by Chris Castle
Joaquín Almunia, the Vice President of the European Commission in Charge of Competition currently investigating Google’s unsavory business practices in Europe may wish to consider the dark underbelly of Google’s advertising business when deciding whether to give the company an unprecedented third opportunity to settle the competition questions against the global monopolist.
According to evidence released by the Justice Department in the Megavideo criminal prosecution, Megavideo was a Google Adsense customer until at least May 17, 2007:
On or about May 17, 2007, a representative from Google AdSense, an Internet advertising company, sent an e-mail to DOTCOM entitled “Google AdSense Account Status.” In the e-mail, the representative stated that “[d]uring our most recent review of your site [Megaupload.com,]” Google AdSense specialists found “numerous pages” with links to, among other things, “copyrighted content,” and therefore Google AdSense “will no longer be able to work with you.” The e-mail contains links to specific examples of offending content located on Megaupload.com.
While the quotation appears to be carefully worded email relating to Megaupload.com‘s Adsense account, it is unclear whether the government is pursuing the role that Google played in shoveling money to the “Mega Conspiracy” prior to that termination, and whether all accounts that benefited the Mega Conspiracy prior to and after the email were in fact terminated. Given the numerous examples of Google serving advertising to referring sites that drove traffic to Megavideo, this email quoted by the government actually raises more questions than it answers.
The DOJ also notes evidence that the Mega Conspiracy opened a Google Analytics account for Megavideo to provide data to help the company steal more efficiently, that apparently rose to the level of email exchanges with Google employees:
According to internal e-mails and documents obtained from Google, members of the Mega Conspiracy, including DOTCOM and VAN DER KOLK, began accessing Google Analytics reports for Megavideo.com, Megaupload.com, and Megaporn.com. The Google Analytics account was opened at least as early as November of 2008 under the name “TIM VESTOR,” which is an alias for DOTCOM. Google Analytics provides website measurement tools, such as the number of visits during a specified time period….
A particular Google Analytics report shows that between November 19, 2010, and February 18, 2011, Megavideo.com had roughly 1 billion visits. Less than 13% of these visits were “direct traffic” — meaning visits that were likely generated by the user having directly typed the URL link into the web browser or having bookmarked the URL link. More than 85% of the visits to Megavideo.com were from “referring sites,” meaning the user appears to have clicked a URL link on the referring site that directed the user to Megavideo.com. The top referring websites during that time period were third-party linking sites, such as seriesyonkis.com (more than 110 million referrals) and sidereel.com (more than 60 million referrals).
The reports from Google Analytics for the following time periods reflect similar data: February 19, 2011 — May 18, 2011; May 19, 2011 — August 18, 2011; August 19, 2011 — October 27, 2011….A particular Google Analytics report shows that between November 19, 2010, and February 18, 2011, Megaupload.com had roughly 1 billion visits. Less than 20% of these visits were “direct traffic,” and roughly 80% were from “referring sites.” The top referring websites during that time period were third-party linking sites, such as taringa.net (more than 50 million referrals), seriesyonkis.com (more than 25 million referrals), and multiupload.com (more than 20 million referrals). The reports
from Google Analytics for the following time periods reflect similar data: February 19, 2011 — May 18, 2011; May 19, 2011 — August 18, 2011; August 19, 2011 — October 27, 2011.
It’s not surprising, then, that the government obtained emails from Google relating to this level of traffic as it beggars belief that a Google Analytics customer with this level of traffic was just kind of getting an automated report.
These reports prepared by Google also demonstrates that Google knew or should have known that its terminated Adsense customer was in a business of getting most of its traffic from referring sites–and as Ellen Seidler has documented on Popup Pirates, these referring sites triggered pop up advertising pages that served “Ads by Google” and did so in the tens of millions. Advertising for some of the biggest brands in the world.
There was clearly an Adsense account somewhere in this mix for these referring sites, even if the Adsense account for Megaupload got to hot to maintain. It is now clear that Google was preparing reports that detailed exactly which sites were referring traffic to the Mega Conspiracy.
There are two questions that the DOJ has not asked as yet:
1. What happened to the money that Google made on Google’s share of revenue paid to the Mega Conspiracy before May 17, 2007? If this is like other instances where Google has profited from crime (as it told the BBC regarding advertising for counterfeit Olympics tickets, for example) and selling human growth hormone, RU486 and oxycontin, the only way Google will give up any of the proceeds from crime is if Google is criminally prosecuted. So let’s get on that, shall we? and
2. What is the relationship was between Google and these referring sites documented in the Google Analytics statements it sent to the Mega Conspiracy, how were they paid, and did any of that income originate in the US or was the revenue disguised outside of the US (such as in Google’s China operations that played a leading role in Google’s payment of $500,000,000 for violating US controlled substances laws. Did Google provide any income tax disclosure or filing regarding the income, including for its own share of advertising revenue? (Actually paying tax might be a bit much to expect, but at least telling the government how much income it was not paying tax on might have happened.) Was any of this income included in SEC filings and audited financial statements for Google and if not, why not? What did Google’s CFO Patrick Pichette know and when did he know it? Or perhaps John Dixon at Ernst & Young?
