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Chasing online pirates is a gold mine!

Published: 12 October, 2009, 18:01

TAGS: Crime, SciTech, Piracy, Internet


Busting people who download pirated content and claiming damages is 150 times more profitable than selling it legally on the internet. Pirate-hunting has now turned into a lucrative business.

Pirate-hunting companies generate their revenue by identifying alleged pirates and sending them notifications, demanding to pay damages for illicit acquisition of copyrighted content. Violators often pay out of fear of legal action, which allows the firms to hand over part of the cash to the copyright owner and leave the rest for themselves.

The relatively new scheme is used mostly in Germany and the UK due to the legislative opportunity there. A presentation by one of them, Germany-based DigiRights Solutions, reveals how profitable this business actually is, reports TorrentFreak news website.

DigiRights Solutions says it claims an average $650 per offence from an alleged pirate, i.e. per pirated song. About 25% of recipients agree to pay, and the company gets to keep four fifths of the money, or $520, while $130 goes to copyright owner.

The document goes on to compare this to the revenue generated by online music shops. With prices of tracks being around 90 cents, pursuing filesharers turns out to be astounding 150 times more profitable than selling actual music.

Each month, DigiRights Solutions says it is able to pursue 5,000 people per title. With a quarter of those resulting in a $130 payment, it would take 150,000 online sales for the copyright owner to have comparable revenue, the report says.

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JG October 12, 2009, 14:43
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I disagree.... These companies have found that going to court is not profitable at all - in Europe. In European courts, they are obliged to provide sensible proof of downloading by the individual concerned. If they fail, the court will make them pay the costs of the other part - and they fail a lot. Most of these companies have abandoned such activities as their "proof" was shown to be nonsense in several cases i.e. they accused the wrong people of downloading. In these cases, the threatening lawyers and their clients had to apologise to those they had wrongfully accused. Anti-pirate action has largely switched to lobbying to impair or remove Internet access from those accused of downloading. This is seen as a better option as they can simply accuse someone of downloading without the expensive and inconvenience of actually allowing the accused victim the EU-given right of defending themselves in a court of law. As a result, the newly passed French "three-strikes" law is likely to be kicked into touch as soon as someone challenges it in a real court. The smart option for the media companies/copyright holders would be to build business models that actually work for selling music online. Currently, they charge about the same for downloaded material as they do for physical products, despite the savings in manufacture, supply chain and retailer profits. Bulk subscription deals with ISPs are probably the answer. The big threat (to the big media companies) is that many music acts may start to sell their product online without any involvement of the big media companies.