Anti-piracy outfit Rightscorp is one of the many companies trying to turn Internet piracy into profit. The company has a somewhat novel approach but has difficulty balancing the books.

Essentially, Rightscorp operates like other so-called copyright-trolling operations, in that it monitors alleged offenders on BitTorrent networks, tracks them to their ISPs, then attempts to extract a cash settlement. Rightscorp does this by sending DMCA notices with settlement agreements attached, in the hope that at-this-point-anonymous Internet users break cover in panic. This can lead to a $20 or $30 ‘fine’ or in some cases dozens of multiples of that.

But despite settling hundreds of thousands of these cases, profit has thus far proven elusive, with the company hemorrhaging millions in losses. The company has just filed its results for the first half of 2017 and they contain more bad news.

In the six months ended June 2017, revenues obtained from copyright settlements reached just $138,514, that’s 35% down on the $214,326 generated in the same period last year. However, the company did manage to book $148,332 in “consulting revenue” in the first half of this year, a business area that generated no revenue in 2016.

Overall then, total revenue for the six month period was $286,846 – up from $214,326 last year. While that’s a better picture in its own right, Rightscorp has a lot of costs attached to its business.

After paying out $69,257 to copyright holders and absorbing $1,190,696 in general and administrative costs, among other things, the company’s total operating expenses topped out at $1,296,127 for the first six months of the year.

To make a long story short, the company made a net loss of $1,068,422, which was more than the $995,265 loss it made last year and despite improved revenues. The company ended June with just $1,725 in cash.

“These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued,” the company’s latest statement reads.

This hanging-by-a-thread narrative has followed Rightscorp for the past few years but there’s information in the latest accounts which indicates how bad things were at the start of the year.

In January 2016, Rightscorp and several copyright holders, including Hollywood studio Warner Bros, agreed to settle a class-action lawsuit over intimidating robo-calls that were made to alleged infringers. The defendants agreed to set aside $450,000 to cover the costs, and it appears that Rightscorp was liable for at least $200,000 of that.

Rightscorp hasn’t exactly been flush with cash, so it was interesting to read that its main consumer piracy settlement client, music publisher BMG, actually stepped in to pay off the class-action settlement.

“At December 31, 2016, the Company had accrued $200,000 related to the settlement of a class action complaint. On January 7, 2017, BMG Rights Management (US) LLC (“BMG”) advanced the Company $200,000, which was used to pay off the settlement. The advance from BMG is to be applied to future billings from the Company to BMG for consulting services,” Rightscorp’s filing reads.

With Rightscorp’s future BMG revenue now being gobbled up by what appears to be loan repayments, it becomes difficult to see how the anti-piracy outfit can make enough money to pay off the $200,000 debt. However, its filing notes that on July 21, 2017, the company issued “an aggregate of 10,000,000 shares of common stock to an investor for a purchase price of $200,000.” While that amount matches the BMG debt, the filing doesn’t reveal who the investor is.

The filing also reveals that on July 31, Rightscorp entered into two agreements to provide services “to a holder of multiple copyrights.” The copyright holder isn’t named, but the deal reveals that it’s in Rightscorp’s best interests to get immediate payment from people to whom it sends cash settlement demands.

“[Rightscorp] will receive 50% of all gross proceeds of any settlement revenue received by the Client from pre-lawsuit ‘advisory notices,’ and 37.5% of all gross proceeds received by the Client from ‘final warning’ notices sent immediately prior to a lawsuit,” the filing notes.

Also of interest is that Rightscorp has offered not to work with any of the copyright holders’ direct competitors, providing certain thresholds are met – $10,000 revenue in the first month to $100,000 after 12 months. But there’s more to the deal.

Rightscorp will also provide a number of services to this client including detecting and verifying copyright works on P2P networks, providing information about infringers, plus reporting, litigation support, and copyright protection advisory services.

For this, Rightscorp will earn $10,000 for the first three months, rising to $85,000 per month after 16 months, valuable revenue for a company fighting for its life.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

When people are found sharing copyrighted pornographic content online in the United States, there’s always a chance that an angry studio will attempt to track down the perpertrator in pursuit of a cash settlement.

That’s what adult studio Flava Works did recently, after finding its content being shared without permission on a number of gay-focused torrent sites. It’s now clear that their target was Marc Juris, President & General Manager of AMC-owned WE tv. Until this week, however, that information was secret.

