A new report from the Digital Citizens Alliance, conducted by MediaLink LLC, found that in 2014, nearly 600 pirate sites generated an estimated $209 million in revenue from advertising alone – a significant portion coming from major brands. The takeaway is clear – advertising dollars are the engine driving a black market for creative content that is likely to continue as long as pirate site operators can easily generate ad revenue from legitimate businesses.
The study, highlighted today in the Wall Street Journal, analyzed sites that received a minimum of 25 Digital Millennium Copyright Act (DMCA) takedown requests in Q3 2014.
The profitability of piracy and low barrier to entry make it easy for new pirate sites to emerge and start generating ad revenue. Forty-four percent of the pirate sites studied in the DCA’s 2013 study were either no longer active or had dipped below the threshold for tracking in 2014. However, new sites have popped up to replace the ones that disappeared.
Four types of sites were included in the report: BitTorrent/P2P portals, video streaming sites, linking sites, and direct download sites – also known as cyberlockers. BitTorrent and other P2P portals were the most common sites used for piracy in 2014. The 136 sites that fit this description accounted for $79.7 million in ad revenue.
The advertising-supported business model has not been disrupted by takedowns or other enforcement actions. Pirate sites collected this ad revenue even after seven large BitTorrent sites – that collectively took in $44.3 million in ad revenue in 2013 – were shut down. The decrease in revenue from the closure of those large sites was offset by new smaller sites popping up and an increase in video streaming pirate sites.
The report sheds light on the complex nature of online ad placement. Digital ads are generally placed through a highly automated system involving exchanges, networks, publishers, and agencies that don’t always differentiate carefully between legitimate and pirate sites. The brands themselves are often unaware of the placements, which have negative consequences for their businesses. When ads are served on pirate sites, they often appear next to malware and other explicit or offensive ads that tarnish the brand’s image. What’s more, pirate site advertising impressions are falsified at an alarming rate, the report found, meaning pirate sites are stealing from their advertisers in addition to artists. The Illusion of More has a good explanation of how all this works. The LA Times also provides a good example.
The good news is that the advertising community is taking steps to address these issues. The report cites the ad industry’s creation of the Trustworthy Accountability Group (TAG) – a program to certify third party vendors that provide technical tools to keep good ads off of bad sites – as an example of necessary action taken to address these problems.
CreativeFuture, which has thanked TAG for its commitment to taking the profit out of piracy, will continue to rally the creative community to push for accountability in the online advertising space. Artists, advertisers, and audiences all stand to benefit from a strong digital market for creative content that respects and rewards creativity.