DEA Takes $16,000 From Train Passenger Because It Can

After scraping together enough money to produce a music video in Hollywood, 22-year-old Joseph Rivers set out last month on a train trip from Michigan to Los Angeles, hoping it was the start of something big.

Rivers changed trains at the Amtrak station in Albuquerque, New Mexico, on April 15, with bags containing his clothes, other possessions and an envelope filled with the $16,000 in cash he had raised with the help of his family, the Albuquerque Journal reports. Agents with the Drug Enforcement Administration got on after him and began looking for people who might be trafficking drugs.

Rivers said the agents questioned passengers at random, asking for their destination and reason for travel. When one of the agents got to Rivers, who was the only black person in his car, according to witnesses, the agent took the interrogation further, asking to search his bags. Rivers complied. The agent found the cash — still in a bank envelope — and decided to seize it on suspicion that it may be tied to narcotics. River pleaded with the agents, explaining his situation and even putting his mother on the phone to verify the story.

No luck.

Link (Techdirt)

Rightscorp Hemorrhages Cash, Profit from Piracy Remains Elusive

In copyright enforcement circles the terms ‘piracy’ and ‘profit’ are often cited in close proximity. Entertainment companies bemoan the alleged profits made by ‘pirate’ sites at the expense of creators, while the same entities claim that piracy is killing their business, even while making billions.

Somewhere in the middle ground lie the groups that seek to turn piracy into profit by punishing the infringements of others. Traditional ‘trolls’ seek thousands from alleged Internet pirates via the courts, but companies such as Rightscorp Inc chase individuals for relatively tiny sums – $20 per shot – for unauthorized content downloads.

It’s a strategy the company insists will eventually pay off but if the latest set of results filed by the Los Angeles-based outfit are anything to go by, investors should be wary of holding their collective breaths.

In a call with investors yesterday things appeared to start reasonably well. Rightscorp President, COO, CTO, and CFO Robert Steele began by reporting how well the company had performed in the final quarter of 2014. Total revenues were almost $242,000, up 56% from the $155,300 achieved in the same period of 2013.

For the full year, things looked even better. From January 1 to December 31, 2014, Rightscorp pulled in close to $931,000 in revenues, that’s 187% up on 2013 when the company generated just $324,000. Steele said the growth in the company’s revenues can be attributed to two key areas.

Firstly, the growing number of copyrights for which the company has contracts to extract settlements from customers. On December 31, 2013, Rightscorp were detecting infringement on approximately 30,000 titles but by the same date in 2014 that had skyrocketed to around 230,000.

Secondly the company says it is getting more and more ISPs on board. It now claims to deal with 233 and has received settlements from customers of five of the top 10 US ISPs including Comcast, Charter, CenturyLink, Mediacom and Suddenlink. The idea is that more ISPs participating should mean more notices being forwarded and a more healthy bottom line for the company. But that’s only the theory.

The problem for Rightscorp is that when compared to the revenue being generated from infringements, its costs are astronomical. It pays out around half of its revenues to its rightsholder clients, which in 2014 amounted to $465,364. But when one looks at the bigger picture that’s much, much less than half of the company’s problems.

In 2014 the company spent around $139,000 on sales and marketing. Its wages bill increased from $637,000 in 2013 to almost $1.15 million in 2014. And last year its lawyers earned more too.

In 2014 the company’s legal bills neared $481,000, that’s up from $355,500 in 2013. The increase is attributed to legal action being taken against the company, including harassment cases currently in the pipeline.

All told, Rightscorp incurred operating expenses of $4,329,602 during the twelve months ended December 31, 2014, versus $2,134,843 for the twelve months ended December 31, 2013.

So, with revenues of approximately $931,000, that’s a loss of around $3.4 million for 2014. The company lost ‘just’ $1.81 million in 2013. Nevertheless, Rightscorp still see their situation as positive.

“We recorded our strongest year yet with an astounding 187% year-over-year growth,” Steele said. “We are confident that by focusing on these growth metrics, we will be able to capture significant growth ahead.”

The company’s latest 10-K filing paints a more gloomy picture, however.

“The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern,” the filing reads.

“The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. If the Company is unable to obtain adequate capital it could be forced to cease operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern.”

While the company’s accounts give cause for concern, the precarious situation is only amplified when one examines Rightscorp’s over-exposure to a limited number of copyright-holder clients. In 2014 a total of 76% of Rightscorp sales came from one client, BMG Rights Management. The company’s contract with Warner Bros. accounted for a further 13% of sales.

If the former pulled the plug (and after a one year contract BMG only needs to give 30 days notice to do so) it could be game over for Rightscorp.

Link (TorrentFreak)

Aussie Anti-Piracy Plans Boost Demand for Anonymous VPNs

Australia has been called out as the world’s piracy capital for several years, a claim that eventually captured the attention of the local Government.

After negotiations between ISPs and entertainment companies bore no fruit, authorities demanded voluntary anti-piracy measures from Internet providers. If that failed, the Government threatened to tighten the law.

Faced with an ultimatum the telecoms body Communications Alliance published a draft proposal on behalf of the ISPs, outlining a three-strikes notification system.

Titled ‘Copyright Notice Scheme Industry Code‘, the proposal suggests that ISPs start to forward infringement notices to their subscribers. After the initial notice subscribers are warned that copyright holders may go to court to obtain their identities.

Several groups have voiced their concerns in response. Australia’s leading consumer group Choice, for example, warns over the potential for lawsuits and potentially limitless fines.

These threats haven’t gone unnoticed by the general public either. While the proposals have not yet been implemented, many Australians are already taking countermeasures.

Over the past two weeks many file-sharers have been seeking tools to hide their IP-addresses and bypass the proposed monitoring system. By using VPN services or BitTorrent proxies their sharing activities can no longer be linked to their ISP account, rendering the three-strikes system useless.

Data from Google trends reveals that interest in anonymizing services has surged, with searches for “VPN” nearly doubling in recent days. This effect, shown in the graph below, is limited to Australia and appears to be a direct result of the ISPs proposals.

Link (TorrentFreak)