Ad-Funded Piracy Dissected In The UK

[J.Stash]

Ad-Funded Piracy Dissected In The UK

David Lowery, a well-established musician, Martin Mills, founder of the Beggars Group, the BPI and several other representatives, including Theo Bertrand, representing Google in the UK, have discussed the delicate subject of ad-funded piracy.

Two days ago, the aforementioned, plus Alexandra Scott, public policy manager at the UK-based Internet Advertising Bureau, James Barton, artist manager at The Blue Team and the University of Southern California’s Annenberg Innovation Lab met at the University of Westminster (London) to address the thorny issue of ad-funded piracy.

David Lowery, the 53-years-old songwriter, producer, label founder, and programmer, started by underlining that “I’m not unsympathetic to the views of the technology industry, because I’m a part of it.”

However, he went on by explaining that, despite his deep understanding of how technology works, there are some problems hiding beneath the surface.

“Artists have always been exploited… it wasn’t right then, and it isn’t right now,” Lowery continued.

He’s referring to the 1950’s, when artists were abusively “milked” by exactly those who were supposed to protect their rights – the labels.

Ad-supported piracy is pretty much the same, the musician believes.

“This new ad-supported piracy is kinda 1950s music business, except you don’t get the Cadillac! In fact, it’s actually worse than that. Cadillac, which is made by Chevrolet, actually exploits it.”

While the entertainment industries, at least on US soil, blame Google for not doing enough in this war against online piracy, Lowery acknowledges that the search engine is not the “worst offender” when it comes to ad-supported piracy.

“They’re just here to defend themselves!” he noted.

To back his claims, Lowery gave three examples of how unlicensed music becomes a source of revenues.

Type “Call me Maybe” (by Carly Rae Jepsen) in Google’s search bar, and a list of unlicensed websites will show. Six of these portals proved to currently have ad contracts with Google or DoubleClick, which also belongs to Google as a subsidiary company.

In the case of iTunes, Lowery said:

”You don’t get legitimate sites. You don’t even get Google Play until the second play.”

The artist went on to display examples of how ad-funded piracy can lead to a dangerous slope.

“If the future of music really is access to songs rather than owning as many as we do nowadays, those services are all advertising-supported, and they’re competing with these illegitimate sites for these ads,” he continued.

“Spotify and Pandora should have probably rightfully got that advertising money.”

In his opinion, tech companies and entertainment companies, along with artists and content creators, should build a strong connection.

“We should just think of this as a society.”

“Just from the point of view of what is good for your country if you think of your country as a business.”

Last but not least, Lowery brought up another interesting fact – tech companies’ revenues (Google, Apple, and Amazon specifically) between 2001 and 2012 went up, up, and away – 58.319% for Google, 3.396% for Apple and 2.0% for Amazon, while the US music industry felt a decisive drop in revenues – 64% between 2000 and 2012.

Alexandra Scott had something to say as well.

“This is a huge industry. We’re talking about hundreds and hundreds of players here. It’s not always obvious to those players where that advertising is going. There’s a huge amount of work that we’re undertaking to address that.”

Sam Shemtob, moderator of the debate, asked Alexandra why are there so many “middlemen” when it comes to online advertising. To that, Scott said:

“Often those middlemen are helping to make advertising more efficient, more targeted and more relevant.”

“I don’t think we want to do away with that, because that innovation is helping to drive the business… Obviously there are concerns about where that advertising is going to appear… It’s not something that’s easy to address: there’s no one-size fits all.”

Feeling that there’s much to say about this, Lowery drew yet another interesting question: why aren’t companies like Apple or Coca-Cola showing up on pirate or adult-oriented websites?

“If Apple does it, if Coca-Cola does it… There seems to be some way of controlling that. My take on this is that when things get more complex, it’s to insulate institutions and individuals from the liability of bad things that happen. In fact, usually what they say in the financial services system is complexity is fraud! Don’t you think that some of this complexity is to remove liability for the major corporations?” the musician asked.

Scott answered:

“No. I don’t think this is a way of people hiding behind things. If we look at advertisers, it’s their prerogative to say ‘I don’t want to appear against certain types of content’… Where there’s been a difficulty, particularly here in the UK, is what is an infringing site?”

“Coca-Cola may say ‘we only want to work on a white-list basis, we only want to appear against certain publishers,” she continued, while admitting that there could be “huge reputational damage” for brands to pop-up on shady (read pirate) websites.

“They don’t want to be going on these sites. They’re just not always aware of the issue. They don’t necessarily know it’s happening until there’s a crisis… I don’t think that people actively seek out these sites to go and advertise on… Eyeballs isn’t the only thing for advertising: it’s all about context,” Scott said.

This is where Theo Bertrand (representing Google) felt compelled to add his opinion:

“It does seem to me to be an entirely sensible way to tackle piracy… most people doing piracy are not some guy in his bedroom altruistically sharing music with his friends. It’s people making money out of piracy, and it’s big business: some of these sites have 2m visitors regularly, and they’re not doing a bad business from advertising.”

How about YouTube and Blogger?

“If people have got content up there that is unlicensed and infringing, that would be a breach of our rules,” he said, citing YouTube’s ContentID system – “which cost us about $30m to develop” – which matches music within videos to a library of licensed songs, for rightsholders to claim, and then either leave alone, make money from ads around it, or get it taken down,” Bertrand continued.

