As BitTorrent filesharing sites such as The Pirate Bay are closed down or go legit, software and music pirates are quickly moving their 'warez' to file-hosting websites.
Sites such as RapidShare, Megaupload and Hotfile let anonymous users upload large files such as cracked software for free.
Hyperlinks to the software can then be distributed by pirates via websites, instant messages or social media sites such as Twitter, said Vic DeMarines, CEO of anti-piracy software vendor VI Labs.
"It's incredibly easy to use. And what you get is essentially your own private FTP server," DeMarines said.
While sites such as RapidShare allow free downloads, they make their money by charging heavy downloaders for premium memberships. These memberships, such as the 30-day premium access for $6.99 at Rapidshare, let users download files immediately and without any caps on bandwidth.
Trade in pirated digital goods , whether it is movies, music or e-books or software, is what drives the popularity and business model of firms like RapidShare. The site told The New York Times earlier this year that it hosted 10 petabytes of data and up to 3 million downloaders at a time.
The Association of American Publishers estimates that half of the pirated books found by its members were linked to Rapidshare.
"There's a lot of money being made," said DeMarines. "Without hosting pirated goods, I'm not sure what their revenue model would be."
According to a recent investigation by VI Labs into the availability of pirated software from a sample of 43 vendors, 100 percent were on RapidShare.
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A spokeswoman for the Switzerland-based firm Rapidshare declined to comment on the VI Labs report, saying she would need more information.
The site is already among the top 20 most popular in the world, according to Alexa. Uploads and downloads to Rapidshare account for 5 percent of all internet traffic globally, says German networking vendor Ipoque.
Though Rapidshare has faced lawsuits related to piracy, DeMarines says it and other file-hosting sites are tricky to prosecute legally becuase uploaders are not required to register or identify themselves. Also, Rapidshare tries to distance itself from any knowledge of the pirated goods by not filtering or monitoring the content on its servers.
"For us, everything is just a file, no matter what," a spokeswoman told The Times in March. DeMarines said Rapidshare does comply with the Safe Harbor Provisions of the US Digital Millennium Copyright Act (DMCA) by quickly taking down pirated files when notified by the copyright holders.
The company even grants certain organisations direct access into their service, so that they can delete the hyperlinks and pirated files themselves, DeMarines said.
Peer-to-peer networking (P2P) remains the largest channel for distributing pirated software, films and other digital content. Ipoque said it enables between 43 to 70 percent of piracy, depending on the region of the world.
The most popular network remains BitTorrent, which is used by six out of 10 P22 users, VI Labs said.
eDonkey is a distant second, with 20 percent share, despite hosting almost 900,000 users and 77 million files at any given time. Once-popular Gnutella is ranked third, with a market-share in the single digits.
But file-hosting is growing much faster, Ipoque said, already enabling between 15 to 35 percent of digital piracy, depending on the region of the world.
DeMarines said he expects file-hosting sites to eventually supplant P2P. "P2P is on its way down. They're too visible, and so the copyright organisations are going to take these BitTorrent tracker sites out," he said.
Other long-running methods for distributing 'warez' are either stagnant or shrinking. Usenet newsgroups, for instance, have lost popularity due to the large amount of pornography and malware mingled in with the warez, DeMarines said.