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Jan 30 Save the Date! T Bone Burnett in Conversation with Jonathan Taplin in Los Angeles on the Value of the Artist — MusicTech.Solutions

January 28, 2017 Comments off
T Bone Burnett
in conversation Jonathan Taplin on The Value of the Artist, and the Value of Art
Monday, January 30, 2017
8pm
Ann and Jerry Moss Theatre

New Roads School
Herb Alpert Educational Village
3131 Olympic Boulevard
Santa Monica, CA 90404

Reserve seating, click here for ticketing.

This will be an inspiring evening with two of the deep thinkers in the artist rights movement!

via Jan 30 Save the Date! T Bone Burnett in Conversation with Jonathan Taplin in Los Angeles on The Value of the Artist — Music Tech Solutions

What the FTC Should Know About Brand Sponsored Piracy and Google’s “Pinto Problem”

January 3, 2013 Comments off
lg4waits

LG Served to Filestube

A Picture Speaks 1000 Words

The Los Angeles Times published yesterday a story about the USC-Annenberg Innovation Lab first monthly report on brand sponsored piracy–the purchase by major brands of advertising inventory located on pirate websites.  This is one of the ways, for example, that Megavideo became such a megamoney enterprise.  Page 8 paragraph 18 of the Megavideo indictment tells us:  “Originally, the Mega Conspiracy had contracted with companies such as AdBrite, Inc., Google AdSense, and PartyGaming plc for advertising. Currently, the Conspiracy’s own advertising website, Megaclick.com, is used to set up advertising campaigns on all the Mega Sites.”

The study highlights the fundamental problem with the brand sponsored piracy–if you follow the money, big brands buy advertising that is served to users of pirate sites by a variety of means.  How the ad comes to be there is important, but following the money in this case is a lot easier than some in the chain–Google for example–would have you believe.  It starts with the brand and it ends with the pirate.  We have pictures.  Many pictures.

state farm

Visa and State Farm Insurance Served to MP3Crank

Follow the Money in Two Easy Steps

“Following the money” is a two step process, best illustrated by the screen captures readily available around the Internet.  Step one: It starts with the brand; Step two: it ends with the pirate.  What happens in between is something that can be known by observation and process of elimination, but the people who are best positioned to find out are the brands.  It is, after all, their money.  It is not Google’s money, it is not Yahoo!’s money, or anyone else’s money.  It is the brand’s money.  And the brand is entitled to know where it went.

For example–I expect that at some point, someone is going to ask to see Megavideo’s 1099s for all the users it paid for pirate films stored in cyberlockers.  Why?  Because a large portion of those users were in the U.S., and the U.S. would require that income to be declared.  You don’t suppose…gasp…dum dum dum…the users failed to declare that income on their tax returns do you?  You don’t suppose that Megavideo failed to report those payments–millions and millions of dollars of those payments over years and years by the look of it.

Which would you rather have?  A criminal copyright infringement case or a criminal tax evasion case from the IRS or Inland Revenue?

If you are a Kim Dot Com with a business located in Hong Kong, that may be jump ball.  But if you are a company like Levi’s, getting caught up in a tax evasion conspiracy case–that may well include money laundering charges, violations of the Patriot Act, Sarbanes Oxley disclosure and a host of other problems–a garden variety copyright infringement case may look like a port in a storm.  You know, a safe harbor.

Because once that ball starts rolling down hill, it may gather itself into the thing that brought down Michael Milken and Drexel–the Racketeer Influenced and Corrupt Organizations Act, or “RICO”.

Levi’s Gets the Memo

rumor has it elyrics

Levi’s and McDonald’s Served to eLyrics

This may explain why the Times reports that Levi’s took quick action:

Jeans maker Levi’s took swift action when Taplin presented evidence that the clothing company’s ads had appeared on file-sharing sites.

“When our ads were running unbeknownst to us on these pirate sites, we had a serious problem with that,” said Gareth Hornberger, senior manager of global digital marketing for Levi’s. “We reached out to our global ad agency of record, OMD, and immediately had them remove them…. We made a point, moving forward, that we really need to take steps to avoid having these problems again.”