There’s a term for this…what is it again? Oh, yes. A Racketeer Influenced Corrupt Organization a/k/a how they sent Michael Milken to prison and bankrupted his company for a lot less evil. If the U.S. government is not going to pursue this investigation, Mr. Almunia is perfectly positioned to do so–why would he want to give an unprecedented third chance to a company that does not come to him with clean hands?
As the DOJ tells us:
On or about September 2, 2007, via Skype, VAN DER KOLK said to ORTMANN, “we’re modern pirates :-)”. ORTMANN responded, “we’re pretty evil, unfortunately”, “but Google is also evil, and their claim is ‘don’t be evil.’”
It takes a conspirator to know a conspirator.
The Trichordist’s commentary on YouTube’s Music Video Awards called attention to a variety of horrendous videos readily available on Google’s crown jewel, but none were quite as disturbing as the DIY videos of how to prepare a variety of illegal drugs for injection (“cooking”) and tips on how to inject these drugs.
First, we find “How I Inject Testosterone and Overcome Anxiety” brought to you buy Chevrolet and the CPAP shop:
And here’s the video:
Then we have “How to Cook Crack”, brought to you by National Geographic:
and here’s the video:
And then there’s “Shooting Up Morphine and Oxycontin” brought to you by the Minnesota Department of Health Services:
And here’s the video:
Not to be outdone by “Shooting Up Dilaudid” sponsored by Intervention Canada
and here’s the video:
If this bothers you, think about this. Google tries to pawn off YouTube as a competitor to television. Turn on your television and see if you can find DIY videos for cooking and injecting crack, oxy, morphine and dilaudid.
If you’ve been in the music business for very long, you have undoubtedly encountered addicts. We don’t think this is funny and we don’t think it can be rationalized.
We do think it should be stopped and the artists participating in the YouTube video awards or who are YouTube users are in a position to influence Google.
This is evil and it should be stopped.
The Jihad Will Be Monetized: How the New Boss Duped the White House (Again) to Protect Intermediaries and Brand Sponsored Piracy, Part 2
Americans are freedom loving people, and nothing says freedom like getting away with it.
From “Long, Long Time” by Guy Forsyth.
(Continued from Part 1)
As we have seen time and again, Google will sell advertising against everything from jihadi war porn, to ads for illegal drug sites, sex tourism and pirate sites of one species or another–and that’s just on the sainted YouTube.
Once you roll off of the YouTube site, nothing changes much except the labyrinth of referring sights, bridging pages and the like gets much, much more complicated. Whether it’s on a Google publisher or a third party or fourth party site, Google dupes brands from Honda to Gatorade to local businesses into facilitating the company’s enrichment at the cost of degrading their brands.
This came up before with the Google drug settlement–the $500,000,000 fine that Google paid to the US Government, and it’s a tribute to the power of the world’s largest media company that you’ve probably never heard about that payment. But we have, so now you will. Google ran a fake hand off with Google Drugs where they had some really serious downside potential that they might not have been able to buy their way out of–also known as jail time. They constructed a fake out by using their government connections–possibly through present members of the senior Justice Department staff as well as Clinton-era intermediaries. And so far, they have gotten away with it.
And I hope to persuade you that Google just ran the Drugs play again to distance themselves from brand sponsored piracy–you might call it the naked bootleg.
Whether they get away with it or not remains to be seen.
Naked Bootleg I
MTP readers will recall the infamous Google Drugs settlement. Google was the subject of several sting operations over a multiyear period conducted by a variety of Federal criminal investigators as well as a federal grand jury in Rhode Island. This was no small thing–Google produced over 4,000,000 documents in the grand jury proceeding.
There are a few other reasons why it is no small thing. Google signed a nonprosecution agreement with the federal government that was remarkably favorable to Google, but still cost the company $500,000,000. And they got off very cheap if you ask me. It takes Google about 48 hours to make $500,000,000, so while that may sound like a lot of money, it really isn’t.
This was in 2011–knowing what we now know about Google’s connections to the Administration, untold data mining on behalf of the government through cozy relationships with the National Security Agency, the Department of Justice and FBI, are you surprised that Google got off lightly on something as serious as violations of the Controlled Substances Act?
Also remember that the issue wasn’t that Google itself was actually fulfilling drug sales–the issue was that they were accused of selling advertising that promoted drug sales they knew to be illegal. Also known as profiting from human misery.
It’s also not surprising that when Google Chairman Eric Schmidt testified at a hearing of the US Senate Antitrust Subcommittee, he invoked his right to refuse to answer on the advice of counsel–some might call that invoking his right against criminal self-incrimination–under questioning from Senator John Cornyn. Senator Cornyn was rightfully not happy. (I’m reminded of Samuel Jackson’s question regarding Mr. Wallace in Pulp Fiction: “Does he look like a bitch?”)
Schmidt clearly looked and sounded like…someone who had something to hide as he repeatedly deflected Senator Cornyn’s question with what he had to know was a lie before Schmidt lawyered up. (The next time this happens–and there will be a next time–it might be worth asking Schmidt to clarify that he’s “taking the 5th”.)
Google is also being sued by many of its stockholders as a result of the Google Drugs prosecution, essentially for defrauding investors by failing to disclose this $500,000,000 forfeiture in a timely way, and using the company’s money to pay what is essentially a fine for the personal bad behavior of the senior management team.
