• by Karlene Lukovitz  @KLmarketdaily, August 26, 2021

Entertainment companies, producers and all who have a financial stake in movies, TV series and even streamed sports events are losing billions each year to pirated content accessible through rogue apps and websites.

As noted by The Wall Street Journal, it’s difficult to determine how the practice of releasing some films on streaming services on the same day as in theaters may have affected the overall volume of piracy.

However, the numbers do show an upsurge in piracy since the pandemic, when lockdowns drove an explosion in at-home video consumption, shuttered movie theaters, and also inspired the advent of so-called “day and date” releases.  

Perhaps most to the point, experts do say that digital distribution has made it easier for bootleggers — who once had to resort to making fuzzy copies off theater screens — to make high-quality copies of movies. And many of those are now turning up on illicit sites and apps within hours or days of their debuts.

According to piracy-tracking company Muso, visits to illegal streaming sites by U.S. and U.K. residents leapt by 31% between February and March 2020, the initial lockdown months. Over the full year, piracy sites attracted 137 billion visits, reports the Alliance for Creativity and Entertainment, an anti-piracy advocacy group funded by media companies.

And while day and date releases served to bring in new-subscriber and premium video-on-demand revenue for platforms like HBO Max and Disney+ during the movie theater shutdowns, pirated copies can only equate to losses for all legitimate parties concerned.

What’s gotten less attention is the role that major tech platforms and advertisers are playing in supporting the piracy boom — and the growing role of apps in this scenario.

According to a new report by anti-piracy tech company White Bullett and the Digital Citizens Alliance web-safety coalition — based on a year of investigation of the content theft business model and how it generates ad revenues — the criminals who distribute bootleg copies of movies, TV shows and other content  are reaping an estimated $1.34 billion in annual revenues through advertising on websites and illicit streaming apps.

The top piracy websites generate $1.08 billion in global annual ad revenue, with the top five of those sites making an average $18.3 million in ads. These sites change domains frequently and redirect to avoid enforcement and bypass advertising blocklists.

The top piracy apps generate less money than sites — an estimated $259 million total in global annual ad revenue (and an average of $27.6 million per year for each of the top five apps) — but they’re growing more rapidly.

Since apps “appear to be more profitable than websites (commanding high advertising bid values and generating greater margins), they are likely to continue to proliferate,” notes the report.

The investigators identified more than 84,000 piracy sites and apps, and found the brands that place the most digital ads overall, which include many of the Fortune 500 companies, "are among the key revenue sources for pirate operators."

Perhaps not shockingly, ads for Amazon, Facebook and Google accounted for 73% of all major brands that appeared frequently on piracy apps during the investigation. “That means these three companies are supporting these piracy operators with potentially tens of millions of dollars in advertising on piracy apps alone,” says the report.

Over the past eight years, concerted efforts by some major brands to stop their ads from showing up on illicit sites have resulted in real progress — but the shift of pirated content to apps now threatens to undermine that progress, according to the report.

In fact, “due in large part to the proliferation of advertising on piracy apps, these major brands paid pirate operators roughly $100 million in the last year to advertise on their platforms," and "one in four ads on piracy apps are from well-known companies.”

In addition to siphoning off revenue from content creators and legitimate owners/distributors, ads appearing on piracy apps or sites pose reputational risks for major brands.

The report points out that a recent, significant decline in Amazon-branded ads showing up on piracy apps and sites demonstrates that the piracy issue can be addressed “when a brand makes it a priority.”

However, effectively battling “an illicit rogue advertising market” will require “the collective efforts of government regulators, law enforcement, the advertising ecosystem, Major Brands, and consumer protection groups,” say the researchers. “That means ensuring that well-known companies are alert to how their advertising is misused, encouraging law enforcement to use the new anti-piracy streaming statute to crack down on criminals, and promoting a renewed vigilance and responsibility by ad networks and intermediaries to protect their clients and their own reputations.”

Digital Citizens says it plans to use this initial study to educate key audiences about the scope of the ad-supported piracy market and its impact on online safety and trust.

The research’s co-sponsors are also preparing a follow-up report that will “delve deeper into how piracy advertising is promoting fraud and malware that are increasingly worrisome to both consumers and businesses.”

In short, while I’m not promoting any particular organization or vendor, I’d recommend reading this free report, if you haven’t already.

PS: Last year, a report from Digital Citizens and content protection firm NAGRA found that pirates were selling more than $1 billion in illicit subscription services. Which brings the estimate of total illegal advertising and subscription revenues being generated to $2.34 billion per year.