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Goodlatte and Schiff and the Elephant in the Room

March 14, 2014

Winning the week:  This was a good week for independent artists thanks largely to the heroic efforts of Maria Schneider.  A majority of the members of the House of Representatives IP Subcommittee heard Google try to blame the victim and explain how their receipt of 200 million takedown notices a year was (A) consistent with the goals of the DMCA as drafted, (B) a demonstration of abuse by independent artists and major copyright owners alike, but most importantly (C) not sufficient notice for Google to have to change anything about their very, very defective product.

Chairman Bob Goodlatte and Representative Adam Schiff wrote this “Dear Colleague” letter regarding another piece of evidence released this week–Digital Citizens report on ad sponsored piracy.  This isn’t the first rodeo on this subject for Goodlatte and Schiff, so I think they’re probably getting a bit more than they care to of Google’s BS this week.

The elephant in the room?  How much does Google profit from theft?  That could be a good follow up question for members at this week’s hearing on DMCA.  Because it’s right on point:  The reason that Google perpetuates its absurd interpretation of the DMCA is because it profits them to do so.  The only question is by how much.

And PS:  It’s spelled R-I-C-O.

Online Advertising and Copyright Infringement: “Good Money Gone Bad”

From: The Honorable Adam B. Schiff

Dear Colleague:

We write to bring your attention to a recently released first of its kind study commissioned by the Digital Citizens Alliance and conducted by MediaLink on the revenues generated from online advertising by websites dedicated to copyright infringement. In the “Good Money Gone Bad” study, researchers analyzed traffic and advertising data for 596 sites that generate big profits by promoting stolen goods – i.e. movies, music, television, and other copyrighted content – online and found the sites generated an estimated $227 million in total advertising revenue in 2013 alone. As the president of MediaLink put it, “this is big business.”

The report concluded, “[t]he 30 largest sites studied that are supported only by ads average[d] $4.4 million annually” … and “[e]ven small sites can make more than $100,000 a year from advertising.” Addressing the last point, the study noted the low technical and financial barriers to entry for setting up a site dedicated to the theft of rights-protected content along with the ease of attracting an audience of consumers of “free” content.

These sites contribute nothing to the production of the goods they make available and exist solely to profit their owners and operators as opposed to providing any compensation to those who create and own the goods they steal so they generate enormous profits. Their margins typically range from 80% to 94%.

In many cases, the advertising that appears on these sites is from large, well-known brands that have no intention of being associated with illicit operators. But the appearance of instantly recognizable corporate logos not only supports these sites, it can also fool consumers into believing the site is a legitimate source for the content they seek.

The “Good Money Gone Bad” study underscores the large beneficial impact of effective voluntary commitments by good-faith actors in the online advertising ecosystem to “follow the money” and to act together to cut off the supply of dollars to sites that intentionally profit by promoting stolen goods.

The International Anti-Piracy Caucus, which we co-chair along with Senator Orrin Hatch and Senator Sheldon Whitehouse, was among the first to call attention to the growing problem of ad supported stolen content online, and to call on advertisers, advertising agencies, and advertising networks to adopt effective standards to cut funds off to sites that profit from stealing the hard work of creators.

We first highlighted the problems associated with ad supported content theft in a series of letters in 2011. Our efforts helped spur the American Association of Advertising Agencies (4As) and the Association of National Advertisers (ANA) to adopt best practices. The Caucus has also called upon the Interactive Advertising Bureau (IAB), which represents advertising networks, to adopt more effective controls to prevent ads from being served to sites dedicated to trafficking in stolen goods.

The full “Good Money Gone Bad” study can be viewed here. For more information on the International Anti-Piracy Caucus or to join our efforts, please contact Jeff Lowenstein in Rep. Schiff’s office or David Whitney on Rep. Goodlatte’s Judiciary Committee staff.


Bob Goodlatte                                                  Adam B. Schiff

                                       Member of Congress                                     Member of Congress

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