phil knows his networks; this
              makes him the perfect undercover agent - and
              one of Novell UK's most envied employees. "I play
              on the Net all day," he says, "and get paid for it." 

              There's a bit more to it than that. Phil and his
              counterparts in Asia and the US are deployed to
              infiltrate pirate groups; to study IRC; to get
              under the skin of the lamers, the dabblers, and
              the professionals; to chat, seduce, charm, and
              interact with the denizens of this bizarre
              over-underworld. Phil talks to traders in their
              own language, understands the tricks and traps.
              After busting The Pirate, he says, "we were
              talking and he was moaning about the
              sluggishness of his network. I pointed out that,
              aside from using LANtastic, he was using a
              75-ohm terminator on the back of his file
              server, slowing the whole thing down."

              Now that he's back from Zürich, Phil will be
              getting some new toys: the spoils of war. In
              many jurisdictions, any hardware deemed to be
              part of an illegal setup can be taken by
              investigators and - if part of a civil prosecution
              - can be worked in as part of the settlement.
              Once sucked dry of evidence and incriminating
              data, the cannibalized machines are moved to
              Bracknell and hooked up to the network.

              But despite the resources at his disposal and his
              status as a network ninja, Phil doesn't always
              get his man. "If there's a person out there who
              has a decent level of technological awareness of
              the ways he can be located, it's quite true to say
              he could successfully hide himself, or use a
              system where it would be impossible to track
              him. It's technically possible for them to bounce
              their messages all around the world and have us
              running around like blue-arsed flies." It's a
              reluctant admission, but then Phil is one person
              pitted against thousands.

              Successful prosecutions aren't always that easy
              either. Take David LaMacchia, an MIT engineering
              student who turned two of the school's servers
              into drop sites and downloaded an estimated $1
              million worth of pirated software. LaMacchia
              was arrested in 1995, only to have the case
              thrown out by a judge who ruled that no
              "commercial motive" was involved. Prosecutors
              tried charging him with wire fraud, but this was
              ruled an unacceptable stretching of the law.
              LaMacchia walked free. "Bringing Internet cases
              through the judicial system is a nightmare,"
              says Novell's Martin Smith. "Try talking to a
              judge about 'dynamically allocated IP addresses.'
              We don't have a chance."

              Tell that to the former warez traders of
              America Online, which had a meteoric history as
              a pirate mecca. For years, instructions on how to
              crack AOL's security and obtain free accounts
              were a Usenet staple. Online, "freewarez" chat
              rooms were packed with traders, 24 hours a day.
              Megabytes of warez were kept in permanent
              circulation.

              Then came the crackdown of 1996, a dark period
              in warez history. Goaded by software-industry
              watchdogs, AOL introduced countermeasures to
              disinfect its system; alt.binaries.warez was
              removed from the Internet newsfeed. CATwatch
              automated sentinels were placed on AOL's warez
              chat channels, logging off anyone who entered.
              "Free" accounts were traced and nuked. Michael,
              the weight-lifting trader and also an AOL
              veteran, says everyone thought that "the FBI had
              infiltrated the warez groups, and we were all
              going to get busted." On the cusp of the big time
              - a top pirate outfit named Hybrid had a position
              open - Michael had been hoping to prove himself
              by doing a CD rip of the soccer game Euro 96. "I
              was halfway through removing the FMV and CD
              audio. I reckon I could've got it down from 58
              disks to 9. But then everything went haywire."

              Profit-driven crackers are actually the easiest
              to catch: they have links to the real world,
              starting with the money trail from credit cards.
              And the easiest prey of all are BBSes, with their
              telltale telephone connections. In January,
              FBIagents led by the bureau's San
              Francisco-based International Computer Crime
              Squad raided homes and businesses in California
              and half a dozen other states. They seized
              computers, hard drives, and modems, though no
              arrests were made. Along with Adobe, Autodesk,
              and other BSA stalwarts, the list of software
              companies involved included Sega and Sony - a
              hint that the targets included gold-disk dupers
              who counterfeit mass-market videogames.

              Mad Hatter was not impressed. "Wow, I'm in
              hiding," he cracked the day after the raids. But
              "Cyber Strike" was, as BSAvice president Bob
              Kruger said later in a statement, "the most
              ambitious law enforcement action to date
              against Internet piracy" - specifically, the first
              UScase in which the FBI, rather than local
              police, took the lead. And that can't help but
              augment the BSA's number-one antipiracy tactic
              for 1997: creating the "perception of threat."
              And even warez gods don't necessarily want the
              FBI on their case.

              But bluster aside, people like Mad Hatter are
              intrinsically - and deliberately - much harder to
              catch. The most prestigious pirate groups -
              Razor 1911, DOD, Pirates With Attitude, the
              Inner Circle - are tightly knit clubs whose
              members have known each other for years and
              call each other "good friends" - though they
              rarely, if ever, meet. Joining is no easy task.
              Positions become vacant only when members
              quit or are busted, or a vote is taken to expand
              operations. Kudos and reputation are everything.
              Unofficial homepages can be found here and
              there, constructed by acolytes who celebrate the
              groups' best releases and victories. These are
              often padded out with cryptic biographies and
              obituaries for those busted by the cops ("We feel
              for ya!"). Despite the boasting, and the draping of
              their releases with corporate motifs - logos,
              front ends, graphics, even signature tunes and
              Java applets - crackers' true identities typically
              remain secret, even to one another.

              The anonymity, however, works both ways.
              Cloaked in his own secret identity, Phil says he
              has managed to get deep within several major
              groups in the past 18 months and is skimming
              the surface of several others. He can
              convincingly portray himself as a caring, sharing
              warez god. "You make some good friends," he
              says with a smile. And, it seems, you can end up
              pretty impressed. "Some of these people are
              incredibly talented. The logic and programming
              behind their setups are just amazing." Or maybe
              he's just bluffing?