by Ellen Seidler | Ad Sponsored Piracy, Copyright, Law, Piracy, Politics
Kim Dotcom, megalomaniac mastermind of Megaupload
Kim Dotcom sued by Hollywood studios
The legal woes for Megaupload’s founder Kim Dotcom continue with today’s news that six movie studios including Fox, Disney, Paramount, Columbia, Universal and Warner have filed a lawsuit in federal court charging Dotcom and his site with “massive” copyright infringement. From the complaint filed in federal district court in Virginia:
1. Until January 2012, when defendants were indicted on federal charges, defendants operated the notorious website and service located at www.Megaupload.com (“Megaupload” or ”Megaupload website”) as a commercial online hub for publicly providing popular copyrighted content, including thousands of plaintiffs’ copyrighted works, over the Internet to millions of Megaupload users without authorization ox license. On a daily basis, defendants intentionally infringed plaintiffs’ copyrighted motion picture and television programs on a massive scale and for a substantial profit. Defendants carried out this intentional, large-scale theft of plaintiffs’ intellectual property primarily through the operation of the Megaupload website, as well as associated websites like the video streanning service located at www.Megavideo.com (“Megavideo”).
2. Defendants intentionally and actively encouraged theix users to upload to the Megaupload computer servers infringing copies of the most popular entertainment content, including plaintiffs’ copyrighted television shows and movies. For example, through Megaupload’s “Uploader Rewards” program, defendants openly paid Megaupload users money to upload popular unauthorized and unlicensed content, including plaintiffs’ copyrighted television shows and movies, onto Megaupload’s computer servers. Pursuant to the Uploader Rewards program, the more often an uploaded file was downloaded by other users, the more money the uploader made.
3. Once a Megaupload user uploaded a file, defendants provided that user with a “link” to the infringing content and encouraged the user to disseminate the “link” as broadly as possible on the Internet so that as many people as possible would find the link and use it to download the infringing content from Megaupload’s servers.
4. Defendants profited handsomely from this copyright infringement in at least two ways: by selling users “premium” subscriptions, which enabled rapid, unrestricted downloading; and by selling online advertising space to advertisers.
The complaint goes to describe the site’s business model–one built on piracy whereby the more content uploaded, the more traffic for the site, and the more ad and subscription revenue earned–more than 25 million according to the complaint. It also pokes holes in the claims of Dotcom, and his apologists, that the site was a legitimate enterprise that merely provided storage for its users:
Contrary to some of defendants’ public assertions, Megaupload was not designed to be a private data storage provider. Users without premium subscriptions were restricted not only in their downloading capabilities, but also in their ability to store files on the site. Any content they uploaded would be deleted if it was not also downloaded within a certain period of time —after 21 days in the case of unregistered, anonymous users and after 90 days in the case of registered users who were not premium subscribers. Only premium subscribers (estimated to be 1% of users) could use Megaupload for long-term file storage. Thus, by design, Megaupload functioned not as a private online storage locker, but rather as a hub for uploading and downloading infringing copies of popular movies and television shows, including plaintiffs’ copyrighted works.
With this latest legal salvo fired against Megaupload and its founder perhaps it’s worth taking a moment to examine why YouTube, another site dependent on user-generated content (UGC) managed to survive and thrive, despite early accusations (and a major lawsuit) that labeled it a piracy cornucopia. Why did Megaupload end up on the dust bin of history while YouTube has become a web video (and music) juggernaut?
The early growth and popularity of both sites was dependent on the public’s general disregard for copyright law. Sure, some of the traffic to YouTube was generated by cute cat videos gone viral, but much of the site’s popular content included clips and often entire copies of tv shows and movies–content uploaders certainly had no right to disseminate. Like Megaupload, YouTube hid behind the shield of “safe harbor” and monetized the content with advertising but unlike Megaupload, the site did not offer cash or other incentives to uploaders, not directly anyway.*
In 2007 Viacom filed suit against YouTube and like today’s filing against Megaupload, the charge was “massive” and “brazen” copyright infringement. After seven years of legal back and forth, the parties finally announced they had settled the case in March, one week before they were scheduled to again face off in court. The companies issued a joint statement which characterized the resolution this way: “The settlement reflects the growing collaborative dialogue between our two companies on important opportunities, and we look forward to working more closely together.”
