A sampling of 596 web sites that deal primarily in pirated content made an estimated $227 million in annual advertising revenues, according to the Digital Citizens Alliance (See: “Good Money Gone Bad: Digital Thieves and the Hijacking of the Online Ad Business – A Report on the Profitability of Ad-Supported Content Theft“). “The 30 largest sites studied that are supported only by ads average $4.4 million annually, with the largest BitTorrent portal sites topping $6 million. Even small sites can make more than $100,000 a year from advertising.”
“It is important to note that the advertising profits garnered by content thieves do not equate with the losses incurred by the owners of the content,” notes the report. “These losses are unquestionably greater by many orders of magnitude…”
Fortunately, the advertising industry is not willing to tolerate intellectual property infringement. “The future health of digital media is at stake,” according to Bob Liodice, head of the Association of National Advertisers, “and we owe it to ourselves, our industry and its brands to attack the issue head-on.”
Like Liodice, Randall Rothenberg of the Interactive Advertising Bureau has called for an all-inclusive quality control program covering the entire ad-supported Internet “that identifies qualified participants, and commits them to good actions, guaranteed by continual monitoring and sanctions for non-compliance.”
Digital advertising is a $40 billion industry in the U.S., notes Rothenberg. The desire of legitimate Internet entrepreneurs to garner a share of the $500 billion that advertisers spend annually worldwide has “unleash[ed] much of the inventiveness that has transformed the lives of consumers and the operations of industries,” he adds, but “advertisers have lowered the prices they will pay for online ads, in part to offset the cost of fraud, non-viewability, and unsafe environments. This hurts legitimate publishers and innovators, even as it rewards a small number of villains.”
Chairman Tom Wheeler of the Federal Communications Commission intends to kick off another useless net neutrality food fight between broadband service providers and “public interest” groups focusing on imaginary bottlenecks in the network. Meanwhile, a critical funding source for the content and applications that make the Internet valuable and compelling for consumers and businesses is at risk.
The Internet ecosystem will be far better served now and in the future by the leadership initiatives of the advertising industry than anything the FCC might come up with.