“We’re seeing a huge rise in the number of takedown requests,” he said.

“The BPI are still number one or thereabouts in the amount they take down.”

As far as advertising is concerned, Google’s research (published last year in the UK) found that two thirds of the visited [by UK citizens, naturally] pirate sites are funded by advertising.

“You can tell then that there is some work being done by the far bigger share of the industry that is adhering to industry codes to stop putting ads on these sites than those who pay no heed to these things,” Google’s representatives continued, while agreeing with Lowery’s idea that brands could constitute a good start.

“Getting them to say ‘I’m going to be really clear with you: I don’t want you to put advertising on these sites, I do want you to put advertising on these sites’.”

He went on to clarify that once an ad has been served, Google’s (and companies alike) obligation is to “take it down” when the case requires it.

“We’re doing that at record levels, but we know we need to do more,” he said.

As for Google’s search advertising, which is most of the company’s business, Bertrand said:

“We capture people at a moment of intention. If I want to buy a set of new glasses, and I go on to Google and I put ‘wine glasses’ or ‘new tumblers’, the reason that’s of value to an advertiser is that Facebook might know lots about you – you’re somebody who drinks a lot of wine, likes glasses, but it can’t capture you at that moment where you’re looking to buy that thing.”

“If you’re an advertiser, that is when you want to capture someone. So the value of search to advertisers is we are there at the moment of intent. I don’t know if you type in music, there’s lots of adverts that come down at the side… I don’t think the search advertising part is really the problem here.”

“And the only way you get that scale is if you get the big brands.”

In other words, brands should take responsibility.

“If we manage to drain the swamp so it’s only the dodgy brands and the dodgy agencies that appear on the dodgy sites, I think we’ll have done enough to make sure it’s not a profitable business.” Lowery agreed.

At the time being, it was Geoff Taylor’s turn to say something:

“I think we’ve all been a bit slow to get to grips with this, perhaps because we were focused on other targets.”

“We shouldn’t kid ourselves – as some of the follow-the-money advocates do – that this is going to make the problem go away,” he continued.

“There’s lots of people running illegal pharmacies or illegal dating sites or gambling sites who’ll still provide a revenue stream for these sites.”

You should also know that the British Phonographic Industry plans to introduce a “structured scheme” to counter the problem, but it’s unsure whether Google is willing to spend more on technologies such as ContentID.

“It seems to me to be not beyond the technology capability,” Geoff said.

“They know very well what sites are illegal, because we send them notices, a million a week… yet coming on to search, very often those sites appear at the top of search results. It’s great that the advertising industry is starting to work with us, Google are part of that… but hey, that can’t be where it stops.”

“Is there a sort-of left-hand right-hand issue that Google can maybe work on, if you’re being served these takedowns?” the moderator asked Bertrand.

“I am an optimist, in that search will get better, and be able to serve people with the results exactly that they want, and to do so utterly lawfully as well,” the representative replied.

“I know the complexities can be seen as something to hide behind,” he continued.

“It is easier to tell whether something is pornography than whether something is licensed or not… The legal basis for declaring a whole site unlawful in the UK at least still only applies to a relatively small handful of websites.”

At this point, Taylor blew some steam and said – “Even those guys, you won’t remove!” – referring to the infamous Pirate Bay, amongst others.

In response, Bertrand answered that:

“If you do a Google search for these, and you got a link for Pirate Bay, if you click on it you’ll get an interstitial telling you this has been blocked, which I’d have thought is a pretty good thing for people to see that.”

“Blocking websites, I don’t think is as effective as going after them as a business,” he continued.

“The supply that was going to Megaupload had simply shifted to a whole new range of middle-ranking pirate sites… My worry is if we’re going after them one at a time with blocking, you start getting into the whack-a-mole thing.”

In Google’s opinion, as explained by its representative, the fight against online piracy shouldn’t rely solely on some company’s shoulders, but instead be a unified effort.

“It’s not Google’s job to go around the web to declare whether sites are legal or illegal, but if Coca-Cola comes to us and says here’s a list of 500 dynamic sites, and we don’t want you to place ads on those… that’s a slightly different thing. It’s almost a marketing thing for the brand,” Bertrand explained.

The discussion went on with arguments from all sides. Lowery, for example, said that:

“We sometimes conflate the search engine Google with the overall internet. Just because Google blocks certain websites, that’s not censorship. Google is a private company, it’s not censoring those websites.”

“Either Google is the web, and therefore it’s a public property that belongs to all of us, and we get to tell it what to do. Or it’s a private company. You can’t have it both ways,” he continued.

“The internet you see is censored all the time… sensibly. You could almost go after the hosts and not the individual websites, and then you’re talking about half a dozen is the majority of the traffic,” the musician concluded.

A couple of glasses of water later, James Barton chipped in by saying:

“How refreshing that finally in 2013 we’re able to have a conversation with members of big tech and big music industry where we can find common ground, and look for a pragmatic solution to the piracy problem.”

“Still slightly missing from this: the conversation surrounding music is between big tech and the big music industry, and the voice that is missing is the voice of the fan, and the voice of the artist… The big next process is educating fans as to why they need to pay, the same as the brands in the damage they are doing to creators when they support these infringing sites,” he continued.

The meeting was indeed interesting, and we can only hope that it will eventually lead to a common ground between content creators, the entertainment industries, and tech companies, for their and our (the consumers) benefit.