Ultimately what separates YouTube/Google’s success versus Megaupload’s demise lies with the fact that the head honchos at Google determined that respecting copyright ultimately provided a better business model than ignoring it. On the heels of Viacom’s infringement suit, YouTube introduced its Content ID (digital fingerprinting) system in 2008 which gave rights holders a (relatively) efficient way to deal the massive copyright abuses that plagued the site. Rather than send hundreds, if not thousands of DMCA takedowns, musicians and filmmakers could claim content they own and be proactive in blocking, removing, or monetizing it. The key was that Content ID allowed the creators to determine if and how their content could be viewed on YouTube, not the other way around.
Megaupload paid lip service to honoring DMCA takedown requests, but in actuality was playing a shell game, removing infringing links but not removing the actual files. If you read the 70 page federal indictment against notorious pirate cyberlocker website Megaupload, you will find this charge on page 10, section 22:
When a file is being uploaded to Megaupload.com, the Conspiracy’s automated system calculates a unique identifier for the file (called a “MD5 hash”) that is generated using a mathematical algorithm. If, after the MD5 hash calculation, the system determines that the uploading file already exists on a server controlled by the Mega Conspiracy, Megaupload.com does not reproduce a second copy of the file on that server. Instead, the system provides a newand unique URL link to the new user that is pointed to the original file already present on the server. If there is more than one URL link to a file, then any attempt by the copyright holder to terminate access to the file using the Abuse Tool or other DMCA takedown request will fail because the additional access links will continue to be available.
During my dealings with Megaupload I’d long suspected as much. Time after time, I’d remove links using Megaupload’s content management tool only to see a duplicate file reappear (with a new link) minutes later. Of course, unlike federal authorities, I did not have access to the actual content residing on Megaupload’s servers, so I couldn’t really prove it.
In the fall of 2011 while I was researching a pirate blog that offered illegal downloads to LGBT films, I saw that the film “Kyss Mig” was being pirated. Since it’s a film distributed by the same company (Wolfe Video) that distributes our film I notified them of the infringing link. A DMCA notice was sent and, as expected, the link was disabled. However, when I went back to the website the following day I noticed that the disabled link had been replaced by a new one. That led me to again notify Wolfe and the exercise in futility was repeated. A few days later I noticed that the link was alive yet again, but the blog owner had changed things up (to protect her download) and the link now took me to an intermediate site “undeadlink.com.”
Essentially the site offered a convenient way to regenerate links to supposedly “dead” files on Megaupload (and apparently Fileserve). If Megaupload had actually removed the infringing file when it was originally reported, this wouldn’t have been an option. However, because Megaupload apparently did exactly what is spelled out in the indictment, it was very possible (and efficient). When I discovered what was going on last fall, and that it verified my suspicions, I decided to record the process. This video documents what I found.
[fve]http://vimeo.com/35648310[/fve]
Dotcom likes to pontificate (to anyone who will listen) and claims he’s “…at the forefront of creating the cool stuff that will allow creative works to thrive in an Internet age. I have the solutions to your problems. I am not your enemy.” Were that really true, why didn’t Mr. Dotcom use technology to transform Megaupload.com into legitimate UGC site by implementing a Content ID system like Youtube’s? Oh right, he would have had to share the profits. Despite disingenuous rhetoric to the contrary, unlike YouTube, Megaupload actually employed technology to ensure that copyright infringement continued rather than prevent it.
It’s an ethos that has allowed online piracy for profit (under the guise of innovation) to propagate across the globe. Why invest in a product when it’s just as easy to steal (and monetize) it? Of course Dotcom and Michael Robertson (founder of MP3tunes who was found liable and hit with a 41 million dollar verdict last month in a copyright infringement suit) have both discovered there are consequences to such theft, but this should be the norm, not the exception. Dotcom’s unbridled hubris and greed got the better of him. One can only imagine what he could have achieved had he crossed over from the dark side and followed YouTube’s lead.
Moving forward, preventing such businesses from taking root in the first place should be one goal in Congressional efforts to update the Digital Millennium Copyright Act for the 21st century. For all its faults, YouTube’s Content ID system lights the way for a possible path forward in redefining “safe harbor.” If a website’s business model to is predicated on “sharing” creative work, providing content creators with technological tools to safeguard their work should be a requirement for meeting the “safe harbor” provisions of the law. Such a requirement would not “break” the internet. It actually would could go a long way in fixing what’s currently broken.
