Image: Flickr/Joriel Jimenez
A major challenge that companies face when trying to tamp down on internet piracy is the notoriously opaque online advertising ecosystem that leads many of those same companies to inadvertently fork over part of their marketing budget to the very places they're dying to see go under. In the aftermath of SOPA and PIPA's demise, then, much of the pressure from regulators and tech companies has been refocused on the advertising industry to find some way to essentially starve things like torrent sites out of existence.
But just how systemic is the issue, really? This week, the Digital Citizens Alliance released a report titled “Good Money Gone Bad: Digital Thieves and the Hijacking of the Online Ad Business.” Produced with the media advisory firm MediaLink, it claims to be the first comprehensive report that measures just how much "piracy sites" are making in ad revenue.
Turns out, they're making a lot. According to the report, websites that make money exclusively off pirated content—movies, music, tv shows, etc.—pulled in $227 million in ad revenue in 2013. A big chunk of this goes to the 30 largest sites (of the total 596 that were included in the study), which averaged $4.4 million annually. Torrent sites were the biggest earners, pulling in more than $6 million each. And since the sites don't spend any money on the content they're hosting, the DCA estimated strong profit margins between 80 and 94 percent across the board.
The report also lists a large number of "premium brands" like Amazon, American Express, Dell, Ford, Lego, McDonalds, and Xfinity. Regardless of a company's stance on online piracy, the report said in its recommendations, having ads appear on these sites can't be great for business.
"When well-known premium brands, as well as other legitimate secondary brands, appear on content theft sites due to the 'blind' sales channels through which most Internet advertising is sold, they involuntarily lend those sites an appearance of legitimacy that potentially deceives consumers," the report said. "When those brands see their ads placed next to illegal content and bottom-feeder ads for sex trafficking or illegal drugs it makes these brands think twice about the Internet as a vehicle to reach their target audience."
The DCA's report is clearly sympathetic to the companies listed in the report, referring to them as "unwitting" participants in many an "ad supported content theft" scheme. But as AdWeek's Lucia Moses noted, it's hard to identify "where to place the blame for ads winding up on piracy sites" because of how convoluted the online advertising market is at this point thanks to the sheer "number of parties involved in placing digital ads and the rise of automated buying that minimizes human beings’ role in the process." Or, to quote RIAA CEO Cary Sherman from a New York Times article last year: “The ecosystem for online ads is incredibly complicated. Everybody can point the finger at other people.”
As any of the kerfuffles over online piracy will show you, there's no clear solution to the problem yet. But the DCA report suggests that paring down some of the complexity of the advertising market could at least begin to reveal one.
It's not like overhauling ad sales will be that easy either, however. As Harris Millard, the president and COO of MediaLink, put it to AdWeek: “There’s something to be temporarily lost to everybody. This has been a way of life, and that will have to change. And that will, quote, inconvenience a lot of people.”