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PRS report reviews models and trends in online infringement
By CMU Editorial | Published on Tuesday 3 July 2012
PRS For Music and Google have published a joint report, based on research by business intelligence company BAE Systems Detica, which provides an overview of the business side of online copyright infringement, identifying six main kinds of IP infringing online services and how each makes money, as well as looking at user trends across the market.
Of the six main models, those seeing growth are websites that provide links to unlicensed TV content, especially live streams of free-to-air and pay-to-view channels, and free-to-access P2P communities that provide links to unlicensed TV, film and music content available via file-sharing networks.
Subscription-based file-sharing communities are sustaining their audiences but not seeing significant growth, while sites that provide free access to unlicensed content, as either downloads or streams, but where files are stored on a central server, rather than being available from another user’s hard drive, are seeing user-bases decline, though are still significant. Websites that sell unlicensed content in much the same way as iTunes or Amazon are also seeing user-bases fall.
Where usage is falling, that may be down to a change in consumer preferences, or simply be because a key provider of one of those six business models has gone offline, most likely because of rights owner action of one kind or another.
In terms of how these services make money, whether for profit or to simply cover running costs, the three main revenue streams are advertising, subscriptions and donations. That fact provides another route for rights owners to pursue in their fight against piracy (rather than direct litigation against operator or user), ie go after advertisers or the credit card/online payment companies that enable infringing sites to take money from users. And, of course, some big rights owners have been using that tactic for some time, particularly the latter, given there are relatively few online payment providers available to infringing companies.
Commenting on the new report, and how it can be used to help rights owners in the fight against piracy, Google’s Theo Bertram told CMU: “Our research shows there are many different business models for online infringement which can be tackled if we work 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”.
PRS chief Robert Ashcroft added: “This groundbreaking research tells us 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”.
The report can be viewed in full at www.prsformusic.com/economics