As detailed in our report yesterday, Flava Works contacted Juris with an offer of around $97,000 to settle the case before trial. And, crucially, before Juris was publicly named in a lawsuit. If Juris decided not to pay, that amount would increase significantly, Flava Works CEO Phillip Bleicher told him at the time.

Not only did Juris not pay, he actually went on the offensive, filing a ‘John Doe’ complaint in a California district court which accused Flava Works of extortion and blackmail. It’s possible that Juris felt that this would cause Flava Works to back off but in fact, it had quite the opposite effect.

In a complaint filed this week in an Illinois district court, Flava Works named Juris and accused him of a broad range of copyright infringement offenses.

The complaint alleges that Juris was a signed-up member of Flava Works’ network of websites, from where he downloaded pornographic content as his subscription allowed. However, it’s claimed that Juris then uploaded this material elsewhere, in breach of copyright law.

“Defendant downloaded copyrighted videos of Flava Works as part of his paid memberships and, in violation of the terms and conditions of the paid sites, posted and distributed the aforesaid videos on other websites, including websites with peer to peer sharing and torrents technology,” the complaint reads.

“As a result of Defendant’ conduct, third parties were able to download the copyrighted videos, without permission of Flava Works.”

In addition to demanding injunctions against Juris, Flava Works asks the court for a judgment in its favor amounting to a cool $1.2m, more than twelve times the amount it was initially prepared to settle for. It’s a huge amount, but according to CEO Phillip Bleicher, it’s what his company is owed, despite Juris being a former customer.

“Juris was a member of various Flava Works websites at various times dating back to 2006. He is no longer a member and his login info has been blocked by us to prevent him from re-joining,” Bleicher informs TF.

“We allow full downloads, although each download a person performs, it tags the video with a hidden code that identifies who the user was that downloaded it and their IP info and date / time.”

We asked Bleicher how he can be sure that the content downloaded from Flava Works and re-uploaded elsewhere was actually uploaded by Juris. Fine details weren’t provided but he’s insistent that the company’s evidence holds up.

“We identified him directly, this was done by cross referencing all his IP logins with Flava Works, his email addresses he used and his usernames. We can confirm that he is/was a member of Gay-Torrents.org and Gayheaven.org. We also believe (we will find out in discovery) that he is a member of a Russian file sharing site called GayTorrent.Ru,” he says.

While the technicalities of who downloaded and shared what will be something for the court to decide, there’s still Juris’ allegations that Bleicher used extortion-like practices to get him to settle and used his relative fame against him. Bleicher says that’s not how things played out.

“[Juris] hired an attorney and they agreed to settle out of court. But then we saw him still accessing the file sharing sites (one site shows a user’s last login) and we were waiting on the settlement agreement to be drafted up by his attorney,” he explains.

“When he kept pushing the date of when we would see an agreement back we gave him a final deadline and said that after this date we would sue [him] and with all lawsuits – we make a press release.”

Bleicher says at this point Juris replaced his legal team and hired lawyer Mark Geragos, who Bleicher says tried to “bully” him, warning him of potential criminal offenses.

“Your threats in the last couple months to ‘expose’ Mr. Juris knowing he is a high profile individual, i.e., today you threatened to issue a press release, to induce him into wiring you close to $100,000 is outright extortion and subject to criminal prosecution,” Geragos wrote.

“I suggest you direct your attention to various statutes which specifically criminalize your conduct in the various jurisdictions where you have threatened suit.”

Interestingly, Geragos then went on to suggest that the lawsuit may ultimately backfire, since going public might affect Flava Works’ reputation in the gay market.

“With respect to Mr. Juris, your actions have been nothing but extortion and we reject your attempts and will vigorously pursue all available remedies against you,” Geragos’ email reads.

“We intend to use the platform you have provided to raise awareness in the LGBTQ community of this new form of digital extortion that you promote.”

But Bleicher, it seems, is up for a fight.

“Marc knows what he did and enjoyed downloading our videos and sharing them and those of videos of other studios, but now he has been caught,” he told the lawyer.

“This is the kind of case I would like to take all the way to trial, win or lose. It shows
people that want to steal our copyrighted videos that we aggressively protect our intellectual property.”

But to the tune of $1.2m? Apparently so.

“We could get up to $150,000 per infringement – we have solid proof of eight full videos – not to mention we have caught [Juris] downloading many other studios’ videos too – I think – but not sure – the number was over 75,” Bleicher told TF.