And here is where the plot sickens: The Wall Street Journal noted a statement made by Google’s lawyer Boris Feldman in an official court transcript from a hearing in Delaware on one of the many stockholder lawsuits, a statement regarding the drug case prosecuted against Google by Peter F. Neronha, the US Attorney for Rhode Island (“Did DOJ Apologize to Google for US Attorney’s Comments?”):
“The U.S. attorney in Rhode Island went off the reservation and gave a long interview about all the evidence and why it was he was so excited about the case,” lawyer Boris Feldman told the judge at a Delaware state court. “It ended up being so far off the reservation that the Justice Department apologized to Google for it and muzzled him.”
Given what we now know about Google’s cozy relationship with law enforcement agencies and past and present DOJ appointees, it is entirely believable that the Justice Department would have apologized to Google for one of the US Attorneys having the brass to actually prosecute Google for anything that ended up in any kind of meaningful punishment for Google. However, the Wall Street Journal reports that the Justice Department (i.e., “main Justice” in Washington) denied apologizing:
Maybe the Justice Department apologized on his behalf? “We did not apologize,” a department spokeswoman said.
And the reaction from Rhode Island (which kept about half of the $500,000,000 to offset law enforcement costs in the state)?
“The U.S. attorney has never issued apologies to anyone in this matter,” a spokesman said. “As far as the suggestion that the U.S. attorney has been ‘muzzled,’ I can only point to the fact that we recently held a widely attended press conference” at which he answered media questions about the case.
Of course, Google likes to enjoy all the benefits of having access to the US public financial markets while accepting only the burdens it is forced to bear:
For its part, Google declined to comment, saying: “Google does not comment on its discussions with regulators.”
“Regulators”? Do you call the cops “regulators”? Maybe in Young Guns, but not since the 19th Century.
I think it is insulting that Google did not back up its lawyer–Boris Feldman has a sterling reputation and is one of the top litigators in the world. That–by the way–should have been the reason he was appearing for Google in the stockholder lawsuit in the first place. The idea that Mr. Feldman somehow misspoke on such a fundamental point or is not worthy of being backed up by his client is laughable.
Calling the Naked Bootleg
What does this have to do with the brand sponsored piracy “best practices”? Here’s where Google calls the naked bootleg.
It also appears that General Holder presided over a December 14, 2010 meeting for invited media at the White House requested by Google during the DOJ’s drug investigation into Google’s bad acts. Rather, nearing the conclusion of the 7-year long investigation into Google’s bad acts.
What, if anything, did this meeting have to do with the prosecution of Google? Did the Attorney General find it appropriate to make the following statement while at the same time prosecuting Google, a participant in the very White House meeting at which he was speaking, a meeting called to promote Google’s activities to cover over its bad acts?
[W]e successfully prosecuted a defendant who was selling fake cancer medications to patients in the United States, Canada, the United Kingdom, Belgium, and the Netherlands. The drugs – which he marketed as a rare, experimental treatment – were manufactured in Canada, but advertised and sold globally over the Internet. With assistance from Canadian and German authorities, this individual was apprehended and extradited to the United States. He is now behind bars and has been sentenced to almost three years in prison.
Given that at the time of the White House meeting (December 14, 2010), Google executives were no doubt close to being criminally prosecuted themselves, don’t you think that news of Google’s prosecution would have been relevant and surprising to participants in the White House meeting? Particularly since the Attorney General of the United States was giving a speech about the very crimes of which Google (a major political supporter of the Obama Administration) was accused at a meeting held under the auspices of the President of the United States concerning the very subject of that prosecution?
When the Google plea bargain was announced a few months after the December White House meeting (reported in the Wall Street Journal on May 13, 2011), would it not have been reasonable for the public to be at least a little surprised–if not shocked–by the Attorney General’s comments or lack thereof? If anyone bothered to report the story?
CNET was the only news organization I could find that actually pointed out this bizarre pageant. CNET reported on May 19, 2011 (six months after the White House meeting at which General Holder spoke):
No one may have been more surprised [at the announcement of Google's $500,000,000 settlment] than Victoria A. Espinel, the U.S. intellectual-property enforcement coordinator. Just six months earlier, Espinel, who’s leading the Obama administration’s efforts to thwart rogue pharmacies, commended Google’s help in the battle at [the December 14] White House meeting.
The December White House meeting was also the occasion to announce the formation of the Center for Safe Internet Pharmacies. Remember this part of the pageant–it will return with the IAB “best practices” announcement.
Again, according to CNET:
There are plenty of others surprised by the news. At that same December meeting at the White House, Google was joined by Microsoft, Yahoo, Go Daddy, and a few other companies in announcing the creation of a nonprofit organization called the Center for Safe Internet Pharmacies. The purpose of the group is to share information about illegitimate online pharmacies in order to root them out and shut them down.
“It was a surprise to me because I didn’t know the investigation was going on and because a half a billion dollars is a big number, even for Google,” said Christine Jones, general counsel, executive vice president, and corporate secretary at Go Daddy, the giant domain registration and Web hosting company that spearheaded the Center for Safe Internet Pharmacies effort.
