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UPDATE: Chiat Day’s Confusing Messaging In Times Square Continues Redux

March 31, 2013 Comments off

Many years ago in another galaxy far, far away, I was part of a musician and composer crew that created tons of advertising for TV and radio.  Our story today begins when my group was up for a national ad campaign for a major retail brand.  Our version of the campaign was a very lean orchestral approach and featured a vocalist who now performs with one of the biggest artists in the world.  Conventional, yes, but really beautiful.

Our competition was an electronic dance theme–ok, call a spade a spade–a brittle and annoying masterpiece of triteness.  Really in your face and we knew it would jump out of the television speaker at frequencies that would make dogs all across the country go nuts.  (Always remember this old chestnut about television: People you will never meet really are inviting you into their homes, dogs and all.)

There were two creatives in the room with us, the other musicians and the account relationship manager.  The relationship guy would ultimately make the decision.  Our guy played our demo and tried to sell it, and the other creative did the same with the dance theme of which he said, “It really gets your attention!”

Long pause.  The account manager got up from the table and walked up to Mr. “It Gets Your Attention.”  He slapped the guy in the face.

“That got your attention, didn’t it?”  Pause.

“But did it make you like me?”

Remember, Chiat Day seems very interested in trying to explain their “PIRACY IS PROGRESS” campaign by claiming that the name of the campaign is “Artists vs. Artists.”

Like that changes anything.

So I happened to run across this image on the Chiat Day NY site.  I’d like to link to it, but they evidently took it down.

photo chiat day 2

What do they call the campaign?

Artists vs. Artists?

Apparently not.  Well, they sure got some attention.

They can Bitcoin, but it would break the Internet to stop brand sponsored piracy

March 31, 2013 Comments off

From Wikipedia

From Wikipedia:

Process

The steps to run the network and generate or “mine” bitcoins are as follows:

  1. New transactions are broadcast to all nodes.
  2. Each node collects new transactions into a block.
  3. Each node works on finding a difficult proof-of-work for its block.
  4. When a node finds a proof-of-work, it broadcasts the block to all nodes.
  5. Bitcoins are successfully collected or “mined” by the receiving node which found the proof-of-work.
  6. Nodes accept the block only if all transactions in it are valid and not already spent.
  7. Nodes express their acceptance of the block by working on creating the next block in the chain, using the hash of the accepted block as the previous hash.
  8. Repeat.

Nodes always consider the longest chain to be the correct one and will keep working on extending it. If two nodes broadcast different versions of the next block simultaneously, some nodes may receive one or the other first. In that case, they work on the first one they received, but save the other branch in case it becomes longer. The tie will be broken when the next proof-of-work is found and one branch becomes longer; the nodes that were working on the other branch will then switch to the longer one.

New transaction broadcasts do not necessarily need to reach all nodes. As long as they reach many nodes, they will get into a block before long. Block broadcasts are also tolerant of dropped messages. If a node does not receive a block, it will request it when it receives the next block and realizes it missed one.

So when it comes to making money for some people (and patenting the process, hello), they manage to come up with this incredibly complex system of verification.  But when it comes to brand sponsored piracy…oh, it’s too complicated.  Don’t want to break the Internet you know.

 

Where Did the Idea for Stopping Brand Sponsored Piracy Originate?

March 18, 2013 1 comment

I’ve had enough questions lately about why I started focusing on brand sponsored piracy that I thought it important enough to give credit where it’s due.  It all started with this quotation from Professor Eric Goldman, commenting on the dip in Google’s stock price after the announcement that it had dodged a career-ending indictment for promoting the sale of illegal drugs when the Department of Justice allowed the company’s executives to pay a fine with $500,000,000 of the stockholders money.

The Google drug dealing case was followed by a still-ongoing shareholder lawsuit that named, among others, the entire Google board of directors and certain executives including Larry Page and Sheryl Sandberg.  Yes, that Sheryl Sandberg.

Shareholder Suite

Here’s Professor Goldman’s money quote, so to speak from the New York Times:

“Web companies can be held liable for advertising on their sites that breaks federal criminal law, and Google and other search engines have faced similar issues over ads for illegal online gambling sites [see, e.g., “Poker Money and the Ethics Professor“]. Eric Goldman, director of the High Tech Law Institute at Santa Clara University, said the latest investigation raised questions about Google’s dependence on such sources.  ’How much of Google’s overall revenues are tied to product lines that are questionable?’ he said. ‘For investors, I think they just got a little bit of a jolt [after Google reserved $500,000,000 to pay its forfeiture in the drugs case] that maybe Google’s profits are due to things they can’t ultimately stand behind.’”  (emphasis mine)

Bingo.  They do the same on pirate sites.  Ergo, Google profits from piracy.  A lot.  And probably illegally if the DOJ can stop apologizing to Google long enough to do its job.

