News

Experts: Illegal Streaming Sites Pull in Major Ad Money (CDSA)

By Chris Tribbey

LOS ANGELES — A year ago, the nonprofit Digital Citizens Alliance (DCA) — a coalition of businesses and Internet experts focused on the threats consumers face online — released a study finding that online piracy sites pulled in more than $4 million each annually, just from legitimate ads.

In the next couple of weeks the Washington, D.C.-based DCA will release a similar study, looking at approximately the same number of sites dealing in illegal content. But while the number of sites in the study has barely changed, their overall make-up has, according to DCA executive director Tom Galvin.

More illegitimate sites today are relying on streaming, not downloading, he said at the recent Digital Entertainment World conference. And while half of the sites in DCA’s 2013 study are shut down, they’ve been quickly replaced by an almost equal number of URLs, destinations for illegal content that make money off legitimate advertising.

“Imagine the [problems] in law enforcement [when] half your criminals change every year,” Galvin said about DCA’s findings, which point to a 5% jump in illegal streaming sites between 2013 and 2014, with all piracy sites presenting a one in three chance for malware for Internet users.

Just like the February 2014 study, this year’s will show that a huge portion of ads on piracy sites come from legitimate brand advertisers. And because the sites rely entirely on the works of others, profit margins can be as high as 90% for the site hosts, according to U.S. Rep. Judy Chu (D-Calif.), co-chair of the Congressional Creative Rights Caucus.

Mark Berns, a VP with strategic advisory firm MediaLink (which conducted the DCA studies), said the 2014 results show an alarming rise in piracy streaming sites. More operators of illegal piracy streaming sites are taking advantage of consumers’ behavior online, he said. “The whole move to streaming films is a societal trend [and] piracy sites have an opportunity to take advantage of higher CPMs [cost per thousand impressions] for ads,” Berns said. “And as demand increases, price increases.”

To help protect brands from unintentionally advertising on piracy sites, a collation of ad groups under the Trustworthy Accountability Group (created by the Association of National Advertisers, the American Association of Advertising Agencies and the Interactive Advertising Bureau) banded together this month to launch the “Brand Integrity Program Against Piracy.” The goal of the endeavor, according to TAG CEO Linda Woolley, is to help advertisers and ad agencies “avoid damage to their brands from ad placement on Web sites and other media properties that facilitate the distribution of pirated content … .”

The group offers companies advertising online tools and services that identify and prevent ads from running on sites that deal with piracy, with the Recording Industry Association of America (RIAA), Motion Picture Association of America (MPAA), Independent Film & Television Alliance (IFTA), CreativeFuture and other content groups offering support of the coalition.

For an example of how badly online piracy streaming sites affect Hollywood, look no further than Millennium Films. Mark Gill, president of Millennium, said that following the online leak of a high-quality version of Expendables 3 last July, there have been nearly 61 million downloads of the film, he said. Peer-to-peer sharing of the film has represented 53% of the theft, compared to almost 15% streaming, he added. The remainder of the film’s theft was attributed to direct downloads, he said.

And more than 80% of the online theft of the film came from overseas, he added. “We’re getting crushed by people outside the U.S. stealing our best export,” he lamented.