The formation of the Center for Safe Internet Pharmacies is one of Google’s customary defenses to why the company isn’t simply running a RICO-predicate criminal enterprise. As recently as April 19, 2013, John Burchett, one of the legion of revolving door types in Google’s Washington DC in-house lobby shop, cited Google’s participation in the Center for Safe Internet Pharmacies in response to Mississippi Attorney General Jim Hood’s inquiry into Google’s compliance with the DOJ plea deal. (See page 13, AG Hood Exhibits. Burchett joined Google in 2007 (“Google: As Cool as it Seems and More“) just before Eric Schmidt received a prophetic letter from Joseph A. Califano, Jr. warning that Google was inducing the sale of drugs to kids. Burchett is a board member of Andean Health and Development and is the former Chief of Staff for Michigan Governor Jennifer Granholm. Governor Granhom was an Obama campaign debate surrogate you will recall from many, many appearances on Sunday shows during the 2012 presidential campaign. Before joining the staff of Harvard Law School classmate Granholm, Burchett “worked as a business consultant to governments across the country” including Detroit’s Little Caesar’s.)
Getting into the Center for Safe Internet Pharmacies industry group apparently was–and continues to be–a very important strategic move for Google. (Or what good Catholics will recognize as an “indulgence” for their sins.)
It also must have been important to Google that their motives for joining the group be concealed and not tainted by the fact that Google–at the very time they were being deceptively portrayed in the People’s House as one of the good guys–was either being criminally prosecuted by the US Government at the time, or was then currently negotiating a way to pay a $500,000,000 fine with the stockholders’ money and be handed a get out of jail free card by the US Government.
Imagine if instead of having this political plum handed to them on a silver platter inside the People’s House (albeit in the dark and without the knowledge of all–well, nearly all–the participants in the White House meeting) the press instead was all about why Google was allowed to join the group without at least disclosing its own felony prosecution for the very crimes at issue in the meeting.
Not very Googlely.
And they got away with it.
And according to Mr. Burchett, they are still getting away with it.
Next: The Return of the Naked Bootleg.
This is an honest house.
That’s why we’d like to see your husband.
Facing certain criminal charges that might be brought against some
people that are innocent, we just feel that it would be…
It’s really for his benefit.
No, it’s not.
No, it’s not.
HUGH SLOAN JR.
Debbie, tell them to come in.
From All The President’s Men, by William Goldman
I’ve spoken about brand sponsored piracy to a lot of people in the online advertising business. These are the worker bees, not the people who make the millions or more and have the big Google or Omnicom jobs. I talk to the people who are being set up for a fall by the people who make the millions and by the people for whom the giant Omnicom and Publicis merger is probably their last liquidity event in their exit strategy. Their last get out of jail free card in the game of brand sponsored Monopoly.
I notice a couple of things about these conversations that are common. First, the employees are petrified that anyone will ever find out that they talked. So until they want to come forward, they will remain anonymous. And of late we’ve all seen how well whistleblowers fare.
But this is more than just an average fear of losing their jobs. No one has actually said this, but some of them, the ones with the firsthand knowledge exhibit what I would characterize as an existential dread.
Then there are others that know exactly what the mechanics are behind the curtain and have more of what I would call a practical dread—they know exactly what to do to fix the problem and could do it, but they don’t have the full support of their companies and don’t want to be first.
And when I see the destruction of the world’s creators being perpetuated by some of the richest people in the world, and certainly the richest people in the online advertising space, I share with the worker bees another belief that they all have to one degree or another: These are all contemptible people who deserve to be punished. It is this self-loathing that they all have some of that will eventually lead to a true whistleblower who will just not be able to live with themselves anymore. And that person will come forward—not because they think it will advance themselves, and not because of riches, certainly.
They will come forward because we all have a voice inside our heads that is our mother, father, pastor, rabbi, teacher, scout master or coach—whoever it is that is who helped us cast our our moral compass. A voice that tells us that there is something bigger than ourselves that we are a part of, and a voice that blocks out threats from bad guys.
And for these people, there’s going to come a moment when that voice will be the only guide they have in an otherwise rudderless moral sea. And that voice will be what drives that person to come forward and tell the truth. And like Debbie and Hugh Sloane, it will not be because it’s to their advantage to do so or for fear of not doing so. It will be for another reason, a much simpler reason.
Because theirs is an honest house.
Let the Duping Begin Again
For those of you coming to the issue of brand sponsored piracy for the first time, it is important that you understand a bit about the online advertising ecosystem and how it differs from offline advertising.
One of the constraints on offline advertising is that brands are limited in the available channels for advertising—just the legal ones run by (relatively) reputable advertising publishers. For example, when McDonald’s wants to launch a campaign in the traditional offline channels, they buy advertising space from television networks, radio, newspapers, magazines, billboards, a host of outlets. These outlets are by and large devoted to a legitimate business.
McDonald’s would not tell their ad agency to buy ad space near drug dealers to encourage users with the munchies to buy a Big Mac. They might think about it–but they would need to find a way to mask that campaign.
This is not to say that criminals do not watch, listen to or read these media outlets and no one tries to prevent them from doing so. But these are not criminal enterprises.
The ABC network of television and radio stations buy, produce or license programming. They are all based in the US and are regulated by the FCC. We know where to find them and if they were to start profiting from unlicensed programming, they’d get sued and they know it.
The use of legitimate advertising publishers causes scarcity and that causes prices to be higher as advertisers fight over that scarcity—the Superbowl is a case in point. At least for now.
Online advertising is a vastly more complex system that looks roughly like this:
Online advertising has many benefits, including microtargeting of consumers and the fact that any video online invariably comes with an advertisement in the pre-roll or a popup add on the video itself. Advertising on sites like YouTube should—should–have the added benefit of knowing what a user is searching for on YouTube through keywords.
