Ad-sponsored piracy remains a touchy subject within the music industry, although there has been some encouraging progress in the last year for cooperation between rightsholders and online ad companies (Google included) to whip big-brand ads off piratical websites.
What’s always been unclear is how much money those sites are making from ads, but now a study from US consumer group the Digital Citizens Alliance claims to have sized up the market.
Its Good Money Gone Bad report (PDF), published this week, examined 596 websites offering unlicensed music, films and TV shows, and estimates that their annual ad revenues are collectively $227m, with the 30 biggest sites averaging $4.4m a year.
The study also claims that nearly 30% of the large sites carried “premium” brand ads, while nearly 40% carried “legitimate secondary ads”. And it also suggests that the profit margins of these piracy sites range from 80% to 94%, thanks to hosting rather than licensing being their principal costs.
“This report confirms that content theft isn’t a cottage industry — it’s big business. Plain and simple, ad-supported rip-off sites are exploiting the Internet and advertising community to get rich,” claimed Digital Citizens Alliance boss Tom Galvin.
“The result is a damage to brand value for advertisers and serious harm to people who work in the creative industries.” The study used Google’s own DMCA removal requests data as its starting point when identifying which piracy sites to study: using those with 25 or more takedown requests as its baseline.
The report is useful for its breakdown of different kinds of piracy sites, both by type (BitTorrent/P2P, direct download host sites, linking sites and video streaming host sites) and by size (small with less than 1m monthly visitors, medium with 1m-5m, and large with more than 5m).
413 of the sites covered count as ‘small’, with 235 of those being linking sites. The 45 largest sites (7.6% of the sample) accounted for 62.5% of the aggregate ad revenues, while the BitTorrent/P2P category generated more than half of the total.
More reading: Google, David Lowery and the BPI talk ad-funded piracy