New Study Shows Content Theft Sites Hijacking Online Ad Business to Make Hundreds of Millions in Profits

WASHINGTON, Feb. 18, 2014 /PRNewswire-USNewswire/ -- Content theft sites made nearly a quarter of a billion dollars last year from advertising on rip-off sites, according to a new report from the Digital Citizens Alliance.  According to the study, the 30 largest sites that profit exclusively from advertising dollars by pushing stolen movies, music, and television programs will each make more than $4 million dollars a year for their 'work.'  

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"Ad profits are the tip of the iceberg," said Digital Citizens Alliance Executive Director Tom Galvin about the report. "These ad-supported rip-off websites are just a small sample of the sites that are profiting from theft, and with the Internet population growing so quickly we need to address this problem immediately.  Let's be clear, 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.  This goes beyond the old adage that crime pays."

The report, entitled, "Good Money Gone Bad: Digital Thieves and the Hijacking of the Online Ad Business," examined hundreds of content theft sites that featured advertising.  The research shows that a significant number of ads on these sites come from premium and secondary legitimate brand advertisers.  Secondary ads are non-premium legitimate ads, mostly for legitimate gaming, gambling and content aggregator sites. 

Digital Citizens, a consumer-oriented coalition focused on educating the public and policy makers on the threats that consumers face on the Internet, commissioned MediaLink LLC, a leading research firm, to identify and quantify profits from rogue sites offering pirated content.

The report came to several troubling conclusions:

• 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.
• Even small sites studied could make more than $100,000 a year in advertising revenue.
• 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.
• Nearly 30% of large sites carried premium brand ads.
• Nearly 40% of large sites carried legitimate secondary ads.

"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," said Galvin. "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."

"MediaLink was pleased that Digital Citizens invited us to assist with this important research," said MediaLink's Wenda Harris Millard, President and COO of the strategic advisory firm, which provides counsel and strategic direction to clients across the media, marketing, advertising, entertainment and technology landscape. "This issue doesn't only affect the creators of content. It's also theft of ad revenue and a threat to the reputations of important brands. We hope the report sparks collaborative action to address the problem."

The Digital Citizens report focused on the advertising revenues bad actors generated offering up other people's works. 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.

About the Methodology

In creating a 596-site sample of sites for research, MediaLink focused on Q3 of 2013 to provide a recent point in time on which to base calculations. As the basis for finding sites engaged in content theft, it started with Digital Millennium Copyright Act (DMCA) removal request data from the Google Transparency Report.

The baseline was sites that had 25 or more DMCA takedown requests in Q3 that Veri-Site determined were live in the quarter, and for which unique visitor and page view data were available from comScore. The comScore data were used to calculate advertising revenue, and subscription revenue for those sites offering paid access. MediaLink validated the sample further using Integral Ad Science ratings on sites determined to be at high risk for content infringement, and its analysts visited and reported on hundreds of sites to further qualify them, and removing from consideration:

• Porn and hate sites
• Sites where most content appeared to be user-generated, personal in nature or highly localized, e.g., Tamil-language programs or movies unlikely to be interesting to a broader pirating audience
• Available content was not primarily movies and TV shows.

Thus, the only sites kept in the sample were those at least partially ad-supported sites where infringing content appeared to be a significant portion of the site.

About Digital Citizens Alliance
Digital Citizens is a consumer-oriented coalition focused on educating the public and policy makers on the threats that consumers face on the Internet and the importance for Internet stakeholders – individuals, government and industry - to make the Web a safer place. Based in Washington, DC, the Digital Citizens Alliance counts among its supporters: private citizens, the health, pharmaceutical and creative industries as well as online safety experts and other communities focused on Internet safety. For more information, please visit digitalcitizensalliance.org.

SOURCE Digital Citizens Alliance