The Copyright Alliance is seeking videos from artists and supporters on why the arts matter. The videos submitted will used to create a grassroots video message to Congress from artists and their supporters. It’s important to let your voices be heard. You can upload your “selfies” here.
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.
* Full disclosure, I am a member of the Digital Citizens Alliance Advisory Board .
Today my Twitter feed was filled with Tweets cheering Google’s new “doodle,” a rainbow flag festooned with various icons of athletes in action. Below it was a quote from the Olympic Charter:
“The practice of sport is a human right. Every individual must have the possibility of practicing sport, without discrimination of any kind and in the Olympic spirit, which requires mutual understanding with a spirit of friendship, solidarity and fair play.” –Olympic Charter
Sadly, while I am all for athletes and rainbow flags–and focusing attention on the fact that Russia is hosting the Olympics despite enacting abhorrent anti-gay legislation –Google makes me gag.
It’s not the message, but the messenger–a hypocrite to its very corporate core. If Google as a company truly believed in “human rights” why does it continue to disregard the rights of artists at every turn? Perhaps those who doodle for Google might want to review the United Nation’s Universal Declaration of Human Rights (Article 27, paragraph 2) which includes this passage:
(2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.
Why is Google so keen on “fair play” and the rights of athletes to compete, but when it comes to artists, not so much?
Since we’re asking the question, perhaps we should also ask why Google doodles about non-discrimination at the Olympics but donates millions to ALEC, an organization actively working to deny Americans their right to vote?
For the record, recently discovered documents also reveal ALEC’s troubling anti-gay history, not surprising for a group known for its right-wing positions and affiliations.
For Google the Olympics controversy provides the company with yet another opportunity to leverage its (global) influence to gain positive reviews, this time by hijacking of the Olympic spirit.
The persecution of LGBT people in Russia is an outrage that deserves every bit of attention it’s received–but given the context and the company, today’s rainbow doodle comes off as a cynical public relations ploy by a company posturing to obscure a truly malevolent soul.
A new petition is circulating at the freshly minted irespectmusic.org website soliciting support for artists to receive “pay for radio play.”
The petition, directed toward members of the House Judiciary Subcommittee on the Courts, Intellectual Property and the Internet reads:
Dear Member of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet:
I join music makers and music lovers alike in urging Congress to support artists’ pay for radio play.
The United States is the only democratic country in the world where artists don’t get paid for radio airplay. Currently, the short list of countries that share the United States’ position on this issue includes: Iran, North Korea, China, Vietnam, and Rwanda.
As Congress reviews radio airplay royalties, we ask that you stand by American artists and musicians to ensure they are paid when their work is played on the radio.
Thank you for recognizing the importance of this matter and the need for its long overdue and timely resolution.
I Respect Music. #IRespectMusic
Sincerely,
If you support artists rights, please go here to add your support.
Creativity ‘Continues to Thrive,’ in spite of SOPA’s defeat, not because of itIn a post marking the anniversary of SOPA’s defeat (Stop Online Piracy Act) Google asks users share a graphic to celebrate. “Since we combined our voices to stop SOPA, creativity has continued to thrive — both on and off the web.” Their celebratory note also includes this caveat:
Of course, piracy remains a major concern and Google does its part to fight it, but, two years after SOPA, it’s clear that the Internet has been really good for creativity and entertainment.
Frankly, I’ve never heard artists or entertainers make the argument that the internet isn’t “good” for creativity or entertainment. Yet, during the SOPA debate, as red herrings flew, content creators became the enemy in and us vs. them debate as hyperbolic and often mendacious rhetoric echoed across the web.
SOPA anniversary aside, this week marked another milestone– 100 Million takedown requests to remove search links to pirated music have been sent to Google. Note this total only includes takedown notices sent by the music industry. Don’t forget to add those millions sent to Google for pirated movies, photographs, books, and more.
If piracy is really a “major concern” for Google why do illegal sites still dominate in searches for music and movies? Here’s a graphic that is a tad more “balanced” than the one Google wants you to share.
Below is another graphic that worth considering when reading about Google’s rather disingenuous statements about their concerns re: online piracy. Yes, creativity continues to thrive online, but just image what could happen if Google actually took serious steps to stop supporting online piracy? It would be nice to see the trend lines in the chart below going down rather than steadily climb.
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