An interesting post from Jack Marshall on advertising industry site Digiday:

Visit the top torrent search engines, and you’ll find ad calls from Yahoo, Google, Turn, Zedo, RocketFuel, AdRoll, CPX Interactive and others. These sites exist to connect people with illegal downloads of intellectual property, a practice that’s estimated to cost the U.S. economy $20 billion in the movie industry alone. No matter your feelings about U.S. copyright laws, they are laws, and there’s no doubt these sites facilitate illegal behavior, even if they don’t house the content themselves. The oxygen that sustains many of these sites is advertising, delivered by the vast archipelago of the ad tech industry.

According to AppNexus CEO Brian O’Kelley, it’s an easy problem to fix, but ad companies are attracted by the revenue torrent sites can generate for them. Kelley said his company refuses to serve ads to torrent sites and other sites facilitating the distribution of pirated content. It’s easy to do technically, he said, but others refuse to do it.

“We want everyone to technically stop their customers from advertising on these sites, but there’s a financial incentive to keep doing so,” he said. “Companies that aren’t taking a stand against this are making a lot of money.”

Brand Sponsored Piracy and Award Shows: British Airways Delivers the ultimate insult to Adele

January 17, 2013 Comments off

As we have written before on MTP, brand sponsored piracy is the act of brands selling advertising on pirate sites.  Top brands like Fortune 500 brands.  This is what we have called the “unholy alliance”–the big search engines…ahem…drive traffic to pirate sites where they also have advertising publisher arrangements.  If you notice the carefully worded non-denial denials from Google and Yahoo! in reaction to the USC-Annenberg Innovation Lab’s first Transparency Report, you will begin to understand why some in the online advertising space call Google “The Paymaster of the Internet”.

If true, this raises an interesting question–however “complicated” it all is, somebody somewhere is supposed to be sending IRS Form 1099s to all whom they pay.  Otherwise, there are vast, undeclared sums of money being funneled to God knows whom.  If you believe the Electronic Frontier Foundation and Jimbo Wales, these are just kids in their bedrooms doing a little linking.  If you believe your eyes, these is a corrupt network participating in a herd of organizations dedicated to offering a variety of infringing works, including copyrights and design rip offs, drugs (both prescription and counterfeit), and “RUSSIAN GIRLS ARE DYING TO MEET YOU”.  Perhaps literally.  And while they may give away the music and movies for free to the end user, the site supports itself with advertising and subscriptions.

The net result is that there is a massive amount of money changing hands from brands serving advertising to pirate site ad publishers.  We know the money starts with the brand and ends with the pirate.  What happens in between the brand and the pirate is not really our concern–that is important to the Internal Revenue Service and the Federal Bureau of Investigation in the US, or Inland Revenue and the Serious Organised Crime Agency in the UK.  But what becomes very clear is that these ad networks are spokes in a wheel of corruption, heavily influenced by a criminal organization.  You know–a Racketeer Influenced Corrupt Organization.  Which on top of everything else may be engaged in tax evasion on a grand scale.

But the good news is that a lot of this information is the kind of thing that guys with badges and warrants are good at finding.

Adding Insult to Injury:  Brands that Advertise on Awards Shows and on Pirate Sites

In a recent post, How We Could Really “Thank the @goldenglobes”, @nbc, @tinafey123 and Amy Poehler: Should creator awards shows refuse ads from brands that sponsor piracy? we raised the question of whether it was appropriate for ads who want to get the big audience that the big awards shows can bring to be allowed to advertise on those shows if they also participate in brand sponsored piracy, knowingly or unknowingly.  The Trichordist noted that the Golden Globes sold television advertising by brands that also sold advertising on pirate sites offering black market copies of Adele’s music.  These included AT&T, American Express, Target and Nissan–but perhaps most gallingly, British Airways.

British Airways–the flag carrier of the United Kingdom, sponsor of the 2012 Olympics, trying to have it both ways just to get that audience that pop culture can deliver like no other.  And they don’t care that they are ripping off another British icon–Adele.  Not to mention Adele’s UK indie label XL, and icon in its own right.

If Google is the paymaster of the Internet, then it is likely that Google knows exactly which ad agency gets to sell in the legitimate side of their business and the illegitimate side of their business.

This is enough to drive our British friends up the wall.   It’s not enough that they produced Adele and added a zero onto worldwide record sales.  It’s not enough that they did this despite all odds.  It’s not enough that the most British of film characters, James Bond 007, still a strong brand thanks to long term copyright protection, is the vehicle for Adele’s most recent success with the soundtrack for the Bond movie Skyfall, and it’s not enough that Google is systematically playing an influence game in the UK to essentially destroy the very protections that brought value to both the Adele and the Bond franchises.

No, to add insult to injury–British Airways, flipping British freaking Airways bloody wants to dance on their graves and sell tickets to the Googleization of copyright in real time.

This really is “not on” as the Brits might say.  It’s very Googlely, but not very British.

It is just unfair, and it needs to stop.  Or be stopped.

adelebristishairmp3crow

How We Could Really “Thank the @goldenglobes”, @nbc, @tinafey123 and Amy Poehler: Should creator awards shows refuse ads from brands that sponsor piracy?