Yet, it doesn’t seem to work that way. For example, a YouTube search for “thai teen girls” served this ad for President Obama’s reelection campaign:
A YouTube search for Anwar Al Awlaki returned this ad for Mazda:
And a YouTube search for “jailbait” returned this ad of highly suggestive dancing by a girl of indeterminate teenage years for Senator Cornyn’s campaign against Obamacare:
Then there is this ad for both Honda and The Tile Shop served against a video of “748 Cute Girls Kissing” also in response to the search term “jailbait”:
Each of these examples of online advertising comes from the highly controlled YouTube environment, the showpiece of Google’s advertising model and Google’s prized extension of its search monopoly into the video search vertical. Google actively promotes YouTube as a replacement for television. YouTube is also promoted as the epitome of targeted advertising, an advertising model that Google would have advertisers believe will replace the current advertising model in traditional media.
Yet as an increasing body of research shows—if you don’t want to believe your own eyes—what keeps the YouTube advertising model going is that brands have little or no control over where their ads are placed. And these ads are served to YouTube by Google’s ad exchanges—the very companies that are part of the Internet Advertising Bureau’s “best practices” for online advertising.
Let’s Get this Party Started
It should start becoming clear that the ad exchange really doesn’t care what they sell with the brand’s advertising or what they do to attract an audience–even ads served by Google’s own DoubleClick on Google’s own YouTube platform.
It should start being clear that the IAB’s “best practices” are designed to protect all the gatekeepers and intermediaries–everyone in the advertising chain except the brand and consumers.
Because what keeps the online advertising ecosystem chugging out profits for companies like Google is the fact that companies like Google have convinced advertisers to agree that ad exchanges can serve ads based on one overarching criteria—the ad will be served to the publisher that produces the greatest profit for the ad exchange at the moment the ad can be served, wherever the ad is served, regardless of the context. That is certainly true on YouTube where Google has total control. Imagine what it will be like when we look at unlicensed sites where Google has much less control.
And it is to this end that the IAB’s “best practices” devote themselves. Not to getting value for their advertising clients, not for avoiding unsavory associations between Honda and “jailbait”, not for keeping the brand’s money out of the hands of criminals and God knows not to impose any accountability on those in the advertising chain who brands entrust to get it right—not for any of these worthy reasons.
No, the IAB’s “best practices” are designed for one purpose—keep the party going.
Who Do They Think They Are Fooling?
The UK’s Serious Organised Crime Agency has been very interested in that party for quite a while. (SOCA is roughly the equivalent of the Federal Bureau of Investigation.) As SOCA noted in a recent “Amber Alert” warning to international advertisers (Criminal Finance from Third Party Advertising on the Internet, SOCA Alert A2A725N, Nov. 2012):
It is highly likely that [brands are] unaware that [your] advertising was placed on [unlicensed sites] due to the way that internet advertising operates. The aggregation of advertising from various companies by advertising networks [and advertising exchanges], and the contracting of advertising to “fourth parties” (who may be less reputable or simply less thorough in their verifications) all serve to complicate the audit trail for advertisements….[I]llicit website[s], underpinned by the theft of [creators’ works]…used the income stream from online advertising space as its sole source of revenue. This revenue support[s] the criminal activitiy of the site.
SOCA then identifies one of the biggest, and certainly the most serious, problems with online advertising—the large number of criminal enterprises posing as advertising publishers. This is particularly true with unlicensed sites featuring music, motion pictures, television programs and broadcast television streams as well as books and other creative media.
Google’s UK Policy Manager is quoted as acknowledging the role of criminal enterprises in a recent debate on brand sponsored piracy:
“[M]ost people doing piracy are not some guy in his bedroom altruistically sharing music with his friends. It’s people making money out of piracy, and it’s big business: some of these sites have 2m visitors regularly, and they’re not doing a bad business from advertising.”
It is important to understand that “most people doing piracy” are in it for the money—not because they want to be in the media distribution business. I know this to be true because many of the top illegal p2p sites (including Limewire) rejected an opportunity to “come in from the cold” using SNOCAP—both immediately before and immediately after the Supreme Court ruling in the Google-backed Grokster appeal that was a huge loss for the criminal class. Why? Because at least three of them told me straight up that they couldn’t afford to pay royalties at the prices they got for their “high risk” advertising. Plus they couldn’t be bothered to bear the accounting burden.
So to Google’s credit, they did try to get a court ruling in their favor (through Lessig and the EFF). But when they couldn’t do it legally, they just did it illegally (remember that the Grokster ruling came down at roughly the same time that Google’s Adsense supplied advertising to Megavideo that they continued to do until the site was shut down–easy to understand why it would be important that Kim Dotcom never be brought to trial in the US with all that awkward discovery.)
Remember—when unlicensed and brand sponsored sites offer media to the public for free, they are willing to sell advertising at lower rates to the same accounts reaching the same audience as the licensed sites.
Fast forward to earlier this year, and you will see the negative effects on the legitimate market reported by Spotify’s Will Page, who echoed the statement attributed to Google’s UK policy manager:
“Copyright infringing websites are big businesses … 2/3 of piracy sites have advertising, and 1/3 also include credit card logons. This competition is real: consider how ad pricing is distorted by those unlicensed sites who offer more scale and no content costs.”