It’s quite rare for this kind of dispute to play out in public, especially considering Juris’ profile and occupation. Only time will tell if this will ultimately end in a settlement, but Bleicher and Juris seemed determined at this stage to stand by their ground and fight this out in court.

Complaint (pdf)

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Rather than taking site operators to court, copyright holders increasingly demand that Internet providers should block access to ‘pirate’ domains.

As a result, courts all around the world have ordered ISPs to block subscriber access to various pirate sites.

This is also happening in Australia where the first blockades were issued late last year. In December, the Federal Court ordered ISPs to block The Pirate Bay and several other sites, which happened soon after.

However, as is often the case with website blocking, one order is not enough as there are still plenty of pirate sites and proxies readily available. So, several rightsholders including movie studio Village Roadshow and local broadcaster Foxtel went back to court.

Today the Federal Court ruled on two applications that cover 59 pirate sites in total, including many popular torrent and streaming portals.

The first order was issued by Justice John Nicholas, who directed several Internet providers including IINet, Telstra, and TPG to block access to several pirate sites. The request came from Village Roadshow, which was backed by several major Hollywood studios.

The order directs the ISPs to stop passing on traffic to 41 torrent and streaming platforms including Demonoid, RARBG, EZTV, YTS, Gomovies, and Fmovies. The full list of blocked domains is even longer, as it also covers several proxies.

“The infringement or facilitation of infringement by the Online Locations is flagrant and reflect a blatant disregard for the rights of copyright owners,” the order reads.

“By way of illustration, one of the Online Locations is accessible via the domain name ‘istole.it’ and it and many others include notices encouraging users to implement technology to frustrate any legal action that might be taken by copyright owners.”

In a separate order handed down by Federal Court Judge Stephen Burley, another 17 sites are ordered blocked following a request from Foxtel. This includes popular pirate sites such as 1337x, Torlock, Putlocker, YesMovies, Vumoo, and LosMovies.

The second order also includes a wide variety of alternative locations, including proxies, which brings the total number of targeted domain names to more than 160.

As highlighted by SHM, the orders coincide with the launch of a new anti-piracy campaign dubbed “The Price of Piracy,” which is organized by Creative Content Australia. Lori Flekser, Executive director of the non-profit organization, believes that the blockades will help to significantly deter piracy.

“Not only is there decreasing traffic to pirate sites but there is a subsequent increase in traffic to legal sites,” she said.

At the same time, she warns people not to visit proxy and mirror sites, as these could be dangerous. This message is also repeated by her organization’s campaign, which warns that pirate sites can be filled with ransomware, spyware, trojans, viruses, bots, rootkits and worms.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

Most people who create something like to be credited for their work. Whether you make a video, song, photo, or blog post, it feels ‘right’ to receive recognition.

The right to be credited is part of the so-called “moral rights,” which are baked into many copyright laws around the world, adopted at the international level through the Berne Convention.

However, in the United States, this is not the case. The US didn’t sign the Berne Convention right away and opted out from the “moral rights” provision when it eventually joined.

Now that the U.S. Copyright Office is looking into ways to improve current copyright law, the issue has been brought to the forefront again. The Government recently completed a consultation to hear the thoughts of various stakeholders, which resulted in several noteworthy contributions.

As it turns out, the RIAA doesn’t want artists, such as songwriters, to have moral rights. Crediting everyone who’s involved in making a song can be confusing and complicated the group notes, arguing against the addition of a new statutory attribution right.

The RIAA highlights that it would be costly for streaming services to credit everyone involved in the creative process. In addition, they stress that the likes of Spotify might not have the screen real estate to attribute all creators, without ruining the user experience with long lists of names.

“If a statutory attribution right suddenly required these services to provide attribution to others involved in the creative process, that would presumably require costly changes to their user interfaces and push them up against the size limitations of their display screens,” the RIAA writes.

These comments don’t sit well with songwriters and other creators around the world, who feel that the RIAA is putting trivial metadata issues above their rights. In a protest against the RIAA’s stance, several songwriter groups around the world are now joining hands to show their discontent.

The British Academy of Songwriters, Composers and Authors (BASCA), Songwriters Association of Canada (SAC), Songwriters Guild of America (SGA), Music Creators North America (MCNA), Council of Music Creators (CMC), and several others, have sent a strongly worded open letter to the RIAA accusing the record label group of betrayal.