January 13, 2013 1 comment

I’ve got a little list — I’ve got a little list
Of society offenders who might well be underground,
And who never would be missed — who never would be missed!

From The Mikado, by W.S. Gilbert and Arthur Sullivan

The Golden Globes will kick off award season tonight, and I’ll be watching to see who wins but also for something else–who sponsors.  And I will be making a little list of those sponsors who find the audience desirable to compare to the list of companies that also find it desirable to advertise on pirate sites, particularly sites that pirate the Golden Globes.

I realize that it is a tricky thing to get a network ad sales team–let’s be honest, any sales team–to turn down money.  But isn’t this as good a time as any to make advertisers aware of the problem of brand supported piracy?

So how would you find sites that have illegal streams or copies of the Golden Globes?  Say it loud and proud–GOOGLE!  Just search Google for “golden globes 2013 torrents” and voila!  Kick Ass Torrents link is above the fold.

Google Golden Globes Torrent

We know Google is supporting the Golden Globes on The Pirate Bay!  Of course, that’s about as surprising as the sun rising in the East or the U.S. Government giving Google a contract and a pass on prosecution. And you’ll also find this link at Daily Motion:

Google Golden Globes Torrent Daily Motion

Which is essentially an ad for the Golden Globes on Watch Award Shows–sponsored by Snickers.   Watch Award Shows does not appear to be an NBC affiliate–got that out with a straight face.

So it’s already starting.  The eponymous Snickers is already paying money to support it through the willfully blind and perhaps otherwise legitimate video content aggregator Daily Motion.  Nobody knows anything, all will say their various contracts prohibit selling ads on illegal sites, and all will say they are happy to take down infringing links once they’ve been caught and want no other punishment.

And of course, Google caps its takedown notices at 3 million takedown a week that it acknowledges are 97% accurate, but wants you to believe that is evidence of heavy handed practices by creators and not evidence of Google’s profit from piracy.  Because ignorance really is strength, don’t you know.

If on the other hand you think that there is something wrong with promoting the soulless profit from the works of others, if you think that it is sadistic to force the creators–who just wanted to make a movie or a record or write a song and be left in peace–to chase these charlatans at great cost to the creators, if you think that its debased for advertisers to essentially sell tickets for all to watch this inquisition play out to the great profit of Big Tech…then maybe you also think that we shouldn’t let the brands who prop up the “new boss” system to advertise on shows that celebrate our best creators.

But maybe you don’t think so.  Maybe when you see a great movie win best picture, the overwhelming emotion you feel is–let’s go steal it!

The Piracy-Pandora Connection: Can the Super Bowl, Oscars and Grammys Move the Needle on Brand Supported Piracy?

December 20, 2012 1 comment

The Seattle Weekly’s Chris Kornelis has a thoughtful article today asking why artists came together to oppose the so-called Internet Radio Fairness Act but haven’t consistently been a united front against the unprecedented levels of online theft we’re all too familiar with (read “It’s Time for Artists to Fight Piracy as Vigorously as They’ve Challenged Pandora“).   This is actually a very insightful point because the alliterative piracy and Pandora are more connected than one might think.

Catching Up to the Google Propaganda Machine

Kornelis mentions David Lowery’s “Letter to Emily” which was almost universally received as a balanced and courteous discussion of the underpinnings of piracy as a culture and pointed out how successfully Big Tech has attempted to commoditize music and movies in order to sell hardware and Internet access.  Nowhere is this more prevalent than Google, which has built an entire litigation and lobbying strategy around crushing artists.   For example, this week Google announced it is receiving 3 million DMCA takedown notices a week for Google search alone–and that somehow that means that Google’s rights are being infringed.  What that should say to people is that if there are 3 million notices sent by copyright owners who can afford to track Google 24/7, there are an untold number of notices that could be sent by copyright owners who cannot.  Aside from the fact that Google has put arbitrary caps on the number of takedown notices that they will accept and those caps max out every week.

Those “have not” copyright owners are usually called independent artists.

And that doesn’t even count YouTube.

After the eye opening Google Shill List revealed the extent of Google’s financing of tax exempt front groups like the Electronic Frontier Foundation and Public Knowledge, trade associations and their attendant consultants like the CCIA, and Google’s efforts to disallow class certification for authors in the Google Books case so that authors could enjoy the freedom of suing Google individually on a work by work basis–you begin to get the idea of what the artists are up against.

And that’s just Google’s propaganda machine.

Why does Google spend what must be well over $1,000,000,000 by now on lobbying and litigation?  Because it profits them to do so.  All those DMCA notices?  That’s translates into traffic Google sends to pirate sites.  And we are told that it’s the artist’s fault by the former Grokster-Limewire and God knows who else lawyer Google hired from the EFF after a federal judge called him out for destroying evidence to help a massive infringer?  This guy has the brass to tell us that even though the notices are 97% accurate, it’s still our fault for fighting back?

Well screw that, I say.