So creators are harmed twice: First when their works are used as a honeypot by the unlicensed site to induce users who are duped by the presence of legitimate advertising. This is not lost on the Serious Organised Crime Agency:
[I]llicit website[s], underpinned by the theft of [creators’ works]…used the income stream from online advertising space as its sole source of revenue. This revenue support[s] the criminal activitiy of the site. Ultimately this revenue was acquired from brands whose advertising appeared on [unlicensed]. By incorporating the advertising of recognised brands the website[s]…[attempt] to make the site appear legitimate. Conversely, the implied association between the site and legitimate brands may be damaging to the latter’s brand reputation.
But second when legitimate licensed services like Spotify have to compete with unlicensed sites in a race to the bottom on advertising pricing—a race that is a cynical attempt on the part of all in the advertising chain to profit from human misery by duping consumers. The artist’s share of gross revenue is inevitably smaller because the gross is lower, or the service asks the artist to take a lower royalty because advertising prices are driven down by unlicensed sites offering the artist’s music with no royalty cost.
The Internet Advertising Bureau had an opportunity to produce a set of “best practices” that would have actually protected Internet advertisers and consumers alike. Suggestions are not hard to find—Professor Ben Edelman of the Harvard Business School has a very well thought out “advertiser’s bill of rights” that would have worked just fine.
If your goal was to stop crime. That was certainly a popular view when Professor Edelman presented his ideas at the summer meeting of the National Association of Attorneys General.
Instead—as I hope to demonstrate—the IAB did the opposite.
They produced a way to keep the party going.
Some of you may have seen the “best practices” circulated yesterday by the White House–also known as Google Chairman Eric Schmidt’s B&B on the Potomac. (See the hysterical satire on “Father Knows Best” by Harry Shearer on Le Show: “Mr. Eric Knows Best” based on an imaginary dinner at the White House foreshadowing the dismissal of the FTC antitrust investigation of Google led by an outside lawyer with Google connections–Beth Wilkinson.)
We wanted to post a few thoughts about this latest debacle before a more detailed analysis.
1. The best practices were released by the White House around the time of the Joint Strategic Plan. This could give the impression that somehow the IAB’s best practices are part of the Joint Strategic Plan. Not true. The plan is subject to interagency review. The best practices are simply a project and process that has been convened in part through the White House. It is a one-sided agreement among businesses that profit from making the “best practices” not too difficult and as porous as possible. A private agreement with no force of law. Aside from market power–but we forgot, Google is not a monopolist according to the Federal Trade Commission.
2. There were no creators involved in developing the “best practices.” Not one. This is another unilateral attempt by the advertising networks to continue profiting from theft at the expense of artists.
3. The big companies involved in the announcement are AOL, Microsoft, Yahoo and…Google. Which of these is not like the others? Which of these paid a $500,000,000 fine for drug profiteering? Which of these has a nonprosecution agreement preventing it from being criminally prosecuted for aiding and abetting the sale of drugs to children? Only one–Google.
4. The “best practices” concerns itself solely with trademark and copyright infringement–not drugs, human trafficking, terror propaganda. It appears that Google–clearly the leader of the pack on this issue–is trying to deflect attention away from its bad behavior, particularly with the timing of the release of the statement. That timing is odd–after Mississippi Attorney General Jim Hood called out Google for continued drug profiteering and right before Google’s nonprosecution agreement with the Department of Justice is about to expire.
5. This isn’t the first time that Google used the White House to dupe Americans–the company did the same thing with the drug issue, convening an industry-wide meeting at the White House to develop best practices for drug advertising while at the same time negotiating their way out of a Rhode Island grand jury prosecution by paying a $500,000,000 fine. Despite the Attorney General’s active participation in that White House meeting, the subject of Google’s prosecution and subsequent fine never came up, Google was praised by one and all for being proactive and left the impression in quotable press reports that Google was doing the right thing on drugs. Press reports they rely on to this day–except for the CNET story, of course.
6. The best practices only apply to third party websites, not to web properties controlled by affiliates of the ad networks. Like, oh say, YouTube advertising Google Chrome on jihadi propaganda.
Or Duped Advertiser Numero Uno on YouTube searches for “thai teen girls” that return search results for sex tourist videos. No, the “best practices” don’t require any action against Google properties. Presumably this will also protect Google from Dr. Strangelove type actions against itself when it launches the new Moto X cell phone (or the “motox” as we call it around MTP–rhymes with “botox”…sort of).
7. The most ludicrous part of the best practices is that it requires yet more notices be sent to ad networks–when Google already receives 20 million notices a month for search alone and publishes them in the Google Transparency Report. Google says it finds 99% of its piracy problems on its own–if you think you find things on your own after people tell you about your problems 20,000,000 times a month or 240,000,000 times a year for search alone. The total number of DMCA notices Google receives has got to be much higher than that. But even so, if you miss 1% of those notices that still leaves 2,400,000 infringements.