“The RIAA’s argument prioritizes the inconvenience of dealing with accurate metadata over the principle of the protection of the rights of the people upon whose work the music business is built,” the letter reads.

“More fundamentally, RIAA’s comments are taken by many in the music creator community as a betrayal of our joint commitment to expand opportunities for creators. Unfortunately, this divergence of views gives our common adversaries an opportunity to divide our community.”

The groups warn that without proper attribution, songwriters and other contributors risk not receiving any compensation for the work they do. This puts the RIAA in the same camp as those who want to weaken copyright in general, the letter notes.

“Without accurate metadata, contributors to a work risk not getting paid. That’s a moral dilemma intrinsically linked to the issue of moral rights — and on this issue the RIAA has now aligned itself with those who seek to enfeeble IP rights.”

The RIAA’s stance goes even further than that of Creative Commons and the “copyleft,” according to the groups.

“Even anti-copyright groups like Creative Commons understand the importance of attribution. If the RIAA is seen as less artist-friendly than Creative Commons, the copyleft and all who seek to undervalue our work will benefit.”

While Creative Commons has more flexible views on copyright than the average entertainment industry company, describing it as “anti-copyright” goes a bit far. Still, the groups send a strong message to the RIAA, that the organization’s stance on moral rights is abhorrent.

The songwriter and artist groups stress that the RIAA might shoot itself in the foot, as it’s distancing the people it needs to further its interests around the globe. As for the metadata problems, they believe that the streaming platforms and other services will come up with a proper solution eventually.

“We believe there’s no doubt music platforms will come up with innovative and effective ways to give credit. Certainly there’s no need to set expectations at rock bottom as the RIAA did in their comments,” the groups write in their letter.

The groups urge the RIAA to revise its views and start collaborating with creators to address specific implementation problems. The record labels and creators should stand together as one, instead of going against each other.

It will be interesting to see if and how the RIAA responds to the critique.

While the US Government has yet to decide on the moral rights issue, in other countries the attribution right is taken very seriously. Just recently, a District Court in Isreal awarded a local music composer $223,000 in statutory damages because his name was removed from the credits of an online kids animation series.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.

“I woke up this morning in a bad mood and decided to kick them off the Internet.”

Those are the words of Cloudflare CEO Matthew Prince, who decided to terminate the account of controversial Neo-Nazi site Daily Stormer.

Bam. Gone. At least for a while.

Although many people are happy to see the site go offline, the decision is not without consequence. It goes directly against what many saw as the core values of the company.

For years on end, Cloudflare has been asked to remove terrorist propaganda, pirate sites, and other possibly unacceptable content. Each time, Cloudflare replied that it doesn’t take action without a court order. No exceptions.

“Even if it were able to, Cloudfare does not monitor, evaluate, judge or store content appearing on a third party website,” the company wrote just a few weeks ago, in its whitepaper on intermediary liability.

“We’re the plumbers of the internet. We make the pipes work but it’s not right for us to inspect what is or isn’t going through the pipes,” Cloudflare CEO Matthew Prince himself said not too long ago.

“If companies like ours or ISPs start censoring there would be an uproar. It would lead us down a path of internet censors and controls akin to a country like China,” he added.

The same arguments were repeated in different contexts, over and over.

This strong position was also one of the reasons why Cloudflare was dragged into various copyright infringement court cases. In these cases, the company repeatedly stressed that removing a site from Cloudflare’s service would not make infringing content disappear.

Pirate sites would just require a simple DNS reconfiguration to continue their operation, after all.

“[T]here are no measures of any kind that CloudFlare could take to prevent this alleged infringement, because the termination of CloudFlare’s CDN services would have no impact on the existence and ability of these allegedly infringing websites to continue to operate,” it said.

That comment looks rather misplaced now that the CEO of the same company has decided to “kick” a website “off the Internet” after an emotional, but deliberate, decision.

Taking a page from Cloudflare’s (old) playbook we’re not going to make any judgments here. Just search Twitter or any social media site and you’ll see plenty of opinions, both for and against the company’s actions.

We do have a prediction though. During the months and years to come, Cloudflare is likely to be dragged into many more copyright lawsuits, and when they are, their counterparts are going to bring up Cloudflare’s voluntary decision to kick a website off the Internet. They gave their legal opponents free ammunition.

Unless Cloudflare suddenly decides to pull all pirate sites from its service tomorrow, of course.

Source: TF, for the latest info on copyright, file-sharing, torrent sites and ANONYMOUS VPN services.