New study: media companies are making pirates rich

The Wall Street Journal reported on May 8^th that revenue from sites running pirated movies and television shows generate $227 million a year in the US alone.

How do they do it?  By running ads from legitimate brands placed by ad networks.

How is this possible?

The article is based on a study commissioned by the Digital Citizens Alliance (Friend MTS has no relationship with this organization) that shows how pirates are gaming programmatic ad systems to indirectly earn revenue from major brands.   When I was Chairman of the Online Publishers Association (OPA), an organization that advocates for publishers who directly sell advertising, we highlighted the dangers to brands of using intermediary ad networks that can’t confirm where the ads actually run.   Not only do ads on pirate sites damage the brand image and fund an illegal industry, but they undermine the very media properties needed to run bona fide advertising.

This is only the tip of the iceberg

The $227 million figure that Digital Citizens Alliance identified is a fraction of the problem, since the study only covered the United States where piracy rates are among the world’s lowest.   In the United States, access to pay-TV is about 85%, the same programs are carried by every operator, most major sports events are free-to-air, and more new release movies are available than anywhere in the world, so the incentive to pirate video content is low.   In much of the rest of the world, particularly in Europe, the opposite is true and that is where the highest consumption of pirated content occurs.    At Friend MTS, we track the illegal streaming of video content world-wide and see this consumption first-hand.

How to regain control?

Major brands can help reduce piracy by insisting on a higher accountability from ad networks.   The technology exists to stop legitimate ads from appearing on pirate sites, but unless the clients of ad networks demand that improvements be made, ad networks are not going to cut their revenue and increase their costs to fix the problem.   Last fall, I approached one of the ad networks mentioned in the Wall Street Journal article, offering Friend MTS’s expertise to help develop systems capable of preventing ads from ending up on illicit sites.   I was told thanks, but they had everything under control.   Maybe they did then, but like computer viruses, the threat is always changing and the security solutions must be constantly updated.

At Friend MTS, we are watching for the latest threats to illegal content use and making daily updates to our systems to detect, prevent, and reduce the threats to content owners and rights holders. As ad supported businesses, media companies are in a delicate position to demand that brands do a better job policing their ad placements, but taking action against the misappropriation of their copyright content carries no such constraints. Friend MTS is ready to help any media company reduce the threat of piracy to economically insignificant levels.