So we love this “Masters of the Internet” track around MTP–which answers the musical question, is Google a commoditizer? The track by Marc Ribot’s Ceramic Dog is also a nice bookend from Bonfire of the Vanities to the watershed interview in the Guardian by Radiohead’s Thom Yorke where Yorke sums up Radiohead’s realizations about what David Lowery calls the “New Boss” reality:
“[Big Tech] have to keep commodifying things to keep the share price up, but in doing so they have made all content, including music and newspapers, worthless, in order to make their billions. And this is what we want? I still think it will be undermined in some way. It doesn’t make sense to me. Anyway, All Watched Over by Machines of Loving Grace. The commodification of human relationships through social networks. Amazing!”
“Masters of the Internet” is also a cool play on Google CEO Eric Schmidt’s Nixonian “Gang of Four” reference to the Internet oligarchs of Apple, Amazon, Facebook and Google. But–no monopoly there says the FTC.
Here’s Marc’s critique of brand-sponsored culture (aka “free culture”) from SPIN.com:
A number of people have asked us what’s up with Masters of the Internet. Do we hate our fans? Are we Luddites? Well, no and no. Here’s what we think: We don’t really expect much from asking people who are downloading stuff for free to voluntaristically pay up- although, yeah, we could use that dollar right about now, and we support Trichordist’s Principles for an Ethical and Sustainable Internet.
We don’t know what the ultimate solution is- but we know it isn’t the impoverishment of musicians and defunding music. And we know it isn’t pretending that no-one is being hurt.
Corporations are making huge profits from the ads on ‘free’ sites, from selling the hard and software that make illegal downloading possible. They need to give back a portion of their billions to the people who do the work: hey, we love our tech toys too, but an empty i-Pod is just a crappy paper-weight. Giving us back part of the value we create would make a real FREE culture possible- one where fans get what they need, AND creative community workers get paid. Bread and Roses, baby!
If you’re in NYC on May 5 (next Sunday), Ceramic Dog will celebrate the release of Your Turn as part of the Undead Music Festival at (Le) Poisson Rouge, downbeat 8 pm. These cats deserve your support!
Interesting Letter about USC-Annenberg Innovation Lab Brand Sponsored Piracy Study to Internet Advertising Bureau from Reps. Goodlatte and Schiff and Senators Hatch and Whitehouse
It’s always great when the government follows up on an important issue to artists. Representatives Goodlatte and Schiff and Senators Hatch and Whitehouse sent this letter to Mr. Randall Rothenberg of the Internet Advertising Bureau that had this choice passage:
We were pleased that your November 1, 2011 letter highlighted the IAB’s Network and Exchanges Quality Assurance Guidelines (Quality Assurance Guidelines), which “strictly prohibit” the sale of ad inventory on sites with “content in violation of U.S. law, and more specifically, Warez including P2P, torrent sites, illegal downloads, pirated software, Spyware and Malware, and sites that host or stream infringing content.” We understand from your letter that IAB has promoted the Quality Assurance Guidelines to help address this problem, and we further understand that IAB is currently in the process of updating them.
As you may have seen, the University of Southern California’s Annenberg Innovation Lab has released three “Advertising Transparency Reports,” listing the “top 1 O” ad networks that it found placing ads on sites engaged in piracy. Without endorsing the methodology employed, we note that IAB member companies that are “certified” under the Quality Assurance Guidelines are named in the reports.
We would welcome an update on your progress in implementing and updating the Quality Assurance Guidelines, and promoting the industry’s adoption and – most importantly operationalization of such measures.
Oh, wouldn’t we just.
Right after Google bought YouTube, Google lawyer Zahavah Levine spoke on a panel at the Beverly Hills Bar Association during which she described the “whack a mole” aspect of how infringing content is posted, reposted, and reposted again on YouTube–unless you want to make a deal with YouTube. (I happened to be speaking at the OECD’s digital future conference right before Google bought YouTube and got the distinct impression that the concept of UGC as a way to both steal copyrights and add another of the 1,000 cuts to the industry litigation budget sprang from the depths of the imagination of one Fred Von Lohman and one Terry Fisher–meaning this was all part of Google’s acquisition strategy–but that’s another story.)
So what exactly are you agreeing to as a songwriter when you agree to relax and enjoy it as it sounded like Ms. Levine suggested? What are you authorizing when you agree to “monetize” your “content” on YouTube? By the look of it, far more than you bargained for! (Or didn’t bargain for)
Take this example of a YouTube ad for “health-seller.com”. And by the way–I don’t mean pre-roll ads for other products on this particular video, I mean the video is itself an advertisement. Against which other ads are sold. What is it an ad for? “Buy Pills Online Without Prescription”. And what kind of pills? Cialis, Arcoxia, Levitra, Cardizem (heart relaxer), Casodex (prostate cancer treatment), Cloud9 Human Growth Hormone, Cytoxan (cancer treatment), and of course more different species of Viagra than Carter has…ah…pills.
Google, as MTP readers will recall, is no stranger to the world of no-prescription pharmacies–the company’s senior management team (apparently going up to Larry Page and Eric Schmidt) were nearly indicted in a multiyear sting operation for which it paid $500,000,000 of the stockholders’ money. So it’s not like they don’t know what they are doing when they allow these pill pusher ads onto YouTube. In fact, this type of YouTube video may themselves violate the Google Nonprosecution Agreement that allowed them to get out of jail free (to the executives involved). OPM, man.
And guess what is being advertised next to the drugs?
Yes, Google Chrome. You don’t suppose that YouTube serves Chrome ads based on the keyword “tablet” do you?