Meanwhile, while YouTube has thrived where Megaupload has failed, businesses like YouTube can and should better reward the creators on whose work they depend. As online distribution options grow and improve, hopefully many will say goodbye to the opaque revenue “sharing” model imposed by YouTube (and others) and take their content to sites/businesses where formulas for compensation are more transparent, and more generous to those who actually create the content.
A download link to a pirated copy of our film on Megaupload.com
BTW, is there a way indie artists could jump on board the lawsuit filed by the studios? Why not make it a class action affair? There are plenty of indie musicians, filmmakers and authors around the world whose works (and livelihoods) were ripped off by Kim Dotcom’s enterprise. In their lawsuit the studios are asking for maximum statutory damages of $150,000 per infringement plus the profits the defendants generated. Just imagine how many new works might be in the offing if those thousands of creators whose works were pirated on Megaupload were awarded damages along with the studios?
*To this day there are still some YouTube users ‘s that earn ad revenue by uploading dubious content. Of course YouTube/Google earns income off these uploads too.
by Ellen Seidler | Ad Sponsored Piracy, Copyright, Film, Google, Piracy
Today’s Variety features an article by Todd Spangler with the headline, “House of Cards’ Searches on Google Turn Up Pirate Links as Top Results.” Color me not surprised in the least. Perhaps folks are noticing because House of Cards is a popular Netflix original series that just launched its second season but the fact that pirate top the list in Google search results is nothing new–just ask musicians and filmmakers. According to Spangler:
In a Google search for “Watch House of Cards” on Wednesday, the top two results were links to apparent pirate sites, couchtuner.eu and stream-tv.me; Netflix showed up third. WebProNews reported on the Google search results for “HoC” earlier, and found similar results for searches on other Netflix content including “Orange Is the New Black,” “Arrested Development,” “Lilyhammer” and “Derek.”
In December of 2012 I wrote a blog post “Google Search #FAIL Means More $$$ for Them” in which examined this same phenomenon with a search of a newly released indie film.
Not to beat a dead horse, but surprise, surprise….I did a Google search this morning to see how easy it would be to find download links for “Kyss Mig,” a recently released Swedish indie film. I used Google to search for “download kyss mig” from this past month, and….oops, so much for Google’s new search algorithm that’s supposed to penalize (reported) pirate sites. Why am I not surprised that The Pirate Bay result tops the list?
Here’s a screen shot of my results. It’s not surprising that the Netflix series is suffering the same fate that other content creators have long endured.
I went on to point out the interconnections between these illicit search results and the money trail. After all, as the Digital Citizens Alliance’s newly released report on piracy profit proves, it’s all about the money.
Not only did I find the full film streaming (for free) online (I checked and actually viewed the first ten minutes) but right beside was a Netflix advertisement. When I checked the source of the ad I found it led me back to “doubleclick.net” a Google-owned company. Perhaps this is how Google expects users to find legit copies of the film? After all, Kyss Mig does stream on Netflix….kind of a roundabout way to find the film when I can watch it right here, right now for free! Of course Google makes money from the ad either way (as does the pirate website) so what do they care? Hmmm, perhaps the Google ad placement has something to do with why this pirate site is comes up first in search results? Not to don my tin foil hat but….
- A full (free) stream of the indie film “Kyss Mig” was easy to find thanks to Google search results–result that generated ad revenue for Google and website operators. BTW, movie is now offline since I reported it to the distributor. I guess I’m going to have to be a good girl and use the search terms “buy Kiss Mig.” Only then am I given results that lead me to legit options.
BTW, I notified the distributor that the film was available via this pirate site so as of Monday, December 10th, this illegal stream is history. Too bad I can’t say the same for the website itself.
So, while today’s story about “House of Cards” search results leading to pirate websites may be a surprise to some, unfortunately for most of us, it’s old news. After all, if you’re looking for a sign post to find pirated content online, Google makes it easy.
by Ellen Seidler | Ad Sponsored Piracy, Copyright, Piracy, Politics
Today the Digital Citizen’s Alliance* released a report “Good Money Gone Bad: Digital Thieves and the Hijacking of the Online Ad Business,” which how quantifies how online piracy is fueled by ad-supported content theft. Highlights of the report’s findings include:
1. The websites researched make a projected $227 million in annual ad revenue. The 30 largest sites that profit exclusively from advertising averaged $4.4 million annually, with the most heavily trafficked BitTorrent and P2P portal sites topped $6 million annually.
