When a bad guy steals your car stereo, to turn it into easy money, he often turn it over to a “fence” in exchange for quick cash. Wikipedia explains this criminal workflow this way:
A fence is an individual who knowingly buys stolen property for later resale, sometimes in a legitimate market. The fence thus acts as a middleman between thieves and the eventual buyers of stolen goods who may not be aware that the goods are stolen. As a verb, the word describes the behaviour of the thief in the transaction: The burglar fenced the stolen radio. This sense of the term came from thieves’ slang, first attested c. 1700, from the notion of such transactions taking place under defence of secrecy.
The fence is able to make a profit with stolen merchandise because he is able to pay thieves a very low price for stolen goods…
It’s no surprise that in this digital age, criminals have turned their attention to dealing in stolen digital goods. Instead of car stereos thieves steal movies, music, etc. and, using the web advertising, convert it into income. It’s low risk way of making money and there’s a myriad of ways it can be done.
Deposed cyberlocker king Kim Dotcom did it with his Megaupload piracy pyramid scheme, but there are plenty of others who have perfected variations of this illicit business model along the way. Many, seemingly legit companies like Google have perfected the infrastructure and revenue formula so as to make it routine, right under our noses.
Most consider Google’s YouTube to be a raging success. After all, where else can you find the best cat videos or latest PR packages from ISIS terrorists in one place? It’s also a great place to “fence” stolen movies and music.
YouTube’s ads are ubiquitous and generate billions in profits, estimated to be over 1.9 billion for Google in 2013 alone. YouTube users can also share in (some of) the revenue if they set up an AdSense account and choose to monetize their uploads. According to a report in Barron’s, YouTube users make out pretty well:
…YouTube will bring in $5.9 billion in revenue this year, rising to $8.9 billion by 2016, with 53% of that paid out to users who provide the clips.
In cases where users upload work they actually own rights to, it’s great. Problem is, a lot of those people collectively pocketing 3.1 billion–in many cases–don’t own what they upload. These leeches set up channels, upload pirated content, and make money. Of course, YouTube as enabler-in-chief still pockets the majority of the profits, rightful ownership be damned.
When placing a myriad of advertisements adjacent or on videos, YouTube makes ZERO effort to vet the content for ownership. It doesn’t require any proof that uploaders own rights; it just assumes they will honor copyright law. Yeah, just like a fence assumes that every car stereo he receives wasn’t stolen from someone else.
When posed with the question as to whether it can “determine copyright ownership” YouTube justifies this hands off approach with this carefully crafted response:
YouTube isn’t able to mediate rights ownership disputes. When we receive a complete takedown notice, we remove the content as the law requires. When we receive a valid counter notification we forward it to the person who requested the removal. After this, it’s up to the parties involved to resolve the issue in court.
Mediating a dispute once something is uploaded is NOT equivalent to vetting content ownership prior to upload, yet YouTube apologists continue to claim that to do so would “stifle innovation” and “limit free expression” online. I’m not entirely sure how cracking down on thievery stifles innovation, but it makes for a good soundbite doesn’t it? How would vetting certain content before users are allowed to profit from it limit anything, aside from criminal behavior? Oh right, it could lower profits. That’s what this is really about.
YouTube claims be the broadcaster for the 21st century, yet can you imagine NBC airing a movie and earning income from advertising in the process without having cleared the rights prior to doing so? When my documentary aired on various PBS stations I had to document ownership and submit detailed paperwork that verified I had permission to use various works of music used throughout the piece. When we produced our feature film we had to purchase errors and omissions insurance and license all the music used in order to protect the rights of other creators.
These practices are the cost of doing business in the creative world yet YouTube doesn’t have to do the same? Why are companies like YouTube, that generate income by screening created by others, considered exempt from standard broadcast practices? Why is their bad business behavior exempt? Why are such practices on internet considered sacrosanct?
For Google, protecting innovation means protecting profits
It’s no wonder the powers that be at Google/YouTube fight tooth and nail against any effort to rein in this copyright-evading cash cow. Since enforcing copyright would put a serious dent in YouTube’s profits, you can bet that Google will move heaven and earth to prevent that from happening. Their apologists (and lobbyists) have mastered the spin that warn enforcing copyright (in a meaningful way) is a threat to innovation. In Google parlance innovation is merely a code for growing profits.
Other companies profit too. The graphic below illustrates how the Russian aggregator, Quiz Group, either creates its own pirate puppet users, or works with them to game the YouTube monetization system by monetizing pirated movies. By joining Quiz Group YouTube users don’t need an AdSense account. In exchange for giving up 20% of any income earned, they can easily earn money when by uploading illegal content.
