Why MySpace, MTV See Profits in Piracy

Yo ho! It appears that media companies have finally found a way to profit from digital pirates’ booty.

MySpace and MTV Networks announced plans yesterday to use a video identification technology developed by Auditude to identify and insert ads over any video clips produced by MTV Networks that are found on MySpace. While no one has invited Internet users to ignore copyright restrictions, enforcement actions seem to be shifting toward getting the good out of unauthorized activity rather than stopping it.

Adam Cahan, Auditude’s CEO, said it was challenging to get content owners to understand the value of the technology. First he had to prove that it actually worked — that it was accurate, speedy and scalable. Then he had to prove that serving up ads with that unsanctioned content really is a viable business opportunity.

“We showed them the analysis and told them, ‘Here are the audience views that you’re getting but aren’t being monetized. So how do we bring you back into that picture and help you be successful?’” Cahan said.

Auditude uses patented fingerprint filtering to identify protected content uploaded to the Web. Its fingerprinting database contains more than one billion minutes of identified content, including user videos, four years of 100 channels of television and tens of thousands of films. The content owner needs to supply its content for fingerprint registration.

The identifying technology, when deployed on a site like MySpace, then scans any content a user tries to upload and takes action according to the owner’s stipulations — anything from blocking the upload entirely to adding an overlay with marketing and other information. Auditude’s solution also incorporates an advertising platform that manages and serves the ads that are displayed with the content.

Cahan says that fingerprinting technology is capturing virtually everything on the Web,

“We’re announcing lots more partnerships in the coming weeks,” he said. “The market is brand new, but it’s going to expand very quickly. There’s a pain point that exists between content owners, users and publishers and until now there hasn’t been a good solution.”

Auditude’s “attribution overlay” shows a viewer details about the show; the name, when it originally aired and supplies “see more” links that click through to additional content or merchandise. Ads from third parties can also be displayed.

Mike McGuire, Research vp of media a Gartner, said that the key to success with fingerprinting technology is that companies like Auditude are trying to monetize an existing behavior rather than trying to modify or prevent that behavior, something that has already proven to be a difficult challenge.

A year ago McGuire recommended moving discussion away from digital rights management to what he calls “digital experience management.”

“Not that anyone’s condoning copyright violation, but the desire that people have to share media has proven to be a persistent activity,” said McGuire. “I think you will see more and more vendors looking at this approach or something like it. This is a portent of things to come.”

McGuire believes that content producers will use the fingerprinting technology to monetize short form content like video clips, but in its current form the technology is less suitable for music and movie downloads, given that users may not want to watch a movie for two hours with an ad overlay or music with embedded audio ads.

But some content providers don’t think that ad-supported sharing will change gain such wide acceptance.

“Content owners will continue to vigorously work with top-tier Web sites to take-down pirated bits or mash-ups, build ad-supported distribution for their content, invest in automated detection and take-down systems and [will] evaluate systems such as Auditude along the way,” said Thomas N. Ellsworth
CEO of GoTV Networks, which develops original programming for broadband and mobile platforms

He added, “Copyrighted content detection and take-down systems are maturing and becoming increasingly effective. If this trend continues the need for systems such as Auditude will likely wane.”

Content providers sometimes seem divided on how to uphold their copyrights. Viacom is the parent company of MTV Networks. Despite its apparent openness to exploring new ways of managing copyrighted content, as per the MySpace MTV partnership, Viacom is also currently locked in a legal battle with Google-owned YouTube over what Viacom calls “massive intentional copyright infringement” and is seeking more than $1 billion in damages.

Last year, YouTube launched a fingerprinting technology called Video ID that gives publishers the option of either taking down illegal content or placing ads on that content, but it has not implemented the ad system.

In its defense, Google lawyers have cited section 512 of the Digital Millennium Copyright Act (DMCA), which can be interpreted as relieving hosting companies of legal liability for hosting copyright-protected content if they remove the content promptly when it is brought to their attention, don’t ignore copyright infringement and do not receive “financial benefit directly attributable to the infringing activity.”

Napster used section 512 of the DMCA in its defense back in 2000. The court opted not to rule on section 512 specifically, but issued an injunction stating that the company was required to disable any uploading, downloading and transmission of copyright-infringing files identified by music companies. Within a month Napster blocked more than 1.7 million files and was no longer the p2p service of choice.

It’s likely that YouTube will work aggressively with content owners to permit access to copyrighted material rather than to block it. In October, during his keynote at the MIPCOM conference in Cannes, France, YouTube founder and CEO Chad Hurley urged content owners to adopt his site as a distribution channel, saying that 13 hours of video are uploaded every minute to the popular video destination.

Hurley said that YouTube is developing new ways of monetizing content noting that, “We do feel it is our responsibility to help content creators get paid.”

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