2. Even small sites studied could make more than $100,000 a year in advertising revenue.
3. Because they rely entirely on the works of others for their “product,” their profit margins range from 80% to 94%, underscoring that crime can pay when you steal other people’s content.
4. Nearly 30% of large sites carried premium brand ads.
5. Nearly 40% of large sites carried legitimate secondary ads.
Tom Galvin, Executive Director of the Digital Citizens Alliance, explained the significance of the study results this way:
This report confirms that content theft isn’t a cottage industry—it’s big business. Plain and simple, ad-supported rip-off sites are exploiting the Internet and advertising community to get rich. The result is a damage to brand value for advertisers and serious harm to people who work in the creative industries. We hope this report pushes the online advertising community to take additional steps to protect brand value and stop ads from appearing on content theft sites that are undermining the vibrancy and safety of the digital marketplace.
The issue of ad supported piracy is a topic I’ve been researching and writing about about since the spring of 2010 when my indie film was released (and pirated). When I began searching for, and removing, pirated copies of our film online I quickly discovered that piracy was big business and driven by profits and created a blog (www.popuppirates.com) to document how piracy’s business model worked and the significant role advertising revenue played in incentivizing online piracy and sustaining it. Given today’s news I thought I’d take a look back and include an excerpt from a post I wrote four years ago that unfortunately–as the DCA study results show–could just as easily have been written today.
I created this video, “Follow the Money: Who Profits from Piracy?” to provide an overview on piracy’s link to advertising profits.
Online piracy isn’t about altruism, it’s about income. Today’s technology allows web pirates to steal content and monetize that content with a click of a mouse. Meanwhile, “legit” companies encourage and facilitate this theft while also profiting from it (ad service providers, advertisers and payment processors). The time has come for reasonable measures to be taken to discourage this theft. Content creators and consumers will benefit. Only the pirates and those who profit from their theft will lose.
In the process of scouring the web for the thousands of illegal download links and online streams of our film (more than 55,000 documented to date) I quickly discovered that various, theoretically legit companies, seemed to be (indirectly) generating income through the placement advertising on websites featuring streams and download links to pirated films. In addition, and most troubling, is that fact these ads generate income for operators of these pirate websites and add to generous profit totals for ad providers ($2.80 billion for 4th quarter 2011 for Google’s AdSense – all sources). More on Google’s financials can be found here.
The nature of the advertising varies, but I was dismayed to discover that the ads were not limited to cheesy online gaming sites, etc. Rather, they include a number of legit companies like Sony, Radio Shack, Pixar, Porsche, ATT, Chase, Network Solutions, Auto-Zone and even Netflix (particularly ironic since they carry our film). The list of advertisers goes on and on. It’s the same situation, if not worse for other films. Ads are ubiquitous on pirated content throughout the web…
…This dubious connection to piracy is not limited to the companies whose ads appear on various pirate sites. Even more problematic are those companies, like Google (via AdSense), that generate their own robust revenue stream by providing the interface for the pirate-site pop-up ads themselves. In this equation everyone, except the actual content creators, make money from this theft.
One could argue that the companies that provide the ads, as well as the companies being advertised, have no control over where the ads appear and thus bear no responsibility–hear no evil, see no evil? Is claiming ignorance any way to run an ad campaign or a business? It seems that the answer is “yes”–as long as there’s profit involved.
From my perspective, their implicit involvement, intentional or not, should be revealed. Every time one of these illegal files is added to a website where these ads appear, Google and et al earn money at the expense of the content creators. This just isn’t right.
In the scheme of things, our successful (highly-pirated) little indie film is a mere drop in the piracy bucket–we are one among thousands. However, collectively, this tainted revenue is significant, as is the harm done to those whose work is being stolen with the mere click of a mouse.
Certainly companies with the technological capacity (and robust balance sheets) of Google can afford to turn some attention to this issue. If these companies can offer ad placement based on cached cookies and metadata, why can’t they vet the websites where their ads appear? It ain’t rocket science folks. I daresay that if these websites were offering porn and not pirated films, these ads would NOT be popping-up, at least not for long.
Now, four years later, has anything really changed when it comes to ad sponsored piracy? As today’s study results make clear, the answer seems to be “not really.”