Lyrics007 U2 Google Play

Google Play Served to Lyrics007

Note the difference between the Levi’s response and the Google response.  Levi’s went on the record, direct quote with source.  Levi’s didn’t call Google.  They called their ad agency.  As hard as it may be for the company or the tech press to believe, when it comes to brand sponsored piracy, what Google or any other ad network wants really doesn’t matter to the brand.  Why?

Because Google will sputter around trying to say that somehow they didn’t have any control over the operation of the Doubleclick ad serving technology (yet apparently can disable users of it).  They will start talking about what they knew and when they knew it, whether they profited from the knowledge, and so on.  That’s what usually happens.

For example, Google’s statement to the Times was telling:

“To the extent [the study] suggests that Google ads are a major source of funds for major pirate sites, we believe it is mistaken,” a Google spokesperson said. “Over the past several years, we’ve taken a leadership role in this fight. The complexity of online advertising has led some to conclude, incorrectly, that the mere presence of any Google code on a site means financial support from Google.”

Who said this?  Ah, yes.  the well-known “Google spokesperson.”  The Google spokesperson sure is everywhere these days.  This is a company that is so secretive, that reporters tell me they have to press hard to even get a name to go with a quote, particularly when it’s bad news.  (See Jane Hamsher’s story in Firedoglake.com “Google Pulls Utoopi Paid Sex App Marketed to Students From Google Play”.)

But more importantly perhaps, what did they really say?  That they have no control over their technology?  That it has a design defect of such magnitude that it permits the offshore money flow–the apparently largely undeclared offshore money flow of income in the hundreds of millions–from unsuspecting brands to operators of pirate sites?

According to Wikipedia:

In September 1971 the Ford Motor Company launched the Pinto [model]…. Through early production of this model it emerged that design flaws could result in fuel tank explosions when the vehicle was subject to a rear-end collision. Some sources even allege this safety data was available to Ford prior to production, but was ignored for economic reasons.

Either way, a major scandal followed with the leaking to San Francisco magazine Mother Jones of the notorious “Ford Pinto Memo”, an internal Ford cost-benefit analysis showing that the cost of implementing design changes to the subcompact’s fuel system was greater than the economic cost of the burn injuries and deaths that could be prevented by doing so. Subsequently some have played down the importance of this case, as Pinto explosion fatality estimates range widely from 27 to 900, with the lowest figures being allegedly in line with comparable fatality statistics for other car models.

Does this mean that ad networks have a Pinto Problem?  That their customers have no responsibility for any improper payments because of the “complexity of online advertising”?  As a wise man once said, beware of complexity because it usually means fraud is not far away.

As The Trichordist pointed out, Google’s statement is kind of silly–the qualifying use of the word “major” for example is actually quite hilarious if you like gallows humor (“To the extent [the study] suggests that Google ads are a major source of funds for major pirate sites, we believe it is mistaken,” a Google spokesperson said.”).   As The Trichodist correctly pointed out, does this mean Google is a major source of income but only for minor pirate sites?

Google’s use of qualifiers is silly, but it is also a rather chilling nondenial denial.  What does this mean in practice?  I’m trying to script the conversation between the Google sales rep and the brands’ ad agencies:  “We have this great network you should pay us money to be included in because LOL we have no control over any of it!!!”  And did an ad agency account rep respond with “OMG, that’s awesome LOLROFLMAOPUG!!! We’re so in!!”

lyrics007_google

If this Google Publisher code doesn’t mean Google paid the pirate, what does it mean?

Probably not–but only “probably,” because if you read the news stories about how Google sold the drug ads to the law enforcement sting that led to Google’s $500,000,000 fine and plea bargain for violations of the Controlled Substances Act, it’s actually quite believable that such a conversation took place.  Eric Schmidt, after all, refused to answer factual questions from Senator Cornyn concerning the contents of Google’s drugs plea agreement (a public document)–on the advice of counsel.