Ford, Microsoft, CVS, LinkedIn, Dodge, North Face, Geico and more put money in pirate pockets
On its website, Quiz Group lays claim to 5 BILLION monthly views and more than 15,000 channels. I can only imagine how many of those billions of views come from stolen goods. Advertisements, 30 seconds and longer, from LinkedIn, Ford, Dodge Ram trucks, North Face stream before the full-movie appears. Cha’-ching…money, money, money…
Surely YouTube has received thousands of DMCA notices linked to videos monetized by Quiz Group, but since it only penalizes individual users (and not the masterminds) Quiz Group can continue to rake in the dough alongside Google.
Quiz Group sports its own YouTube page and claims to be “YouTube certified” and on its own website recruits with this claim, offering to cut through any copyright red tape:
…we are aware of all the problems you may face around YouTube and we know the best solutions as well. We understand how it hurts, having third party claims, facing conflicts and resolving strikes. We have been through all these stories many times and learned our lessons based on the most complicated scenarios. We have converted our experience into effective tools, you may move forward smoothly and with a high confidence, grow really fast within YouTube environment.
Clearly YouTube’s standards aren’t particularly high if they allow a shadowy this Russian piracy-for-profit model to thrive. Perhaps YouTube’s standards for “certification” mandate moneymaking over respecting copyrights owned by others ?
I attempted to “join” Quiz Group to determine how they vet affiliates. In order to be considered, I had to give them access to a Google account. It took only seconds, but not surprisingly I was rejected for not having enough subscribers (10) nor views (1,000) within the last month.
Of course I’d like to speak with a Google representatives to ask why the company develops, and sustains business relationships with self-described “YouTube” channel aggregators like Quiz Group but folks at company headquarters won’t pick up phones or respond to emails from people like me. Stonewalling is another corporate skill they’ve mastered with virtual moats encircling their shiny corporate offices in Mountain View.
After all, why shouldn’t Google look the other way when this criminal enterprise is mutually beneficial?
For the record, I easily found other YouTube users linked to Quiz Group engaged in the same scheme (see example below). Given it took me only a couple searches to find them, I don’t imagine it’s stretching the truth to assume that a good number, if not the majority of Quiz Groups affiliates are in the business of making money off pirated uploads.
I wonder how North Face, Dodge, Amazon, Microsoft, Airborne, Geico, LinkedIn, CVS and Ford feel about their advertising appearing on these stolen movies? Are they OK with YouTube, Quiz Group and this pirate making money off stolen movies (and them)?
Why don’t advertisers pressure Google to do better? YouTube could start by applying the 3 strikes policy to those, like aggregators like Quiz Group, that routinely monetize infringing content, not just penalize the (often fake) users that upload it. There are also numerous other technological safeguards that could be implemented to prevent this abuse so why don’t advertisers demand better?
We constantly hear from representatives their industry, how concerned they are about ad sponsored piracy abuse. But, as I’ve noted repeatedly on this blog, so far the advertiser’s words are a million times louder than their actions. Industry reps could exert pressure to ensure ad profits go to rights holders, but it would require some effort–obviously more than they seem willing to give.
There are also tons of YouTube pirates who bypass third party aggregators and pocket cash directly via their own AdSense accounts. This isn’t the first time I’ve written about this scenario on YouTube. Time passes, but nothing changes.
YouTube finds a Safe Harbor to protect its piracy profits
Aside from the advertisers, the only other way to exert pressure to change can come from Washington. Is this dirty profit scenario was what lawmakers had in mind when they crafted the “Safe Harbor” provisions of the DMCA. It’s one thing to offer service providers (like YouTube) protection from legal liability from “consequences of their users actions”, but does that also mean it’s OK to (knowingly) profit from illegal activity?
The DMCA states services providers have to “terminate” accounts of repeat infringers, but in the meantime let the tainted profits flow? It’s OK to be a criminal as long as you don’t get caught? This seems to be Google/ YouTube’s modus operandi.
I wonder if Congressman Darrell Issa, in his new role as chair of the subcommittee on the Internet, Courts, and Intellectual Property,will hold hearings on these types of nefarious business practices? He’s repeatedly voiced concern over patent trolls, what about pirate trolls? It’s been reported that discussion regarding copyright will remain the purview of the full committee, so perhaps such discussions will be handled there.
Until something changes, YouTube’s eco-system will remain a cesspool rather than a legitimate and laudable business model. For all the great stuff streaming on its pages, there’s a lot of s*&^ too…and because it’s YouTube practices business are intentionally nubilous, those who do follow the rules–like filmmakers and musicians–continue to be victimized. YouTube is the Wild West, a swamp of online fraud, where profits soar, often for those who are least deserving–morality be damned…