The Digital Citizens Alliance report also makes this important point:
The research does not represent the losses incurred by the victims of content theft – writers, producers, musicians, actors, and the thousands of others who work in creative industries. Content thieves are responsible for illicitly distributing millions of copies of valuable works, costing their owners billions of dollars in rightful revenues. The fact that the value of the content they illegally distribute is far greater than the advertising profits they reap is of no concern to the thieves, because they pay nothing for the content that drives their business.
Perhaps this study will serve as the tipping point that will motivate advertisers (and ad networks) assert more control over where their ads appear and into whose pockets their money goes. At least one can hope, but given the industry’s tendency to provide lip-service rather than real action to sever ties with online pirate sites, I remain skeptical. After all, if the fact that ads for popular brands are prominently displayed alongside piracy site sex ads won’t move them into action, I’m not sure what will.
Dove’s “self-esteem” ad
Kraft
Aveeno
Duracell
Best Foods ad
Natural Choice
Windows
Bounty
Vicks
Luvs Diapers
Duracell Batteries
Crest Pro Health
Swiffer
Best Buy
Febreze
Greenies
Alaska Airlines
L.L. Bean
Nokia
Motorola (a Google Company)
General Electric
Microsoft Windows Phone
Castro Motor Oil
Target
Hot Pockets
* Full disclosure, I am a member of the Digital Citizens Alliance Advisory Board .
by Ellen Seidler | Ad Sponsored Piracy, Copyright, Film, Piracy
Kim Dotcom has jumped the shark, Napster is long dead and Pirate Bay moves its domain nearly every other day, yet some things never seem to change when it comes to the world of online piracy— the dysfunctional and thorny thicket that is the DMCA and the enduring role of big brand’s in ad-sponsored piracy for profit.
Everyone who knows anything about online piracy understands that the DMCA takedown process and “safe harbor” provisions that shield pirate entrepreneurs from liability should have been tossed in the trash long ago. Signed into law in 1996, the Digital Millennium Copyright Act created a legal framework for managing (digital) copyright in an era of new technology and a burgeoning internet. Now, nearly 20 years later, the legislation is well past its sell-by date. Rather than provide clarity on digital rights and discourage copyright abuse, the DMCA seems only to have emboldened online profiteers who build businesses with piracy at their core.
Take a look at this “new” website GayFlix hosted by weebly.com, a do-it-yourself web hosting portal. The site welcomes visitors with this greeting, ” Welcome to GayFlix. The greatest source online for gay related movies and series that you can watch for free. ”
Not only does it offer up “free” LGBT movies, but it actually solicits submissions to complete its list of missing movies, asking users to send links via a convenient online form. No mention is made of requiring that links be from legit sources. No, this is not a joke…
Welcome to GayFlix. The greatest source online for gay related movies and series that you can watch for free. We only provide embed codes for links of 3rd party websites. This means that you can find videos on our site and watch them here for free, but we do not allow video hosting or video uploading of any kind. All videos are screened by our moderators, we filter through videos to remove content that is not related to the GayFlix ideal, such as porn or genres that do not include GLBTA material. We also allow filmmakers to submit links to their work for us to post on our site for others to enjoy. We allow our members to send us links to GLBTA movies and series, you can do this on the submission page. All content will be screened fully before posting so please allow us 24 – 72 hours to post approved material, all unapproved material will be discarded and an email to its submitter will be send on why we have chose not to approve the material as well as a copy of our policy to remind them what is appropriate material, if a member feels that there was a misunderstanding in the screening process they are welcome to contact an administrator for further assistance and information.
Some of the movies “shared” on the site are embedded via HULU, a legit source but many others are pirated copies including Elena Undone, Kyss Mig, Joe + Belle, Inescapable, August, A Portrait of James Dean-Joshua Tree 1951 and A Perfect Ending , among others. The pirated streams are all hosted via slimy cyber-lockers shown in the graphic below.
Note the disclaimer beneath the pirated stream that, “All videos belong to 3rd party websites. GayFlix does not allow hosting. GayFlix has no control over advertisements on videos.” Say what? So what? First of all the videos don’t “belong” to 3rd-party websites–they belong to their creators–-and, while the site doesn’t “allow” video hosting. it has no problem embedding illegal copies from other sites? What kind of twisted logic, blatant lack of accountability applies here? Oh yeah, the DMCA…but wait, even the DMCA has directs that a website operator not “have the requisite level of knowledge that the material is infringing.” Sorry, but you can’t tell me that these folks who claim to “vet” their content don’t have a clue that many of movies they “share” are pirated?