The Piracy-Pandora Connection

The reason why it’s good business for Google to profit from piracy is because there’s a lot of profit in piracy.  Here’s how it works–Google sets up the pirate site with an Adsense account (just like they did for Megavideo) and that allows the pirate to sell its inventory to Google.  Adsense accounts may have once been vetted by humans, but even then the pirate could change the URL after they got the approval.  So Dimitri’s Kittens and Sunshine became a pirate site after a one-time approval.

Now that Google is working on the bottom half of the Alexa chart, they don’t make enough money from this large number of small inventory sites to justify human review.  So they just set them up automatically.

(Google isn’t the only ad network or ad exchange that does this, but they are the only one that spends hundreds of millions on litigation and lobbying to do it and they have a global monopoly on their particular corner of evil.)

And so is born the unholy alliance–Pandora and other legitimate services have to compete for the same ad dollars with pirate sites that have ads by Google and are served traffic by Google and offer the same content that the legitimate sites have.  So if you are Spotify or Pandora and you are trying to make a living from advertising, your real competition is not each other but is Google’s ad scheme–with pirate sites that pay no royalties.

If Google stopped serving advertising to the pirate sites, then those ad dollars would have to go somewhere.  But the glut of advertising drives down the pricing that devalues music and also makes it hard for legitimate sites to compete for the same advertisers who show up on pirate sites.

The Super Award Show Season Opportunity

Kornelis also put his finger on another important issue.  It doesn’t hurt to have a rallying point that is both a positive and a negative–we love Pandora, but we don’t like their bill.  We want to help them to be successful, but we won’t take a cramdown.

That worked out well for artists and I think that the IRFA messaging was excellent.  (Sorry, Tim.)

The ad-supported piracy issue is a little more complex, however, because so far the vast majority of people in the chain deny it’s happening.  But unfortunately for them, we have pictures.  USC-Annenberg is doing a corporate responsibility study.  Ben Edelman at Harvard has done a vast amount of work on this issue.  The unholy alliance is real and it is happening every second of every day.

I have frankly given up on getting ad agencies to take responsibility for their actions.  I can understand why they don’t want to voluntarily give up rebates on ad commissions they take by steering their clients to ad inventory that the clients don’t want.  (My advice would be to ask themselves whether they’d rather get reamed in Ad Age or in prison on a fraud beef.)

So how can we move the needle with advertisers who want to do the right thing?

In the first quarter of 2013 we will have a number of high profile advertising opportunities that feature prized advertising opportunities for sponsors.  I’m thinking of the Super Bowl, the Oscars and the Grammys, just to name three.  There are more.

None of these shows exactly have a problem selling spots.  So why should the NFL or the movie or music industry groups permit advertisers on their air who also sell ads on pirate sites that steal the very content that makes the shows possible?

And even if the first round of discussions is not a take it or leave it proposition, sponsors on these shows should definitely have a teachable moment.  A sit down with the players and artists whose livelihoods are affected by bad choices of these companies would be entirely appropriate.

It’s About Who Shows Up

These TV ads are sold by sales teams at the networks who buy the rights.  That’s done with a contract.  Part of that contract should require at least a meeting with the advertising sales team and advertisers at which these issues are discussed.  The networks are just as much victims of piracy as the artists are, so this should be an easy ask.  Standards and practices should include no advertising on pirate sites.

The point is that you can’t trust ad networks to take care of the problem.  They try to get us to “follow the money” through a labyrinth of ad exchanges, real time barter trading desks, cascades, waterfalls, and all the other obfuscation techniques that have resulted in the highly lucrative unholy alliance.

I don’t need to follow the money.  I can take a screenshot–I see a Fortune 100 brand advertising on a Most Wanted List pirate.  I followed the money–it comes out of the brand’s bank account and goes into the pirates bank account.  How that happens–not my issue.  Leave that to the guys with the badges.

And it shouldn’t stop with the award shows.  It should work its way through every aspect of our business.

This is an idea that’s well worth trying.

Chris Kornelis is on to something.

Snakes in the Kitchen: A Journal of How McDonald’s Does Its Bit for Brand Supported Piracy

November 12, 2012 Comments off

If McDonald’s “restaurants” had snakes and rats running through the kitchen, they would be shut down for health violations.   Instead of snakes in the kitchen, McDonald’s appears all too happy to let them loose in its advertising practices.

John Mellencamp summed it up nicely in his recent post:

[O]n top of everything, [piracy sites are] collecting advertising money from Madison Avenue.  So what’s happening is your search engine leads you to an illegal downloading site where you can download — you name the artist — their entire catalog and, at the same time, see products and services offered for sale ranging from soft drinks to pornography and, adding insult to injury, that merchandise appears to be endorsed by the artist to whom it’s attached.  The artist, who is already being stolen from, now appears to be shilling for these products.  The gangsters are making money, but the artist?  Squat.  (And I do mean gangsters.. this is not just a couple of kids file trading anymore, these are criminals, quite literally.)

So how does this work, exactly?

