How billions of dollars are siphoned off by pirated entertainment sites

Websites and apps that offer pirated or stolen content, which include movies, TV shows, games and live events, earn an average of more than $1.3 billion in annual advertising revenues, according to a new report.

Technology companies such as Amazon, Facebook and Google are responsible for much of the funding to such piracy operators through ads, even though these criminals offer risky content that exposes consumers to fraud and malware, said a report by Washington non-profit organisation Digital Citizens Alliance and global advisory firm White Bullet.

“For too long, online piracy has been treated as a nuisance … and not the multibillion-dollar industry that baits consumers to expose them to fraud and malware, hurts the reputation of brands and the overall advertising ecosystem, harms creators and poses new challenges for law enforcement,” said Tom Galvin, executive director of Digital Citizens.

“It is time for Fortune 100 companies and the legitimate advertising industry to stop funnelling tens of millions of dollars to criminals.”

The websites that offer stolen content generate in excess of $1bn in global annual ad revenue while the top five of these made an average of $18.3 million in sales from advertising.

Many of these websites continuously change domain names to avoid enforcement and bypass advertising blocklists. The top apps that offer stolen content generate $259m in global annual advertising revenue. while the main five of these netted an average of $27.6m in ad revenue.

“These apps remain a smaller piece of the piracy pie than websites, but they are growing at a more rapid pace,” the report said.

White Bullet reviewed 664 billion ad impressions and found that about one in three piracy websites and apps have risky advertising that exposes consumers to fraud and malware.

Consumers who admit visiting pirated websites and apps are two to three-times more likely to report an issue with malware than those that do not visit these illicit websites and apps, the report found.

It said that ads for Amazon, Facebook and Google accounted for 73 per cent of all major brands advertising that appeared frequently on piracy apps.

“This report confirms the simple fact that digital advertising funds piracy … that underlying data is the evidence needed to drive action and change,” said Peter Szyszko, founder and chief executive of White Bullet.

“Despite the alarming scale of the problem, today we are fully armed with AI [artificial intelligence] technologies that can both track illegal activity and advance solutions.”

White Bullet said it has stopped millions in ad spending from funding piracy and reduced the profit of intellectual property crime. But still more has to be done.

Currently, there is a recent significant decline in Amazon ads showing up on piracy websites and apps, demonstrating that the issue can be addressed if a brand makes it a priority, the report said.