Thanks to the safe harbor provisions of the DMCA, this apparently seems a perfectly respectable (and legal) thing to do? As Wikipedia notes, “The DMCA’s principal innovation in the field of copyright is the exemption from direct and indirect liability of internet service providers and other intermediaries.”
GayFlix does display a DMCA contact button at the bottom of the page but in reality the DMCA takedown process is another escape hatch for a poor, ignorant site operator who doesn’t realize (wink, wink) that he’s sharing infringing content. When a site like this does get a DMCA takedown notice and removes the infringing content, that’s it–no questions asked. It’s also worth noting that just because a site lists a DMCA contact, in many cases any takedown request that’s sent is routinely ignored.*
This website doesn’t appear to make money off ads, but it does offer up a shopping page (called the Rainbow Shop) that sells a variety of LGBT-themed t-shirts and trinkets. More traffic potentially means more sales.
If the GayFlix operators want to “share” LGBT films, too bad didn’t just become an affiliate of Wolfe on Demand, the largest (legal) distributor of LGBT films in the world. Had they done so operators could have legally embedded dozens of great LGBT movies on their site and earn commission every time a visitor rented or downloaded a film. Added bonus, the filmmakers actually get paid too!
Moving on, more thorns can be found by examining the illegal embeds’ source. The pirated copy of “A Perfect Ending” streams from the website played.to. If one clicks the arrow at the center of the screen, advertising appears. The ads promote a number of mainstream brands including AT&T, Netflix, HULU, Mike’s Bikes, Google Shopping, Norton and so on….
By inspecting the source code for the illegal movie stream, one can easily determine that the ad providers is a company named Integral Marketing.
The company isn’t exactly transparent. WHOIS search results seem to indicate it may be based in Tel Aviv, but who really knows. When offering services in the smarmy world of advertising on pirates sites, I guess it’s best to maintain a low profile. The company’s “about us” page describes its services this way:
Integral Marketing is a digital marketing company that uses unique advanced targeting technology and display advertising to provide optimal value to brands online. Our goal is to ensure quality traffic, service, and to help save you the time necessary to search and locate effective websites to advertise on. Our understanding in customer service, technology, sales, and account management enables us to deliver and meet the advertising results you require. [emphasis added] Over 600 million unique monthly online users with the capacity to display over 3.65 billion ad views/month. With our growing team and constant efforts to advance, continues to gain market intelligence and deliver reliable and accurate advertisements in order to meet the unique marketing needs of every client.
The site also claims to “ensure we cater to our advertisers’ campaign goals.” Hmmm, I wonder it’s the goal of AT&T, Netflix, HULU, Norton, Google and Mike’s Bikes (among others) to have their products associated with pirated movies online?
By the way there’s nothing in the DMCA that makes this sort of black-market profiting illegal. It’s A-Okay for brands to advertise their products on pirate websites and put money in the pockets of thieves. In fact, according to this ad provider, it’s just part “cost effective” part of doing business in today’s world.
Last week Jack Marshall wrote a piece, “Why Does Tech Advertise on Piracy Sites?” The question is really a broader one, “Why do companies that care about their brand continue to advertise on pirate websites?” It’s a question I asked in 2010 when I first began writing about the link between ad revenue and online piracy on my blog at popuppirates.com. As Marshall notes in his piece,
The question is: Do those companies’ ads show up on that type of site because they can’t stop them? Or do they simply ignore the fact because they’re a great source of cheap, effective media? Either way, it’s not a great look. If they are unable to stop the ads, that doesn’t give advertisers much comfort. And if they don’t care, well, publishers are a bit less cavalier when it comes down to misappropriation of intellectual property.
Over and over major brands and their ad industry representatives have been asked this question and the response has always been to feign concern while deflecting responsibility. Last September, at the annual “Advertising Week” convention in New York City the question came up in a panel on “Digital Media Under Attack-It’s Worse Than You Thought.” Privacy-net’s Gordon Platt reported on the event:
Much of the conversation focused on the relationship between advertising and piracy, not unexpected for an Advertising Week event. “No one has asked the blunt question of whether you want your ad associated with a pirate site,” said [Rick] Cotton. He added, “Advertisers should not want their ads to be in that environment. It’s getting more risky to be in business with criminal websites.”
