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MARCH 20, 2017

Examination of the "follow-the-money" approach to copyright piracy reduction

This report produced for Canadian Heritage presents one type of counter-measure to commercial-scale copyright infringement (CSCI) activity. It focuses on the type of copyright infringement defined in the Copyright Act as "provid[ing] a service primarily for the purpose of enabling acts of copyright infringement" where "the economic viability of the provision of the service if it were not used to enable acts of copyright infringement" would be such that it would not be a viable economic enterprise. Furthermore, the report focuses on one type of counter-measure, known as "Follow the money".

Follow-the-money counter-measures aim to reduce or to interrupt the flow of revenue to CSCI sites. They involve three economic sectors:

The online advertising sector is characterised by a disconnect between the ad buyer and the ad space provider: to a large and increasing degree, online ad placement is automated and based on algorithms that aim to match the target profile with the visitors of various websites. In addition to giving rise to a variety of fraudulent practices, this has increased the risks to household brands to be associated with online activity that they would prefer to stay away from. Therefore, the online advertising sector has a vested interest in combatting the placement of legitimate ads on CSCI sites and it has initiated a number of actions to do so. These actions have had some impact already but their effectiveness depends upon the adoption of some standards and techniques (which carry a cost) and they will not deter those brands that in fact have a business incentive to advertise on CSCI sites.

Payment solution providers have been less proactive at combatting the use of their services on CSCI sites. Major companies tend to refer to their terms of service when this issue is raised and to indicate that they diligently (if slowly) apply them upon receipt of complaints. Payment solutions are a distant second to advertisement in the sources of revenues of CSCI sites.

Search engines have been sensitized to the problem of referencing CSCI sites in search results. While they are willing to be part of a global solution, they minimize their importance in the CSCI ecosystem and they do not want to be tasked with policing the Web. Google has implemented its Transparency Report and processes requests for URL (not site) blocking based on the reports produced by rights holders.

Canadian rights holders adopt one of two positions. Larger firms and sectors where rights are more concentrated support the actions taken by their global partners and contribute as they can. Smaller rights holders and firms in sectors where rights are diffused identify CSCI sites as a problem and may support global partners' efforts in spirit, but do not spend their limited national resources targeting elusive pirates.

Follow-the-money counter-measures raise the issue of the identification of CSCI sites. At this point, this task has been left with rights holders to a very large degree, with few examples of government involvement.

Overall, it is concluded that Follow-the-money approaches (or the disruption of visibility, payment services and advertising revenue) can be effective but do not have the potential to eradicate CSCI websites on their own. They have a role to play in a wider global strategy. This conclusion is backed by the observation that copyright piracy is an international problem that requires cross-border cooperation and solutions, particularly with respect to defining CSCI activity and identifying perpetrators.

While it is relatively easy to identify infringing URLs, it is much more difficult to make a case for a whole website to be considered commercially infringing. This may be an area where government could get involved in support of rights holders. French authors have studied this question in some depth. Our own research suggests that Canada's legal framework should be reviewed in comparison with international standards for defining CSCI and facilitating Follow-the-money counter-measures. Canada should also consider how its law enforcement agencies can best support Follow-the-money counter-measures; the example of the United Kingdom may be a starting point in this regard.

Canadian payment providers could be encouraged to enforce their terms of service more aggressively, ideally working in closer partnership with rights holders as found in the United States.

At another level, government could increase efforts to educate the public regarding the well-documented personal and societal risks and costs of using CSCI websites. Such efforts appear to be having a positive impact elsewhere.

The role of website hosting services and Internet service providers and legislation governing them could also be investigated as these services can ultimately stymy efforts to follow money to its ultimate destination by protecting the identity of CSCI operators.


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