The Ad Industry’s Pinto Memo

So what was said between Google and its ad agency clients about where the ads were showing up and the degree of control Google had over its network?  What was said between ad agencies and other ad serving networks, exchanges, or real time barter operators?  And those conversations with ad agencies, I would submit, would be the where the “Pinto memo” lies that is no doubt being “obfuscated” as you read this.  (Obfuscation with lime seems to be a favorite over there.)

What kind of arrogance would lead a company to think that it could get away with this kind of blatant vileness?  The same kind that would lead it to think it could get away with marketing an escort app, selling drug advertising illegally and trying to twist 3 million takedown notices a week into a problem created by Congress?  Market dominance, perhaps?

It is important to note that Google is not the only network on the Innovation Lab’s list–just the only one that is the subject of multiple investigations for antitrust violations on several continents, not to mention several states.

It’s About the Brands

Fortunately, the USC-Annenberg report does not seek to assign liability for any of this, just to stimulate conversations because they followed the money from the brand to the pirate.  And that call from Levi’s to its ad agency was probably plenty stimulating.  What happened after that at the ad agency is anyone’s guess.

It’s very simple–do brands want their ads served to users on sites that offer unlicensed content and make no royalty payments?  If they do, the public has a right to know that they do.  And so does the IRS.

If they don’t, it’s their money and they can spend it how they like.  But don’t be surprised if the issue comes up the next time they want something from those who are harmed by their decision.

And those people would be the songwriters, artists, film makers, directors, actors, engineers, set designers and other creators who are watching their life’s work be stolen with brand supported sponsorship.

However, is that really necessary?  The Trichordist’s “Principles for an Ethical Internet” suggests we all enjoy “COMMON GOALS, BEST PRACTICES AND SOLUTIONS”–we had these relations with brands long before the Internet and certainly long before there were online ad networks.  I think we can figure this out.

u2unitedh33t-21

United Airlines on H33T

Thank you again @johnmellencamp: USC-Annenberg starts corporate responsibility study for brand-supported piracy

December 8, 2012 Comments off

MTP readers will recall our many posts about what we call “brand-supported piracy“:  The purchase of advertising inventory on pirate sites by major brands wishing to reach their target audience.  These purchases are often given effect through intermediaries, either big ad agencies with real time barter trading desks (similar to derivatives trading and just as unregulated), ad exchanges (like Google AdEx or Yahoo Right Media or Doubleclick aggregators like AppNexus), ad networks or ad serving companies like Google Adsense.  It is through the sale of advertising inventory that sites like MP3skull, Megavideo and Webzilla make their millions.  The brands include McDonald’s, BMW, Macy’s, Levis, State Farm, Toyota, Google Play, Ford, Cooper Mini, Target, Adobe, Alaska Air, Charter, 1800Flowers, Netflix and many, many more.

It’s easy to follow the money.  We know where it starts (the brand) and we know where it stops (the illegal site).  We know that the same music and movies are offered on illegal sites as are available on legitimate sites like Pandora and Hulu.  The big difference: Artists make nothing on the illegal sites, but the brands get what they want, the ad serving company gets its revenue that they split with the pirates.  And the ad agency commissions the whole thing.

The primary method of finding illegal content online is Google search, which drives traffic to illegal sites that publish advertising often served by Google (although recently Google has gotten more sophisticated at hiding its tracks through intermediaries).  And so the unholy alliance is formed:  Google sends millions of users to illegal sites and sells advertising on those sites through a series of intermediaries or real time barter trading desks, with prices that are propped up by the traffic that Google sends to the site.  Then Google uses its lobbying and litigation enforcer muscle to keep governments off the backs of all in the chain.

For example, here is a shot of the html code from an illegal site showing its Google Adsense publisher account number and slotting codes for Google to serve ads to the pirate’s inventory:

Lyrics007 Google Ads Code 1

The corrupting effect of this unholy alliance is extensive:  Who can say how much of Google’s profits are attributed to income from illegal sites?  What restatement to earnings would be required if Google were to stop profiting from the unholy alliance?

