The Supreme Court in Spain has ruled that during a six year period a Warner Bros. themed park failed to compensate artists and rightsholders. The Court found that between 2002 and 2008 Warner Park (Parque Warner) used unlicensed music in a “intense and continuous” manner and must now pay compensation of $354,000.
Hollywood is still 100% focused on trying to blame the internet for any of its woes, mostly with bogus attacks on internet companies it doesn’t like. And yet… it seems to keep on setting box office records. The latest is that Universal Pictures has broken a new record in bringing in $2 billion in box office revenue faster than any other studio in history, pushed over the top by the successful opening weekend of “Straight Outta Compton” (a movie that seems to have some big fans in Silicon Valley).
Hollywood studio Warner Bros. and the Tolkien Estate are cracking down on a British couple building a “Hobbit house” campsite. The pair are being forced to change the project’s name and remove all Hobbit references from their Kickstarter campaign. According to Tolkien’s lawyers even words that rhyme with Hobbit are not permitted.
Piracy monetization firm Rightscorp has made headlines over the past year, often because of its aggressive attempts to obtain settlements from allegedly pirating Internet users.
Working on behalf of various copyright owners including Warner Bros. and BMG the company sends copyright infringement notices to Internet providers in the U.S. and Canada. These notices include a settlement proposal, offering alleged downloaders an option to pay off their “debt.”
Rightscorp’s practices haven’t been without controversy. The company and its clients have been sued for abuse and harassment and various large ISPs refuse to forward the settlements to their subscribers.
Cox Communications, one of the larger Internet providers in the U.S. also chose not to work with Rightscorp. The ISP didn’t comment on this refusal initially, but now that Cox has been sued by several Rightscorp clients, it reveals why.
In a statement that leaves little to the imagination, Cox notes that Rightscorp is “threatening” subscribers with “extortionate” letters.
“Rightscorp is in the business of threatening Internet users on behalf of copyright owners. Rightscorp specifically threatens subscribers of ISPs with loss of their Internet service — a punishment that is not within Rightscorp’s control — unless the subscribers pay a settlement demand,” Cox writes.
As a result, the ISP decided not to participate in the controversial scheme unless Rightscorp revised the notifications and removed the extortion-like language.
“Because Rightscorp’s purported DMCA notices were, in fact, improper threats against consumers to scare them into paying settlements to Rightscorp, Cox refused to accept or forward those notices, or otherwise to participate in Rightscorp’s extortionate scheme.”
“Cox expressly and repeatedly informed Rightscorp that it would not accept Rightscorp’s improper extortion threat communications, unless and until Rightscorp revised them to be proper notices.”
The two parties went back and forth over the details and somewhere in this process Rightscorp came up with a controversial proposal. The company offered Cox a cut of the settlement money its subscribers would pay, so the ISP could also profit.
The best way for Hollywood to defeat piracy is by making content available, legally. To further this effort dozens of video on demand services have been launched throughout the world. However, not all of these services are happy with how the major studios treat them, and today we hear why.
The account below comes from an employee of a mid-sized video on demand (VOD) service in Europe.
To avoid repercussions from the major studios the author prefers to remain anonymous
Is the process of copyright trolling protected by the First Amendment? That appears to be the claim that both Rightscorp and Warner Bros. are making in response to a class action lawsuit filed against them.
Back in November, we wrote about a class action lawsuit filed against Rightscorp, by lawyer Morgan Pietz. Rightscorp, of course, is a company trying (and mostly failing) to make copyright trolling slightly more respectable by shaking down accused infringers (based on a questionable methodology) for somewhat lower amounts than traditional copyright trolls. Morgan Pietz, if you don’t know, is one of the key lawyers who helped take down infamous copyright troll Prenda Law — so his involvement was noteworthy.
Since November, when the lawsuit was initially filed, there’s been some back and forth in the lawsuit (and even the main named plaintiff has changed). In the first amended complaint that was filed last month with new lead plaintiff, John Blaha, the claims about violations of the Fair Debt Collection Practices Act have been removed, to focus mainly on violations of the Telephone Consumer Protection Act and abuse of process. The TCPA bans autodialing telemarketers, and Pietz is trying to argue that Rightscorp’s autodialers fall under this law. The abuse of process claims focus on how Rightscorp got access to various people to shakedown, using DMCA 512(h) subpoenas. This is the process — which courts have clearly rejected — by which copyright trolls think they can issue subpoenas to ISPs about potential infringers, without first filing a lawsuit. Every few years, copyright trolls think they’ve newly discovered this loophole even though the courts have rejected it. The lawsuit has also added key Rightscorp clients, Warner Bros. and BMG, as defendants as well.
Last week, Rightscorp responded [pdf] by arguing that the case should be dismissed under California’s anti-SLAPP law. Now, we’ve been huge supporters of California’s anti-SLAPP law and believe that we need a similar federal anti-SLAPP law. Anti-SLAPP laws allow defendants to quickly get lawsuits dismissed when it’s clear those lawsuits are nothing more than attempts to silence their public speech (SLAPP standing for “Strategic Lawsuit Against Public Participation.”) However, I’m hard pressed to see how robocalling someone demanding they pay up or get sued is “public participation” in any way.
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.
More than a year has passed since the MPAA defeated Hotfile, but the case has still been stirring in the background.
Hoping to find out more about Hollywood’s anti-piracy policies the Electronic Frontier Foundation (EFF) previously asked the court to make several sealed documents available to the public.
These documents are part of the counterclaim Hotfile filed, where it accused Warner of repeatedly abusing the DMCA takedown process. In particular, the EFF wants the public to know how Hollywood’s anti-piracy policies and tools work.
District Court Judge Kathleen Williams sided with the EFF and ruled that it’s in the public interest to unseal the information. The MPAA, however, argued that this may hurt some of its members.
Information regarding Columbia Pictures’ anti-piracy policies, in particular, would still be beneficial to pirates for decades to come, the Hollywood group argued.
“Defendants have cited two specific pieces of information regarding Columbia’s enforcement policies that, if revealed to the public, could compromise Columbia’s ability to protect its copyrighted works,” the MPAA’s lawyers wrote.
In addition, anti-piracy vendor Vobile feared that having its pricing information revealed could severely hurt the company.
Judge Williams has now reviewed these and other arguments but ruled that sealing records indefinitely is not an option. In this case, the public interest in the records outweighs the concerns of the MPAA.