Pirate sites earn over $200m a year in ad revenue

High profit margin pirate sites are making a killing from online advertising, according to one study.
Written by Liam Tung, Contributing Writer

Big-name brands and automated online ad systems are helping pirate sites generate $277 million a year in advertising revenue, according to a new study.

The report, Good Money Gone Bad: Digital Thieves and the Hijacking of the Online Ad Business, comes from the Digital Citizens Alliance, which is hoping to pressure the advertising industry into preventing ads appearing on pirate sites.

The study looked at ad revenues being generated by 596 "pirate sites", selected from sites in Google's Transparency report that had been subject to 25 or more Digital Millennium Copyright Act (DMCA) takedown requests.

According to the alliance, the 30 largest pirate sites generated an average $4.4m in ad revenue annually, while the high-traffic torrent and P2P portal sites made $6m annually. Smaller sites in the study raised $100,000 a year.

The $277m annual revenue figure for the 596 sites was based on an extrapolation from its analysis of their third quarter earnings, estimated to be $57.7m in total.

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Revenue and market share breakdown of pirate sites in Q3 2013. Image: Digital Citizens Alliance

Also in the study were linking sites, which aggregate links to other online properties that host pirated content, streaming sites, and direct download sites.

However, the study found that torrent sites made the most revenue, earning $28m for or half the total revenue in the sample, despite representing only a quarter of the sample.

Linking sites made on average $16.5m, accounting for 29 percent of total revenues, followed by video streaming sites, which made $6.8m and direct downloads, which made $4.7m.

The report notes that the effect big name advertisers have on the viability of pirate sites, claiming that nearly 30 percent of large sites in the sample carried ads for such brands. Secondary brands such as gambling sites appeared on 40 percent of sites in the sample. 

Digital Citizens Alliance says it hopes the report pushes advertisers, ad agencies, networks and exchanges to prevent ads reaching pirate sites in the same way the advertising community prevent ads appearing on porn and hate sites.

"We hope this report pushes the online advertising community to take additional steps to protect brand value and stop ads from appearing on content theft sites that are undermining the vibrancy and safety of the digital marketplace," says Digital Citizens Alliance executive director Tom Galvin.

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