John Mellencamp brought attention to this problem in his seminal Huffington Post editorial and David Lowery has also been a strong opponent on his Trichordist blog.  Artists are starting to call out the real bad guys.

We are told by those participating in this unholy alliance that the problem is “too big to fix” because it involves millions of sites.  What portion of Google’s earnings does this represent?  We know that Google avoided being criminally indicted by a Rhode Island grand jury for selling illegal drug advertising in violation of the controlled substances laws.  That cost Google $500,000,000 and the decision making went as high as Larry Page.  When you have top executives submitting 4 million documents to a grand jury and paying the largest fine in American history to avoid going to jail, that’s pretty clearly part of Google’s business model.

So one category of advertising cost Google $500,000,000–and they got off cheap if you ask me.  (Google is now being sued by its stockholders for falsely overstating its earnings and using company money to pay a private fine properly paid by its executives–but that’s another story.)

Google oxy

As you can see from the screenshot, $500,000,000 and several shareholder lawsuits against Googlers Eric Schmidt and Sheryl Sandberg (or as we call them around MTP, the “Oxycontin Twins”) didn’t make much of a dent in Google’s business practices, demonstrating that arrogance of monopoly that defies governments.  Not to mention demonstrating what seems like a pathological desire to profit from human misery (see Google’s “Utoopi” sex club app debacle “Google Pulls Utoopi Paid Sex App Marketed to Students From Google Play“).

And let’s be clear–when talking about liability in this context, I don’t mean liability for copyright infringement (although I wouldn’t rule it out).  I’m really thinking more of contractual liability.  Because every major brand will tell you that they have contracts with their ad agencies expressly forbidding serving their advertising to sketchy sites.  And the ad agencies have contracts with the ad exchanges or ad networks that do the same and so on and so on.  So somebody is clearly in breach because there are pictures of the ads showing up on illegal sites.  And then there’s the shareholder liability for the ad serving network.  See, nothing up my sleeve.  No copyright infringement, so safe harbors won’t help.

Google Play 007

The corruption, however, is not just at Google–it is also at the brands that are part of this complicit community.  Thankfully, the USC-Annenberg School has initiated a study into naming the brands that support piracy (and by implication their advertising agencies (like say a WPP) ) as well as the ad networks that serve the ads.

Spearheaded by Professor Jonathan Taplin at the University of Southern California Annenberg Innovation Lab, the research will come soon, and according to The Drum will “produce a monthly report in order to shame brands and their advertising networks away from backing piracy entertainment websites.”

The report will begin to roll out from January 2013, entitled ‘The USC Annenberg Advertising Transparency report’ in an attempt to damage the amount of advertising spend that goes to pirate movie and music sites around the world.

“It is an attempt to bring a little transparency to the ad network business, which is the wild west in a weird way. It’s not really very clear how there’s an audit trail for advertisers to know where their ads are going, who’s watching them…hopefully it’ll be a way to bring a little clarity to that situation,” Taplin told The Drum after speaking at the Monaco Media Summit.

The report will be compiled by three companies which will research pirate music and film websites, with the HMTL coded advertising allowing the researchers to scrape the adverts to discover which networks are supplying the adverts, Taplin explained.

“I’d like to see more money flowing into legitimate advertising supported content sites and less flowing into criminal enterprises,” he explained of his core intent.

“Brands don’t want to be associated with supporting piracy, they have no interest in that whatsoever because the ads on those sites are so cheap they slip below the radar. But the total amount of money flowing into it is really rather astonishing. Last year Google had to surrender to the US Government $500m for ads that they had been promoting on illegal Canadian prescription pharmacy sites. If it was $500m for drug ads, think how much there will be surrounding movies, video games – it boggles the mind.

“It’s an international problem. Our initial research has found that these sites are run in places like the Ukraine by people who aren’t in it for the love of art.”

This is great news and we’ll be keeping an eye on how it develops.  When you’ve got them by the bucks, their hearts and minds will follow.

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