Study: ‘Content theft’ a quarter-billion dollar ad revenue industry

By Josh Peterson | Watchdog.org

Content theft over the Internet using BitTorrent and other file-sharing methods is big business, and advertising revenue is the driver.

Content theft websites generate some $227 million in advertising revenue annually, according to a report published by the Digital Citizens Alliance, a DC-based “consumer-oriented coalition.”

The study, conducted by advisory firm MediaLink LLC during the third quarter of 2013, found the most heavily trafficked peer-to-peer file sharing websites generated $6 million in annual revenue facilitating content theft.

The study specifically named ThePirateBay.se — one of the most famous file sharing sites — as one of largest networks file-sharing networks.

“The 30 largest sites that profit exclusively from advertising averaged $4.4 million annually,” wrote Digital Citizens Alliance, calling the data point one of the reports “troubling conclusions.”

Small sites could make more than $100,000 in annual ad-generated revenue.

While past studies focused on how digital piracy hurts creative industries, MediaLink’s study provides insight into the profit motives of content theft site owners.

Since little money is spent on overhead, profit margins range from 80 percent to 94 percent, according to the study’s findings.

Tom Galvin, executive director of Digital Citizens Alliance, in a news release promoting the study said that ad profits are “the tip of the iceberg.”

“These ad-supported rip-off websites 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 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,” said Galvin.

In 2011, the Recording Industry Association of America, a music industry trade association, reported that content theft negatively affected the U.S. economy — with hundreds of thousands of jobs lost every year, and cost governments and industry billions of dollars in lost revenue.

“This goes beyond the old adage that crime pays,” said Galvin.

Contact Josh Peterson at jpeterson@watchdog.org. Follow Josh on Twitter at @jdpeterson

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