The Mad Mad World of Ad Supported Piracy: The Unhappy Meal Served Up to Artists by McDonald’s, Macy’s, Google and Levi’s

Let’s take Lyrics 007 as an example.  Some may not realize the value of lyric reprints (including digital lyric reprints) but if you thought about it for–oh, say 10 seconds or so–you would realize that lyrics are part of the song.  Songs are protected by copyright, so lyrics are, too.  If you want to use lyrics–like on Lyrics007 for example–you need a license and you need to pay a modest license fee.

However, a recent ruling against an illegal lyric site gives some idea ($6.6 milion) of the value of lyrics–which because they are text based are particularly useful for those in the keyword selling business.  So it should not be surprising that ad serving companies like Google sell advertising on these sites.  They are an SEO dream.  (Why do you think that Google tried to sneak song lyrics into the Google Books settlement?)

Our Communications with McDonald’s (2012)

On July 27, I noticed that McDonald’s ads were being routinely served to the well-known illegal lyrics site, Lyrics007.  I contacted the corporate communications office at McDonald’s North America and had an extensive conversation with the representative about how McDonald’s ads were being published on pirate lyric sites.  She asked that I send her screen shots of the illegal sites and McDonald’s advertising so she could show her boss.  I then sent the following emails to this person after that call:

Thanks for your interest, these are the screen shots we discussed.

The attachments follow:

[Note the the following screen shot includes the Lyrics007 Google ad publisher code and advertising client codes taken from a snapshot of the site’s HTML after a search for Maroon 5]

[Another page showing the Google ad publisher codes]

Each of these screen captures shows a McDonald’s ad in a different page against different lyrics.  One screen capture shows the code behind the html page demonstrating that Lyrics007 has a Google ad publisher account and the path that we were able to find is coming from Doubleclick (owned by Google) in many instances.  I included the Google Play, Macy’s and Levi’s screen caps to make the point that McDonald’s is not being singled out.

Part of the discussion I had with the McDonald’s representative involved pointing her to the work of Professor Ben Edelman in the area, so I sent this follow up email.  In a subsequent call, she said she would show these emails to her boss, so I resent the screen shot email with a link to Professor Edelman’s “Advertisers Bill of Rights”:

Thanks for your interest, these are the screen shots we discussed.

This is the link to the Ben Edelman article: http://www.huffingtonpost.com/benjamin-edelman/towards-a-bill-of-rights_b_500992.html

Despite the apparent interest, I heard nothing from McDonald’s.

McDonald’s Serves the Olympic Brand to Pirate Sites

Having heard nothing further, on August 1, I happened to notice that not only had McDonald’s continued to advertise on Lyrics 007, the company was now serving both their own ads and a 2012 Olympics campaign–which suggests that the ad publisher links were active as the Olympics was only just then underway.  I sent the following email and screen capture to the McDonald’s contact:

Dear Ms. ____

I write to you as an attorney who represents both recording artists, producers, independent record companies, songwriters and music publishers.  I also represent technology companies (starting with the original Napster) who wish to negotiate legitimate business models.  My work in trying to bring technology companies and rights holders together has taken me all over the world.  I have spoken about these issues at the US Congress, the UK Parliament and the OECD.  I am a member of the legal and legislative committee of the American Association of Independent Music, the indie label trade association (although I write to you as an individual and not on behalf of anyone).Never have I seen such a gigantic step backwards in bringing legitimate companies to market as I have seen with so-called “Web 2.0” pirates.  Advertising-driven piracy has produced what I believe to be one of the largest and most systematized organizations of fraud and deception in history.  I tend to agree with the U.S. Department of Homeland Security that many of these sites are run by organized crime.  Unfortunately, those charged with maintaining the integrity of brands like McDonald’s are, I believe, just as deceived as are the artists, moviemakers and other intellectual property owners whose works are sold in a vast black market of criminal proportions.

In addition to the screen captures I previously sent to you, I have now found another McDonalds’ ad on the Lyrics007 site that also features the Olympics logo (copy attached).  I have dealt with the Olympics several times in my career and I would be absolutely stunned if the IOC agreed to allow McDonald’s to trash the Olympics brand by including it in advertising on illegal sites.

Having said that, my initial reaction is that I wish there were anything particularly surprising about McDonalds’s situation.  Having been down this path before, I think I can predict what you will be told:

1.  No one knows anything at McDonalds.  It’s all a mystery.

2.  McDonalds’s outside advertising agency uses a variety of advertising networks, exchanges, auctions, etc., to deliver your advertising to a large inventory of websites.  “Millions” of sites, no doubt.  So many that they are impossible to police.  (This will be offered as an excuse for continuing the bad behavior, not as a rationale for why it is irresponsible to be in a position where you cannot control your brand—see “naked trademark license”.)

3.  McDonalds has a contract with an advertising agency that requires strict controls on McDonalds’s valuable brand and prohibits the brand from being served to a variety of places, including pirate sites that deal in infringing content, illegal drugs (i.e., drugs sold without a prescription or counterfeit drugs), illegal or fraudulent mortgage products, human trafficking sites including “mail order brides” and the like.