Bob Liodice, CEO of ANA (Association of National Advertisers) agreed and suggested the industry needs to be accountable for its role in monetizing piracy.
“It makes us all shake our heads, wondering how we can wrap our arms around this. We have theft going on here.” Liodice believes that one problem is that no one has taken “ownership” of the piracy problem. “We have to create a level of collaboration in order for the [advertising] industry to own the issue.” Liodice stressed that collaboration has to be “systematized” and that the industry has to make it “personal.”
During the Advertising Week event NBCUniversal’s Senior Counselor for IP Protection, Rick Cotton suggested, “The simple message is that we need a systematic approach to this problem. Otherwise it’s bad news for the industry.”
Despite hollow assurances that something will be done, nothing seems to change as advertising intermediaries continue to be the engine that drives piracy. At this point all we can do is continue to call them out on their hypocrisy and reveal how their coveted brands risk being tainted by the link to online piracy profiteering.
Where does this leave the content creators who livelihoods continue to be stolen? It leaves us stuck in a swamp of ill-conceived laws, industry apathy, and empty political rhetoric.
*For the record the distributor sent DMCA takedown requests to the email provided on the site for multiple titles, but 24 hours later, the infringing movies remain embedded on the site.
**Update as of 1/29 Weebly.com (the host site) removed the GayFlix content from the web.
Credits: stock image Depositphotos
by Ellen Seidler | Ad Sponsored Piracy, Copyright, Piracy, Politics
Once a thief, always a thief
Last night 60 Minutes ran a segment featuring a Bob Simon interview with the now-defunct Megaupload’s Kim Dotcom. Much has already been written, and debated, about the German pirate entrepreneur who currently resides in New Zealand as he fights extradition to the United States on charges of copyright infringement. So did we learn anything new from last night’s broadcast that billed Kim Dotcom (predictably) as “Hollywood’s Villain?”….the short answer–nope.
Per usual, explanations were limited as to how Megaupload operated (and launched a business model that many others would follow), Mr. Simon explained it this way:
Here’s how it worked. If you wanted to send a friend a file that was too large to email– a wedding video, for example– you could just upload it onto Mega Upload’s servers and your friends could click a link to download it. It was a virtual warehouse where people stored and shared digital files. By selling advertisements and premium subscriptions, Mega Upload brought in an estimated $175 million. It became one of the most frequented sites on the internet. How did it get so popular and profitable? According to federal authorities, by also allowing users to illegally share the hottest new movies, or hit songs, or TV programs, including some CBS shows.
Unfortunately Simon failed to explain probably the most important factor to Megaupload’s financial success, its affiliate program. What good is hosting tons of pirated content if no one know where to find it? If there’s a genius to Dotcom’s acumen as a black market businessman, this is it. Basically the cyberlocker (cloud-based storage) site’s business model was that of multi-level marketing style pyramid scheme. Instead of selling cosmetics or cleaning products, his company “sold” access to stolen movies, songs and e-books.
As with all pyramid-style companies, Megaupload depended on attracting armies of underlings to “sell” its offerings. It did so by offering incentives to users who signed up to become “affiliates.” Upload stolen content, spread the download links far and wide like a virus, and the more downloads you attracted, the more cash you would earn. Affiliates could also earn cash for recruiting more affiliates. This army of mini-pirates was the key to Dotcom’s success and fueled piracy’s rampant growth beyond the traditional, more cumbersome torrent sites like Pirate Bay. The internet was suddenly filled with forums where users “shared” their download links over and over and over again.
Those who clicked on a Megaupload download link would find that they could generally stream or download a favorite film, or song, with a mere click of the mouse. For those who wanted faster download speeds they could subscribe to “premium” services and by doing so dump more cash into Dotcom’s coffers.
By having others do their dirty work uploading stolen content, Megaupload attempted to skirt copyright law by claiming refuge under the “safe harbor” provisions of the DMCA (Digital Millennium Copyright Act). Dotcom reiterated this excuse in his interview with 60 Minutes:
Am I the one who is at fault if users upload that kind of stuff and up… re-upload it again? Do I have to go to jail for that? Because I didn’t do it. I didn’t upload these things to Mega Upload.