So this is how we know that the “no prescription” drug ad is “monetized”. How is this relevant to songwriters? I’d suggest that it’s yet another version of whack a mole, Google’s favorite game that Ms. Levine, Mr. Von Lohman and Professor Fisher foreshadowed way back when.
Listen to the music bed of the video:
Sound familiar? Yes, it’s the Theme from House–it’s actually a song by Massive Attack called “Teardrop,” but these days everyone knows it from its very close identification with the House television show.
When music is “licensed” on YouTube its usually in two licensing buckets–user generated content and music videos. (Unless of course it’s in the YouTube “partner” multichannel networks, in which case it’s not licensed at all the vast majority of the time. Don’t forget that YouTube describes these MCNs as “partners”. We’ll come back to that in another post.)
Music is not licensed for use as commercials, particularly not commercials for illegal pharmacies (that run for 4:22). Any guesses for how much a commercial use of “Teardrop” would set you back? If the writers even agreed to license it for a drug commercial?
But what has probably happened in the case of the drug advertisement on YouTube is that the song was authorized for “monetization” but YouTube failed to tell anyone that the song was being used in the bed of a commercial made for YouTube. A drug commercial. In other words, they can tell you that the song is being used, they just can’t tell you what for.
This is pretty clearly the exact conduct that is prohibited by Google’s nonprosecution agreement as YouTube becomes the leading music source of choice for kids. You know–the kids that Health and Human Services Secretary Joseph Califano was concerned about when he wrote to Eric Schmidt in 2008 to implore Schmidt to stop the drug ads. That Schmidt ignored.
So when you “monetize” a song on YouTube, just remember that you are giving up control of where your song appears because YouTube’s ContentID will not block these ads and no human will either. And as we know from the Google sting that resulted in the $500,000,000 fine to keep its executives out of jail, Google will actually look for ways to get around its own filters.
How hard is it to automatically flag anything with the line “buy pills online without prescription” on a site largely devoted to kids? Is that so very hard to figure out?
As Ms. Levine indicated back in 2006, there’s nothing you can do to actually stop Google from promoting dope on YouTube. Not even fine them $500,000,000. Maybe some day there will be a government that won’t let them buy their way out of jail, because that’s probably what it’s going to take to get their attention.
But until then–what YouTube will likely say is that by deciding to monetize your music, you have authorized using it in the bed of an ad pushing drugs to kids and desperate people, even addicts. And they’ll be all happy and smug about that.
It’s time to start demanding far greater accountability from Google. If they’re going to be using your music whether you like it or not, you should at least have the same control over the “new boss” that you would have over the “old boss.” And it would be a cold day in hell that the old boss ever approved a sync for an ad for an illegal pharmacy.
Monetize, monetize, monetize. This is the constant mantra from YouTube to all copyright owners but especially to songwriters. YouTube gives all kinds of assurances about how they can block songs, recordings and movies with their superduper “ContentID” and “Content Management System.” While these proprietary Google technologies get all kinds of props in the no-nothing press, anyone who uses these systems routinely knows that it requires a staff at each content owner in order to manage all the glitches and mistakes in ContentID and CMS–in order for either of these systems to function properly.
Why? Because at the end of the day, running a large content database that involves registering content requires human intervention. Costly human intervention. One customer service call can destroy profits. And YouTube has essentially outsourced this expensive part of their business to copyright owners. If you work at a major publisher, you know exactly what I mean. If you are an independent songwriter you probably don’t because you have resigned yourself to YouTube’s screw ups.
And this from a company that won’t let you audit?
Case in point–here’s a video from what appears to be an illegal pharmacy site that was uploaded to YouTube before the Google drugs case (see the 2011 nonprosecution agreement between Google and the Criminal Division of the US Department of Justice by which Google avoided being indicted for violations of the Controlled Substances Act by paying a $500,000,000 fine and promising good behavior).
Note three things: The video is “user generated content” (“user” in this context means a YouTube user not a drug user. We think.)
Second, the video has a music bed. Ironically, it is “Teardrop” by Massive Attack which is also the theme from the House television show. I seriously doubt that Massive Attack has any idea that their song is being used to sell drugs through this sketchy video.
We know that YouTube knows the song in the video because they have a link to it by name on Google Play.
Finally, the video is monetized–ads are playing on the page, pre-roll before the video, and inside the video–in fact, the same ads are in each, so the campaign is coordinated.
This ad is for Southwest Montana–the State of Montana is buying ads to promote a drugs site and Google. These ads are served by Google–note the credit “Ads by Google”.
And then there’s this ad for Eakin Kia in Killeen, Texas. I doubt seriously whether Mr. Eakin has any idea that he’s promoting the sale of drugs on YouTube.
Not to be outdone, Google itself advertises its Google Chrome product, probably due to the keyword “tablet”.
Why is it that Massive Attack, the House television program and Eakin Kia are in this situation?
Because YouTube doesn’t give them the choice to block individual video uses. And this video has been in place for 3 years.
Because YouTube wants to make the money–even when it involves practices that nearly put the company’s top executives in jail, was the subject of a lengthy grand jury investigation and for which Google shareholders paid $500,000,000.
They can pay $500,000,000 in punishment to the government, but they can’t quite manage to find a way to tell advertisers or songwriters that their songs or ads are being used to push drugs to YouTube’s young audience.
Click on the image to sign the #irespectmusic petition at irespectmusic.org
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