Welcome to the Diaspora
We’re pleased to see creators around the world coming together to call out the big corporate brands whose online advertising campaigns–either through design or neglect–put money in the pockets of the really bad guys out there. It is not for nothing that many of the big sites dedicated to thievery are located in many of the same countries targeted by the “Internet Freedom” crowd. Whether these sites are kicking back to the PLA or the Kremlin, to local thugs or international crime syndicates, there’s a reason why the servers are located where they are.
And as we saw from the Kim Dotcom indictment, the government alleges that Megavideo had direct accounts with Adsense and Adbright in its formative years, and then started their own ad exchange. Which as we have seen does not mean they are no longer served ads by Google–it just means that Google can say they don’t do business directly the the Megavideo site. As film maker Ellen Seidler has taught us, Google ads were all over referring sites that linked to Megavideo including many on Blogger.
Creators around the world are now beginning to understand this direct connection between the brands that consumers have come to trust and the massive profits of thieves, frequently backed by organized crime. You will frequently hear from these brands and their ad agencies that the brands have contracts that prohibit publishing advertising to unsavory websites. That’s true, just like the laws prohibit advertising drugs to teenagers, fake green card lotteries, counterfeit cigarettes, and copyright infringement. Yet users of the sites are induced to download whatever is available on them.
The truth is that the size of the advertising market permitted by the interlocking contracts starting with the brand and ending with the pirate site is probably 20% to 50% smaller if you eliminate the prohibited ad publishers. In other words, if the advertising networks–like Google Adsense or Google Doubleclick–could only place ads on permitted sites their financial projections would be way, way off.
This issue has come up in the shareholder suit against Google over the $500 million fine the company paid for advertising illegal drugs.
But the real downside for Google and all of the intermediaries is if they had to issue rebates to the brands for ads that the brands paid for unknowingly. This could be a massive restatement of earnings that could cause a significant drop in the stock price.
So creators need to understand what they are up against in their struggle. Yet this message is getting through to many, many creators around the world despite the hush money paid to keep the issue out of the news.
Danuta Kean’s Action Plan for Authors
British author Danuta Kean published “The Big Online Ripoff” on the ALCS website, an excellent call to action for UK creators ripped off by brand-supported piracy (actually any creators, not just UK creators). You should read the article in its entirety, but here are a couple of pieces that jumped out for me:
Contrary to popular belief, illegal filesharing sites are not shoestring operations run by penniless kids. They require vast servers to host stolen content. They also require huge bandwidth to handle the illegal downloads. Even start-ups – let’s call them small town dealers – need computer equipment, software and broadband services that cost considerable amounts of money. To pay for their operations, traffickers use two revenue models: paid-for premium subscriptions that enable faster downloading; and display advertising – often supplied through Google Ads[sense/ Doubleclick or Adbright as alleged in the Megavideo indictment] – which appears as content downloads.
The revenue raised is eye-watering. When the executives behind file-sharing site Megaupload were indicted for copyright violations, racketeering and money-laundering, the indictment left many authors (average income £7,000 and falling) slack-jawed at the money involved. The FBI accused the seven executives, including CEO Kim Dotcom (yes, seriously, that is his name) of amassing $175m since the site launched in 2005. In 2010 Dotcom took home $42m; another executive earned $9m. Among seized assets were a Lamborghini, a Maserati and 15 Mercedes cars with personalised number plates including the legends “STONED”, “GOOD”, “BAD”, “EVIL” and “GUILTY”. Oh, and a Rolls-Royce Phantom (list price £250,000 to £300,000) bearing the number plate “GOD”.
Not surprisingly, this apparent bravura display of Megaupload’s economic power is not among propaganda spouted when the Open Rights Movement….Instead, they prefer to put about the myth that traditional creative businesses – film companies, book publishers and record company executives – are the greedy exploiters in this market.
Danuta also did great work in boiling down the work in this area by David Lowery and The Trichordist into a six point plan that I commend to anyone interested in extending the Wall of Shame in your country. There are groups in other countries springing up as I write this and we hope to soon be announcing plans in other countries to stop brand-supported piracy.
This is very simple–brands should not be sustaining theft and at the same time enjoy the benefits of the free markets undermined by the very theft they support. This is not just hypocrisy, this is true evil. Major brands owe it to their stockholders to demand the rebates they are entitled to if they have been deceived by ad agencies and ad networks, and if the brands knowingly colluded, then those executives who are responsible should be fired and prosecuted.
If we all pull together, then we can move the needle on piracy almost overnight.
As an old country prosecutor once told me, “If a man who chose to do wrong also chooses to renounce evil and make his contrition, then he should be shown mercy. But if a man who chose to do wrong should choose not to make his contrition, then may God show him mercy, because the people will not. And neither will I.”
This is the kind of thing that usually produces mockery from the free culture crowd, Lawrence Lessig and Michael Milken. Or actually, it used to produce mockery from Milken, but no longer. I wonder why?
The clock is ticking down to high noon. Time to pick a side.