Report: Online piracy remains multi-hundred-million-dollar business

May 19, 2015 5 AM PT

Online piracy continues to thrive amid a rise in streaming websites, according to a report released Tuesday by Internet safety organization Digital Citizens Alliance and consulting firm MediaLink.

Content theft website operators across the globe give visitors access to movies, TV shows and music for free. But the pirating industry is “built on theft and deception,” according to the report, titled “Good Money Still Going Bad.” These piracy websites earn hundreds of millions of dollars a year in advertising revenue for the number of views and clicks they get.

“It is still a very big business,” said Tom Galvin, executive director for Digital Citizens Alliance. “This is a market that not only can sustain itself but is now causing harm to customers through malware and other software.”

After examining 589 content theft websites, the report determined that the illicit activity generated an estimated $209 million in aggregate annual revenue in 2014 from advertising. There were 132 premium brands observed by MediaLink researchers on the sites, up from the 89 brands in 2013.

“The content theft industry is marked by a perpetual cycle as sites are shut down, new ones spring up to take their places, and others shift domains from country to country whenever shut down by law enforcement,” the report states. “It is a huge and Hydra-like challenge for content owners and authorities helping them protect their rights and livelihoods.”

BitTorrent is the most popular peer-to-peer file distribution system worldwide, but people also consume illegal content through linking sites (which aggregate index links to media content) and direct download hosts (which allow users to upload media files to cloud-based storage).

There has also been a surge in the number of video streaming host sites. Consumers now stream content more than they used to, which makes it harder for authorities to pursue the content thieves. The number of video streaming sites in 2014 was up 40% from the original report, and revenue grew significantly.

“The streaming trend looks like it’s going to continue because that’s where the audience wants to go,” said Mark Berns, vice president of MediaLink, which provides strategic direction to media, advertising, entertainment and technology industries.

“Ad fraud” has also become more prevalent. “Software bots that generate millions of impressions steal from the marketers who place the ads or ‘launder’ impressions by making it appear that ads are going to legitimate sites when they actually are on bad sites,” the report states.

Such content theft websites are also detrimental to visitors. An estimated one-third of the piracy websites that the report examined included links with the potential to infect users’ computers with viruses and other malware.

If people went to content theft website zumvo.com, for example, clicking anywhere on the page initiated pop-ups warnings, telling the user his or her browser and other plug-ins needed to be updated. Clicking could then create “a back door for other software that could launch denial of service attacks, gather personal data, or execute other computer programs.”

To combat the piracy industry, the report recommends that players in the private and public sectors take more action.

Trustworthy Accountability Group (TAG)’s Brand Integrity Program Against Piracy is one of the efforts highlighted in the report. It helps advertisers and their ad agencies avoid ad placements on websites that promote counterfeit goods or pirated content without their knowledge.

The report also cites the city of London Police Intellectual Property Crime Unit (PIPCU) as one of the most visibly active agencies to address content theft in the public sector. In November 2014, officials arrested two men on suspicion of leaking “The Expendables 3” online before its U.S. and Canada wide release Aug. 15.

PIPCU also maintains a list of sites, which ad tech companies can use to avoid placing ads on infringing sites. Another novel effort, called Operation Creative, replaced ads with warning messages on infringing sites.

“Raising awareness about content theft is important,” Galvin said. “The Internet is a community, and people have to understand where the risks lie.”

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