ArtsWatch: How Top Pirate Sites Are Making Millions Annually

Study estimates infringing sites earn $227 million in ad revenue
February 24, 2014 -- 6:59 am PST
By Philip Merrill / GRAMMY.com

In recent news ...

Premium Brands Still Advertising On Top Pirate Sites
On Feb. 18 nonprofit Digital Citizens Alliance released a study titled "Good Money Gone Bad: Digital Thieves And The Hijacking Of The Online Ad Business." According to the study, the estimated total advertising revenues in 2013 for 596 sites providing unlicensed, copyright-protected content came to $227 million. Small, medium and large sites were analyzed in three general categories: BitTorrent/P2P, linking sites and sites hosting video streams and direct downloads. The small sites took in more than $100,000 in annual revenues each and the 30 top offenders had estimated revenues of $4.4 million on average. Among the larger pirate sites, nearly 30 percent profited from ads paid for by premium brands. The lower end of estimated profit margins from this illegal activity was 80 percent. "These ad-supported rip-off websites are just a small sample of the sites that are profiting from theft," said DCA Executive Director Tom Galvin. "The quarter of a billion dollars that these sites make from ads in a year is a huge sum, but it's only a fraction of the financial losses inflicted on the creative economy and its workers."

Notorious Markets And Special 301 Antipiracy Trade Updates
The U.S. Trade Representative released the 2013 Out-of-Cycle Review of Notorious Markets on Feb. 12, shining a spotlight on the worst copyright violators both online and in physical marketplaces around the world. Content industry organizations International Intellectual Property Alliance, MPAA and RIAA were quick to praise the USTR's effort to define these high-priority enforcement targets, and IFPI and RIAA offered harsh criticism against Russia's vKontakte for its repeat-offender status. IFPI CEO Frances Moore said Russia's "music market could easily rank among the world's top 10. Instead, [its] recorded music business languishes down at number 23," and Moore accused vKontakte of being "one of the major reasons." Efforts made by top Chinese sites Baidu, PaiPai and Taobao demonstrate that the path to reform can be successfully travelled. Although they are no longer listed as notorious markets, the USTR will continue to monitor their antipiracy efforts. Meanwhile, as part of the USTR's regular Special 301 annual cycle, on Feb. 7 the IIPA submitted this year's consolidated recommendations on behalf of top U.S. intellectual property organizations. In addition to noting China's progress, the RIAA separately singled out Italy, the Philippines and Spain for their positive antipiracy progress during the past year.

Congress' Creative Rights Caucus Launches Online Portals
On Feb. 11 the Creative Rights Caucus launched its website and Twitter account. Now comprising 50 representatives, the bipartisan caucus was formed early last year by Reps. Judy Chu (D-Calif.) and Howard Coble (R-N.C.), who sit on the House Judiciary Committee's Subcommittee on Courts, Intellectual Property and the Internet. In a statement, they said, "We started this caucus to fight for individual creators whose rights are often not fully valued or understood. Creative rights matter, and need to be protected, just as we would protect someone's property rights, human rights, and First Amendment rights." Chu discussed Caucus initiatives as the keynote speaker at The Recording Academy Los Angeles Chapter's GRAMMY Town Hall meeting on Feb. 20.

FCC Chair To Build Cautiously On Open Internet Status Quo
Responding to last month's Net neutrality ruling by the U.S. Court of Appeals for the D.C. Circuit, on Feb. 19 Federal Communications Commission Chairman Tom Wheeler declared multiple paths forward, none of them radical. The court ruling will not be contested, changing the jurisdictional authority to regulate broadband will remain on the table as a potential option, and a fresh round of public comment will open under a new docket. Wheeler's fellow commissioners are invited to explore how the rules against blocking and discriminating against traffic can be changed to conform with judicial guidance and meet their intended goals. Perhaps the kicker in all this is transparency. Wheeler said, "This is more significant than many people may realize." The Electronic Frontier Foundation quickly responded with a technical argument in support of this view. Republican FCC commissioners and lawmakers are opposed to new open Internet regulations, generally seeing them as premature and unfounded. AT&T and Comcast reacted mildly to Wheeler's announcement and one of his stated paths forward is to take advantage of industry goodwill toward the general approach that was previously staked out. Wheeler has arguably dug in to the previous open Internet framework while inviting fresh input and new data.

The Recording Academy actively represents the music community on such issues as intellectual property rights, music piracy, archiving and preservation, and censorship concerns. In pursuing its commitment to addressing these and other issues, The Recording Academy undertakes a variety of national initiatives. ArtsWatch is a key part of an agenda aimed at raising public awareness of and support for the rights of artists. To become more involved, visit Advocacy Action @ GRAMMY.com and sign up for Advocacy Action E-lerts.

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