4.  McDonalds’s ad agency has a corresponding agreement with an ad agency or other intermediary or series of intermediaries all of which have made reciprocal promises to the advertising intermediary as the intermediary made to McDonalds.

5.  McDonalds’s reporting from the intermediary includes not quite enough information for the ad agency and McDonalds to be able to determine the particular sites where the ads show up, do not include screen captures, and generally lacks sufficient evidence for McDonalds to know that your advertising is being delivered to pirate sites.

6.  McDonalds pays for the advertising, and McDonalds’s payment is shared with all the intermediaries and the pirate site.

7.  No one ever audits the ad networks because no one wants to know.

8.  This process is repeated millions of times a day if not an hour so it is “impossible” to track—except everyone in the chain somehow gets a share of McDonalds’s advertising spend.  That part can be tracked just fine.

9.  This process is repeated for hundreds if not hundreds of thousands of other brands.

10. Everyone is happy because everyone gets paid—except the creators.

11.  No sale of intellectual property is a lost sale because all sales are monetized—for everyone except the owners of the intellectual property being sold on black market sites.

12.  McDonalds will point to some verification service like Double Verify (or as we call it, “Double Blind”), which I believe to be largely incompetent and is employed by the ad networks to make it look like they are doing something to prevent theft when in fact there is, if anything, more theft than there was before Double Verify.

Does that sound familiar?

The biggest ad networks are involved.  As you will note, Lyrics007 has a Google Adsense publisher account and many of the ads on its site are served by Google.  What the artists are told by companies like Google is that Google endorses a “follow the money” approach to catching illicit advertising sales.  They would like independent artists to spend the time tracing the ad revenue through a labyrinth of companies—a labyrinth which, by the way, I am told has suddenly gotten even more complex since the SOPA legislation was withdrawn.  Strange coincidence.

An increasing number of artists are of the mind that when they see a McDonalds ad on a pirate site, they will follow the money—to where it starts.  And it starts with McDonalds.  We know where it starts and where it ends.  We don’t really care how it gets there, how many noses are in the trough as the dollars make their way to the pirate’s bank account which always seems to be in China or the former Soviet Union (Lyrics007 is registered in China).  We know in this case that for whatever reason, McDonalds is the ultimate paymaster of what is no doubt a legion of thieves.  Whether McDonalds knows it or not.  And in this case, it appears that the ads are served by Google Adsense as Lyrics007 has a Google Adsense publisher account and many of their ads can be traced back to Google with little effort.

By the way—we agree with Professor Ben Edelman of the Harvard Business School that it is ultimately the McDonalds shareholders who are being ripped off just as much as the artists are.  McDonalds should not only be entitled to transparency in accounting but accountability from its advertising agencies.  McDonalds should be getting rebates when its ads show up in places that are damaging to its brand and that it never authorized.  Or I should say that you hope no one at McDonalds or acting for McDonalds ever authorized, and I have to bet that the IOC would agree with McDonalds use of its logo in this unsavory manner.

Berkeley journalism professor Ellen Siedler has written an excellent blog about this problem called “Pop Up Pirates” (www.popuppirates.com) in which she documents repeated instances of advertising served by Google on the Hong Kong-based Megavideo site.  If you recall from newspaper accounts, the FBI and the New Zealand police raided the multimillion home of Megavideo’s owner, Kim Dot Com on a federal indictment for violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”).  Dot Com is currently under house arrest awaiting extradition from New Zealand (where he bought a resident visa for $10 million) to stand trial in the U.S. for his crimes.

Dot Com’s federal indictment estimated that he made over $175 million in a few years using a scheme like the one I’ve outlined above.  Realize that Dot Com’s $175 million is his share of mostly advertising revenue that was split with adserving networks including Adsense and Adbrite according to the indictment.

You should also realize that there are many counts of money laundering included in the Dot Com RICO indictment, each of which is a RICO “predicate”.  No brands have been indicted yet under the RICO statute, but it is made for prosecuting that kind of network and the trial has not yet started.  (You may recall that RICO was the principle statute used by the FBI and the Department of Justice to prosecute the Mafia, Michael Milken and others for massive insider trading and money laundering.)

Another good example of this problem is in the area of pharmaceutical intellectual property infringement and violations of the Controlled Substances Act promoted and sustained by advertising sold by Google’s advertising entities.  Google paid one of the largest fines in U.S. history last year under a nonprosecution agreement following a years-long grand jury investigation into its advertising practices–$500,000,000.

Let me say that again—half a billion dollars.

US government agencies ran several different sting operations against Google that revealed that the company knowingly sold advertising that promoted the sale of prescription drugs such as RU 486, oxycontin, human growth hormone and steroids to name a few.  This sting was well-documented in reporting in the Wall Street Journal.

