The business and politics of piracy

  • 2 July 2012
  • From the section Technology
  • comments
Teenage boy using computer

The subject of online piracy arouses strong emotions, both from the creative industries and from web libertarians. But the fierce debates about the extent of the problem and what should be done have been short of one thing - data.

So there should be a welcome for a big piece of research into piracy sites and how they are funded. This study was undertaken by the security firm Detica on behalf of two organisations which might not seem natural bedfellows, Google and PRS for Music, which represents songwriters.

And what it shows is exactly what you might have suspected - that piracy is big business. The study identifies six different business models for online copyright infringement, and finds that advertising and subscription are very professionally integrated into many of the sites. Often, you will see the logos of well-known payment services on sites. The study found that many featured adverts from leading brands, though Google was keen to point out that the vast majority of the ads were not provided by the recognised networks from the mainstream industry.

According to a report which sometimes struggles to speak plain English, the two fastest growing business models are Live TV Gateway and P2P community. The first turns out to mean sites offering unauthorised access to live television streams, principally Premier League football.

Traffic to these sites - as measured by page views - is up 61% over the last year, with many visitors arriving from a social network.

P2P community refers to file-sharing sites providing, says the report, a "well-organised range of content types offered free to the user". This sector of the "industry" is heavily dependent on advertising and donations, with 86% of sites featuring adverts.

The report is packed with charts and numbers, though disappointingly short on individual case studies or big figures for the overall size of the industry. I did though find one really interesting number buried deep in the document. In talking about some of the methodology used, the researchers describe one site in their study as having 15 times the ad revenue of a licensed advertising-supported service.

It turns out that total advertising revenues for licensed music services in the UK have been flat for some time at around £12m per year. No wonder services like We7 have failed to make much headway. Will Page, chief economist at PRS for Music, says the research is a reminder of just how tough it is for legal services: "There are only so many willing advertisers with only so much ad-spend and only so many sets of eyeballs which they can reach. Advertisers are wanting to reach music fans, and both legal and illegal are competing for them."

But what is really interesting about this piece of research is the politics behind it. Google is in a battle with the BPI, the body which represents the music labels, over the shape of government legislation on piracy. The BPI says many consumers find copyright-infringing material through a Google search. It says the company makes money from advertising around search results, and wants piracy sites to be pushed further down the results, below legitimate music offerings. Google isn't keen to play around with its search algorithm.

The search company, the BPI, and other parts of the internet and creative industries are taking part in government roundtable discussions about the battle against piracy. The research on the piracy sites was commissioned to inform the roundtables.

Now Google is stressing that the message from the study is "follow the money". If you want to do something about piracy, go after the advertisers and the credit card firms rather than worrying too much about search.

PRS for Music, which takes a more moderate line on this issue than the BPI, said it hoped the research would "enable a more targeted and ultimately successful approach to tackling online copyright infringement." But I get the impression that the songwriters trade body is a bit nervous about the way that Google has spun the report as showing that search is not too relevant.

The government has told both sides - the internet firms and the creative industries - that if they cannot come up with a voluntary code to tackle piracy there will have to be legislation. After the publication of this report, everyone seems to agree that copyright infringement is a very lucrative business - but they seem no nearer to an agreement on what exactly to do next.