Dotcom also blamed his flamboyant lifestyle and his nationality as reasons for his targeting by U.S. officials not the 2 and a half billion his company was worth at its peak when he left Hong Kong for New Zealand—a valuation built by pirating the hard work of others—musicians, filmmakers, authors and more. Too bad the folks at 60 Minutes didn’t think it worth interviewing any of those (beyond Hollywood) whose livelihoods suffered thanks to Megaupload and sites like it.
At this point, whatever happens with Dotcom is pretty much irrelevant. The key truth is that with the demise of Megaupload the entire piracy for profit industry was finally put in the spotlight. Why did so many other cyberlocker sites immediately shut down after the Megaupload indictment? If Filesonic, Wupload, Fileserve and other sites’ business models were legit, why did their operators scurry like cockroaches exposed to bright lights. The answer is simple. They, like Megaupload before them, were engaged in (illegal) theft for profit.
The shuttering of Megaupload marked an important shift for the landscape of online piracy. Just as cyberlockers’ illegal business models were being called into question, legitimate online options were gaining steam. The sudden vacuum allowed legal alternatives like Netflix, Hulu and their ilk to gain traction. Consumers who’d sought out pirated content out of convenience suddenly found that using their Roku or Apple TV box was a better option than scouring the internet for torrents or Russian streaming sites.
I for one don’t care much about what the future holds for Mr. Dotcom. I’m sure he’ll figure out another way to game the system and make money at the expense of others, but in the meantime I’ll be happy that content creators were the victors this time ’round.
P.S. for more analysis on the case against Kim Dotcom and copyright law I suggest Robert Parloff’s excellent piece published in Fortune Magazine in 2012: Megaupload and the twilight of copyright
by Ellen Seidler | Ad Sponsored Piracy, Copyright, Law, Piracy, Politics
The business of online piracy has always been dependent on advertising revenue. Without ad income, many pirate sites would cease to exist. Now it appears that law enforcement in the UK is taking action against this type of criminal activity through an effort called “Operation Creative,” an alliance that include law enforcement, advertisers, publishing and music interests. According to a story published today by the BBC:
In an operation run by the Police Intellectual Property Crime Unit (PIPCU), 61 websites were identified as displaying unauthorised material.They were asked to “correct their behaviour” and “operate legitimately”. Details of those that did not were passed to brands with a request to stop advertising on the sites in an attempt to reduce their revenue. Forty websites have now been suspended.
This graduated approach provides a blueprint for others. The offending websites (and advertisers) were notified that their sites contained copyrighted material and were asked to remove the content. Only when they ignored warnings was action taken to close them down.
This past July, U.S. Intellectual Property Enforcement Coordinator Victoria Espinel issued a statement, “Coming Together to Combat Online Piracy and Counterfeiting,” that outlined a voluntary “best practices” agreement to reduce ad-sponsored piracy in the United States:
Today, 24/7 Media, Adtegrity, AOL, Condé Nast, Google, Microsoft, SpotXchange, and Yahoo!, with the support of the Interactive Advertising Bureau, committed to a set of best practices to address online infringement by reducing the flow of ad revenue to operators of sites engaged in significant piracy and counterfeiting. The Administration strongly supports voluntary efforts by the private sector to reduce infringement and we welcome the initiative brought forward by the companies to establish industry-wide standards to combat online piracy and counterfeiting by reducing financial incentives associated with infringement. We believe that this is a positive step and that such efforts can have a significant impact on reducing online piracy and counterfeiting.
Voluntary agreements are all well and good, but at some point there’s a role for enforcement when such agreements are ignored. UK authorities seem to understand that. Perhaps it’s time that U.S. authorities take a similar, graduated approach. It may also help to garner more public support than seizing domains outright.
Internet-based commerce has matured to the point that it’s reasonable to expect online transactions to adhere to the law. Actions like this will help rein in the bad actors and hopefully make what has been the “wild” west a tad less so.
Ultimately what separates YouTube/Google’s success versus Megaupload’s demise lies with the fact that the head honchos at Google determined that respecting copyright ultimately provided a better business model than ignoring it. On the heels of Viacom’s infringement suit, YouTube introduced its Content ID (digital fingerprinting) system in 2008 which gave rights holders a (relatively) efficient way to deal the massive copyright abuses that plagued the site. Rather than send hundreds, if not thousands of DMCA takedowns, musicians and filmmakers could claim content they own and be proactive in blocking, removing, or monetizing it. The key was that Content ID allowed the creators to determine if and how their content could be viewed on YouTube, not the other way around.