According to the U.S. Attorney for Rhode Island as quoted in the Wall Street Journal, the 4.2 million emails and other documents that Google was compelled to produce to the Rhode Island grand jury demonstrated that the knowledge and decisionmaking to promote the sale of illegal drugs went to the highest levels of the company, including Larry Page.  These drugs were sold in a variety of online “pharmacies”, including in countries that are the targets for Interpol’s Operation Pangea.

And yet if you go to Google search right now and put in the search term “buy oxycontin online no prescription” you will get Autocomplete suggestions (including “buy oxycontin online no prescription cheap”).  There are also paid search results and links to what are pretty clearly illegal pharmacy sites.  So not much has changed.  Except Google is participating in a White House effort to shut down illegal online pharmacies.  Like Double Verify, we are not convinced that this is a serious effort.  We will start to be more convinced when Google has done something as simple as clean up Autocomplete.

And of course, the Google shareholders pursuing a variety of shareholder derivative actions against the Google board are not convinced either.

So ask yourself—when an artist knows this information, what do they think when they see a McDonalds ad on a site that is selling their music or movies illegally or the music or movies of one of their friends?

They think you are in on it.  Can you blame them?

I would like to encourage McDonalds to understand the gravity of what your company is involved in.  What is necessary and would be welcome is for the brands to align with the artists, film makers, authors, songwriters, actors and others who buy your products and endorse your brands and really crack down hard on whoever is responsible for your ads showing up on pirate sites.

Harvard Business School Professor Ben Edelman has an excellent summary of the problem: http://www.benedelman.org/advertisersrights/ “Towards a Bill of Rights for Online Advertisers.”  (Note this was written in 2009—imagine how much of McDonalds’s money has been paid to the black market since then.)

Because I can assure you that when you research McDonalds advertising practices, you will find that the Lyrics007 ad is just the tip of the iceberg.  If you can get anyone in the chain to tell you the truth.

What is also necessary, and what I think would be truly commendable corporate governance on the part of McDonalds, would be for McDonalds to disclose how it has been unwittingly caught up in this corrupt organization and the steps it has taken to be sure—certain, preferably—that McDonalds has done everything to produce the result that no McDonalds advertising appears on illegal sites.

We are often told that artists should just give up because advertisers will make them play an endless game of whack a mole to stop the support of thieves by major brands.  I would suggest to you that two can play that game, and frankly McDonalds have a lot more to lose with the future disclosures.

But wouldn’t it be a much more productive to stop the flow of money to these illegal sites?  The artists want it to stop and I’m sure you do, too.  But only McDonalds is in a position to stop its own advertising spend that is split with illegal sites absent a court order.  Let the government prosecute the criminals for the past, but going forward wouldn’t it be infinitely more productive for McDonalds to get a rebate for these illegal advertising sales and for the artists to have the comfort that they have an ally in a fine brand like McDonalds?

I’m happy to discuss with you further if you like.

At this point, I decided to post the McDonald’s/Olympics logo story on MTP’s Wall of Shame.

The issue in this particular advertisement is that McDonald’s not only is trashing its own brand by adopting ad space on illegal sites, it’s also trashing a partner’s brand–the Olympics no less–by trashing both of them together.  Having dealt with the Olympics over the years, I can guarantee you that McDonald’s serving this ad in this way violated the spirit if not the letter of its co-branding agreement with the Olympics.

Yet McDonald’s did not reply, and did not remove the ads, either.

Asleep in the Executive Suite

Still no response from McDonald’s on September 5, so I sent an email to Heidi Barker, McDonald’s Senior Director of Global Communications.  McDonald’s investors and analysts will recognize her name as she usually is the media contact for McDonald’s investor relations.

I forwarded the email I had sent to the previous McDonald’s contact and also included the screen captures as well as a screen capture from a few minutes before I sent the email:

Dear Ms. Barker, I would appreciate a reply to the email I sent to [Ms. X] on August 1 following a telephone conversation.  McDonald’s advertising is still being served to the illegal site lyrics007.com as recently as today.  In addition to the screen capture of the McDonalds ad with the Olympics logo, I’ve also attached one from last night and confirmed this morning that the McDonalds ads are still being served to the illegal site.

As I’m sure you understand, when users arrive at the illegal site and see McDonald’s advertising, they are induced into believing the site to be legitimate by the air of legitimacy you provide with your brand.

I look forward to your explanation.

Thanks.

Now this is right about the time that The New Republic needs to listen up.  As John Mellencamp said in his Huffington Post piece, “So what’s happening is your search engine leads you to an illegal downloading site where you can download — you name the artist — their entire catalog and, at the same time, see products and services offered for sale ranging from soft drinks to pornography and, adding insult to injury, that merchandise appears to be endorsed by the artist to whom it’s attached.”

While Lyrics 007 is not downloading (other than illegal ring tones), you get the idea.  It sure makes it look as though it is authorized, and having brands like McDonald’s and the Olympicsbrands that are well known for zealously guarding their brand value–clearly ads to that appearance of authenticity of which John complains.

