30/10/2013 10:50 GMT | Updated 23/01/2014 18:58 GMT

YouTube and Piracy - Follow the Money

In days of yore, a good friend of mine sold pirated VHS movies at school. As a 15-year-old it didn't matter that the image was black & white and that the only thing I could really see was the Chinese subtitles; what mattered was that I got to watch a film a week before it was released at the theatres.

I grew out of my pirate phase at the age of 16 when I realised that if I carried on watching out-of-focus films, I'd probably end up needing glasses. Ever since then, I've always paid for movies. There's been a great deal written about movie piracy and I'm not going to rake over old ground. I will just say that I have personally experienced the effects of piracy and seen how badly it's hitting the low and mid budget movie industry.

2013-10-29-countofmontecristo.jpg Dockers advertising before The Count of Monte Cristo

Peer-to-peer file sharing between individuals is one thing, but this summer I noticed a real boom in the number of movies uploaded to YouTube. Iron Man 3, World War Z, and The Avengers are just some of the HD quality movies that have been available on Google's video service over the last few months. YouTube has successfully argued that the Digital Millennium Copyright Act's 'safe harbor' provisions absolves it of responsibility for what its users upload. I've always found this to be a spurious argument - in any other business growth is restricted by a corporation's ability to comply with the law. Imagine a bank that said it was unable to perform proper money laundering checks because it had too many depositors, or because its depositors were paying in too much money.

2013-10-29-enemyofthestate.jpgSkylanders advertising before Enemy of the State

But according to judgments in the YouTube v Viacom case, the DMCA provides YouTube with protection against copyright infringements carried out by its users. YouTube is not under an obligation to ensure that the service it provides complies with copyright law. Instead, copyright owners must report infringement to YouTube. So rather than YouTube creating a clever piece of software, or employing a small team of compliance officers, studios and producers all over the world have to duplicate effort and cost to monitor whether their titles are being uploaded. It doesn't look like this inefficient method of policing copyright is going to change any time soon, but things get really interesting when one looks at the money that is being made from illegal uploads. YouTube may not have a responsibility to ensure that the content it publishes complies with the law, but does that entitle it to derive revenue from illegally uploaded content?

2013-10-29-eurotrip.jpgPhilips advertising before Eurotrip

A quick check of YouTube today reveals that a Dockers pre-roll advert is running ahead of The Count of Monte Cristo, a commercial for Skylanders is running before Enemy of the State, Philips is advertising a shaver before Eurotrip, Google is advertising the Chromebook ahead of Olympus Has Fallen, Reed is advertising before The Rock, and my personal favourite, Don Jon, a movie, is advertising before Head Of State. Other brands currently running pre-rolls advertisements before pirated movies available on YouTube include Sky Movies, Guinness, Sony Xperia, Suzuki, Specsavers, Google Nexus 7, Net Bet, and KLM. Are these brands aware that they may be supporting piracy? Where exactly are their advertising fees going?

2013-10-29-headofstate.jpg Don Jon advertising before Head of State

There are three problems created by YouTube generating revenue from piracy. The first is ethical; should a huge corporation be allowed to profit from the criminal activity of copyright thieves? This isn't individuals file sharing to stick it to the Man. This is one of the world's biggest corporations, owned by Google, a company already under fire for its tax practices in the UK, racking up millions of views and therefore dollars from stolen content.

2013-10-29-olympushasfallen.jpg Google advertising before Olympus Has Fallen

The second problem raised by profiting from piracy is that the content owners, the movie studios and producers, have not had the opportunity to protect themselves with a contract. YouTube can run whatever advertisements it likes before a pirated film. It can advertise a competing studio's movies, it can run commercials for brands and products that are entirely inappropriate for the film and its intended audience. Even if some of the advertising revenue eventually finds its way to the rightful owner of the content, the owner has to accept, after the fact, that its content was used in a manner that it did not approve.

2013-10-29-therock.jpgReed advertising before The Rock

The third problem is brand association. Piracy may have become acceptable to some people, but it is still illegal and may not be something leading brands want to be associated with. It's certainly not something movie studios want to be associated with. How does YouTube ensure that advertisers' commercials don't run ahead of illegally uploaded content? How can advertisers be certain that some of the money they pay YouTube isn't ending up in the hands of criminals for whom copyright theft is just a sideline? Just using today's sample of advertisers, do Guinness, Suzuki, Sony, Philips, Reed, KLM and Dockers really want to their products to be associated with movie piracy?