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FX CEO, NBC Universal Piracy Counsel: Online Ads a Piracy Problem

By Chris Tribbey

John Landgraf, CEO of FX Networks, had every reason to be upset when he recently ran across a piracy site offering a free stream of Avatar. And not just because it was stealing the property of sister company 20th Century Fox.

Running right alongside that illegal Avatar stream was a commercial for Volvo, Landgraf said, speaking at a recent conference. When a major brand has ads appearing on sites that deal in piracy, it offers legitimacy to those profiting off illegal content, he said.

“They look, for all intents and purposes, like legitimate sites,” Landgraf said, adding that FX has licensed its content to more than 300 legitimate digital distribution outlets. “It’s difficult for consumers to differentiate what’s legitimate and what’s not.”

While upsetting for content creators, it’s not necessarily something Volvo or other ad brands can control. Online ad networks connect both large- and small-scale advertisers — often buying blindly — to most any Web site that hosts advertisements, without those networks disclosing which sites those ads will appear on.

The digital advertising supply chain is host to all sorts of vulnerability, according to a recent report from the Digital Citizens Alliance (DCA), a nonprofit, consumer-oriented group that also advocates for Internet-based stakeholders.

DCA’s Feb. 18 report found that the 30 largest content theft sites will each pull in more than $4 million a year on ad revenue. The combined take of the nearly 600 illegal content sites DCA looked at is almost $227 million a year, with even under-the-radar sites pulling in $100,000 a year in ad revenue.

“These ad-supported rip-off Web sites are just a small sample of the sites that are profiting from theft, and with the Internet population growing so quickly we need to address this problem immediately,” said DCA executive director Tom Galvin. “Let’s be clear, the quarter of a billion dollars that these sites make from ads in a year is a huge sum, but it’s only a fraction of the financial losses inflicted on the creative economy and its workers. This goes beyond the old adage that crime pays.

Rick Cotton, senior counselor for IP protection for NBC Universal, suggested government and judicial avenues aren’t the solution, calling legislation and litigation “very blunt tools.” Instead, the content industry needs help from ISPs and those responsible for ad distribution, he suggested.

“If we sit back and let people, especially those outside of the United States, steal … we’re not looking at a bright future,” he said.

This isn’t a new issue: Google, Yahoo and several other major ad network providers agreed in mid-2013 to work with the nonprofit Interactive Advertising Bureau to keep legitimate ads off sites that offer illegal content. But that agreement still calls on the content owners to complain when the rules aren’t followed.

“We need more help from the [Internet] gatekeepers to fight this,” Landgraf said. “For blue-chip advertisers and the U.S. government to have their ads on illegal sites, it’s a problem we can’t control, and it must be addressed, sooner rather than later.”