It will take more than app-store takedowns to counter the boom in pirate streaming apps, writes Peter Szyszko, founder and CEO of White Bullet. Content owners also need to hit the lucrative advertising revenues of apps already operating on millions of phones.
More than 20 years since the heyday of Napster, internet piracy doesn’t make the front pages anymore, but it is both bigger and more normalised than ever. Looking for a football game, a boxing match, a TV series, a film? Someone out there wants to give it to you for free. And in recent times, as our collective internet usage has shifted steadily from desktop to mobile and connected TV, the pirate action has moved to a disconcerting new front: apps.
For copyright owners, this has the appearance of an extremely unwelcome development. Part of the problem here is the app stores themselves, of which there are more than many people recognise. Apple, it’s true, is strict in its refusal to entertain any form of illegality in its App Store. But we also track nearly 60 significant outlying app stores with no such scruples, and we know from their search terms that ‘free movies’, ‘pirate movies’ and ‘premier league’ are what the people want.
Clearly, the demand is out there for pirate streaming apps, and most app stores aren’t resisting it very hard. But there’s an even more profound problem. The very nature of an app means that the piracy channel has now become a private, direct communication between the pirate and the consumer. So while removing an app from a store by legal means is still a worthwhile measure to prevent further downloads, that app lives on in all the handsets on which it has already landed.
Consequently, IP owners can no longer rely on a strategy that only targets what you might call the pre-install phase of the problem – the app store vigilance, the takedowns, the focus on disrupting app distribution. They also need a post-install solution, for all those who have already downloaded the app and are streaming to their hearts’ content.
Look back at the first paragraph, however, and you’ll see there’s a clue to the weakness of the pirate business model. Because like most other “free” services on the internet, these underground services aren’t actually offering content to their users for nothing; they want something from them, and in this case it’s eyeballs. They are in it for the ad revenue.
A huge number of the most popular pirate apps – in western markets, the figure is 98 per cent – run at least partly on the income from advertising. Based on our extensive research, the top pirate web domains are each estimated to earn around $7m (£5.2m) in ad revenue annually. Apps, meanwhile, promise to generate more revenue still, given that in-app ads command rates up to 10 times higher than those of ordinary display advertising.
And these aren’t special crooked ads for the criminal internet – these are big-brand ads from blue-chip programmatic advertising budgets, drawn by the size and quality of illicit streaming audiences.
Some of these advertisers know exactly what they are doing, but many don’t. When we contacted the 50 biggest advertisers in the pirate streaming space to alert them to the fact that they were bankrolling a black market built on IP infringement, 88 per cent of them promptly reduced their exposure significantly, while 36 per cent removed their brands entirely from these illegal domains.
Disrupting these ads is the way to disrupt these services, and it is the only method available that attacks the viability of apps that have already been installed. These operators, many of them with interests in a far broader range of online crime, wouldn’t run these businesses if they weren’t lucrative, and they wouldn’t be lucrative without the advertising.
So even in the midst of a very modern, disintermediated form of piracy, the mainstream advertising business has the power to cut the financial supply lines of this parasitic business, and we want to help them do it. The in-app sector has grown without restraint and with little oversight in recent years, but it can now be tracked and it can be monitored. All scrupulous advertisers owe it to themselves to take a glimpse and judge whether they like what they see.