Begging to be on the Wall of Shame

Another month went by, and still no response from McDonald’s.  On October 13, I sent this email to Ms. Barker:

Dear Ms. Barker, I would appreciate a reply to the email I sent to Theresa Riley in your office on August 1 and the email I sent to you on September 5 regarding McDonald’s advertising on the illegal lyric site lyrics007.com.  I wish to call your attention to the recent $6.6 million copyright infringement judgment entered against a similar illegal lyric site http://www.dailymail.co.uk/news/article-2217281/Lyrics-site-fined-record-6-6m-copyright-infringement.html

In addition to the screen capture of the McDonald’s ad with the 2012 Olympics logo that your company allowed to be published on this illegal site, I’ve attached an additional screen capture from Lyrics007 from today featuring a McDonald’s advertisement for the McDonald’s Dollar Meal served to a page of Maroon 5 lyrics.

As I’m sure you understand, it is hard to understand how McDonald’s can comply with requirements of U.S. corporate responsibility and U.S. brand integrity with payments originating in the United States for advertising that supports theft and allows thieves to profit from copyright infringement wherever they may be located.

I’m sure you can understand that your continued failure to respond to these repeated legitimate inquiries could easily lead the reasonable observer to think that McDonald’s does not take these issues seriously.  If this is not the impression you wish to convey, I would appreciate a response.  What would be even better than that would be if McDonald’s stopped supporting theft by stopping your advertising on these illegal sites.

I have also attached a screen capture of the html code of a page from Lyrics007 that clearly references the site’s Google Adsense publisher account for your ease of reference (0919305250342516).

We will be posting a follow up to our several blog posts on the subject of McDonald’s advertising support for illegal sites, and I would very much like to be able to include a response from McDonald’s explaining that you have discontinued this advertising or your explanation for McDonald’s continued support of this site despite your knowledge.

Thank you.

In addition to the screen captures previously sent, I included the one above taken moments before I sent the email so Ms. Barker could see how the problem continued.

McDonald’s Still Silent

At this point, there was not any genuine belief that we were ever going to hear back from McDonald’s.  I had decided that they’d had plenty of opportunities to respond, even if it was to say they didn’t care.

I sent one last follow up email to Ms. Barker, who was out of the office, so I sent the same email through to her colleagues Becca Hary and Lisa McComb whom she listed as handling her matters in her out of office response:

I received an out of office reply to this email so am forwarding to both of you.

Dear Ms. Barker, I would appreciate a reply to the email I sent to [Ms. X] in your office on August 1 and the email I sent to you on September 5 regarding McDonald’s advertising on the illegal lyric site lyrics007.com.  I wish to call your attention to the recent $6.6 million copyright infringement judgment entered against a similar illegal lyric site http://www.dailymail.co.uk/news/article-2217281/Lyrics-site-fined-record-6-6m-copyright-infringement.html

In addition to the screen capture of the McDonald’s ad with the 2012 Olympics logo that your company allowed to be published on this illegal site, I’ve attached an additional screen capture from Lyrics007 from today featuring a McDonald’s advertisement for the McDonald’s Dollar Meal served to a page of Maroon 5 lyrics.

As I’m sure you understand, it is hard to understand how McDonald’s can comply with requirements of U.S. corporate responsibility and U.S. brand integrity with payments originating in the United States for advertising that supports theft and allows thieves to profit from copyright infringement wherever they may be located.

I’m sure you can understand that your continued failure to respond to these repeated legitimate inquiries could easily lead the reasonable observer to think that McDonald’s does not take these issues seriously.  If this is not the impression you wish to convey, I would appreciate a response.  What would be even better than that would be if McDonald’s stopped supporting theft by stopping your advertising on these illegal sites.

I have also attached a screen capture of the html code of a page from Lyrics007 that clearly references the site’s Google Adsense publisher account for your ease of reference (0919305250342516).

We will be posting a follow up to our several blog posts on the subject of McDonald’s advertising support for illegal sites, and I would very much like to be able to include a response from McDonald’s explaining that you have discontinued this advertising or your explanation for McDonald’s continued support of this site despite your knowledge.

Thank you.

And today?  (November 3, 2012)

Not only is Lyrics 007 featuring ads by McDonald’s, they’ve also added Sears.  The Sears ad is served by a company called Chango, a new entry to thievery on the Wall of Shame.

What this one-sided email exchange demonstrates to me–some major brands do not care about artists, do not care about corporate responsibility and will push their wares anyplace they can.

I would point out that I sent practically the identical email to BMW–and got an immediate reply with a high level of interest in how their brand was being corrupted.

McDonald’s has made a choice to promote theft.  When confronted with the biggest brands in the world supporting pirate sites based in China and outside the laws of John Mellencamp’s home country, what can an artist really do about it except speak out.

And the artists who dare to do that are immediately ridiculed by the likes of CNET and The New Republic.

How do they sleep at night?

If you would like to ask them, Ms. Barker’s email is heidi.barker@us.mcd.com and you can Tweet at them @mcdonaldscorp

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