A data-driven study jointly commissioned by Google and rights collection body PRS for Music which was undertaken by BAE Systems Detica has identified six distinct business models behind online copyright infringement, with each one having clear commercial purposes.
The study provides for the first time detailed research regarding the business models that are most commonly used to infringe copyright online. The data demonstrates:
– Advertising, overwhelmingly (86 per cent) from advertisers outside of the mainstream, provides significant sources of revenue for these sites,
– Large numbers of sites also depend on credit card and online payment facilities,
– A small proportion of sites are hosted in the UK with money flowing mostly overseas to countries including Russia, Sweden, the United States, and the Netherlands,
– The type of sites which are growing in popularity and how users arrive at these sites.
This is the first time that copyright infringing sites have been analysed in this way, with the results allowing Internet companies, rightsholders and policymakers to better understand the range of responses necessary to tackle the challenge. By understanding these sites’ business models, it is likely that measures targeted at revenue generation may well prove effective in helping stem online infringement.
The six distinct business models identified in the study are: Live TV Gateway; P2P Community; Subscription Community; Music Transaction; Rewarded Freemium and Embedded Streaming.
The study’s findings suggest that unauthorised live TV streams are the largest form of online piracy in the UK, and the fastest growing. In the last year, illegal live TV streaming soared by 61 per cent, with just over half of the sites examined by Google and PRS offering links to live TV streams.
The report suggests that these sites attract a significant amount of traffic from social networks as well as offering robust mobile sites.
Theo Bertram, UK Policy Manager of Google, said the research indicated there were many different business models for online infringement which could be tackled if industry worked together. “The evidence suggests that one of the most effective ways to do this is to follow the money, targeting the advertisers who choose to make money from these sites and working with payment providers to ensure they know where their services are being used,” he noted.
Robert Ashcroft Chief Executive of PRS for Music, suggested the research indicated two things: “Firstly, sites involved in copyright infringement are businesses with real costs and revenue sources. They receive subscription or advertising revenue, pay their server or hosting costs but fail to pay the creators of content on which their businesses depend. Secondly, not all of these business models are the same, and the Government now has the evidence to understand which policy levers to apply to deal with these different businesses effectively,” he added.