Google trademark. (AFP / Getty Images )
Google Inc. and Yahoo Inc., two Internet companies that have long cultivated relationships in Hollywood, are nevertheless placing ads on sites that feature pirated movies, TV shows and music, a new report says.
USC's Annenberg Innovation Lab ranked Google and Yahoo among the top 10 advertising networks that support major piracy sites around the world, based on the lab's analysis of online ads that receive the most copyright infringement notices.
Google took issue with the report's findings, calling its conclusion "mistaken." Yahoo did not respond to requests seeking comment.
The report is the first installment of a monthly update that Innovation Lab Director Jonathan Taplin hopes major brands will use to inform their decisions about online ad spending and steer dollars away from sites that exploit film, television and music.
"Whenever we talk to a brand about the fact that their ads are all over the pirate sites, they're like, 'Oh, how did that happen?'" Taplin said. "We thought it would be easier if they knew what ad networks were putting ads on pirate sites — so they could avoid them."
Annenberg's Innovation Lab used as its starting point Google's Transparency Report, which lists the Internet sites receiving the most notices from studios, trade associations and software and game publishers to remove copyrighted works. Whenever an ad appears on one of these leading pirate sites, the lab uses software to obtain the name of the ad network.
The list of ad networks includes Openx, a Pasadena company that was backed by AOL Ventures and describes itself as a leader in digital and mobile ad technology; Google and its advertising platform, DoubleClick; Yahoo and its ad exchange, Right Media; and Quantcast, a San Francisco firm that also places ads on sites owned by such major media companies as NBCUniversal and Viacom.
"To the extent [the study] suggests that Google ads are a major source of funds for major pirate sites, we believe it is mistaken," a Google spokesperson said. "Over the past several years, we've taken a leadership role in this fight. The complexity of online advertising has led some to conclude, incorrectly, that the mere presence of any Google code on a site means financial support from Google."
Taplin has been an outspoken opponent of Internet piracy since the early 2000s, when he witnessed the toll Internet piracy took on his friend Levon Helm — whom Taplin had befriended in 1969, after graduating from Princeton and going to work as the Band's tour manager.
The late singer and drummer had been able to live off the record royalties from his music until the advent of pirate sites such as LimeWire and Pirate Bay, Taplin said. But in recent years, despite suffering from throat cancer, Helm was forced to go back on the road to pay his medical bills. Some nights he couldn't sing more than a single song.
The file-sharing sites were making money selling advertising to fans of the same music, stolen and uploaded to the sites.
"All musicians know ... why their incomes have plummeted," Taplin said. "Everyone knows piracy has destroyed the music business."
The failure in Congress of the Hollywood-backed Stop Online Piracy Act, amid protests of censorship, prompted Taplin to attack the financial underpinnings of piracy. Advertising provides about 86% of the financing for file-sharing sites that feature illegally distributed content, according to a report funded by Google and the Performing Rights Society for Music in Britain.
Brands — particularly those seeking relationships with recording artists to convey a hip image to young music fans — need to be more vigilant about their advertising, said Chris Castle, a music and technology lawyer based in Austin, Texas.
"If you look at IsoHunt right now ... you'll see advertising from the top brands in the world," said Castle, referring to a search engine that allows users to find pirated music, movies, games and TV shows online. "These brands are just perpetuating the people who are stealing from [the artist], and making them rich."
Jeans maker Levi's took swift action when Taplin presented evidence that the clothing company's ads had appeared on file-sharing sites.
"When our ads were running unbeknownst to us on these pirate sites, we had a serious problem with that," said Gareth Hornberger, senior manager of global digital marketing for Levi's. "We reached out to our global ad agency of record, OMD, and immediately had them remove them.... We made a point, moving forward, that we really need to take steps to avoid having these problems again."
Jean Prewitt, president and chief executive of the Independent Film & Television Alliance, said bringing the brands and ad networks into the conversation about Internet piracy is an important step in repairing the damage caused by illegal online distribution.
"When you start to look at this ad revenue, somebody is making money off this — and it's not kids in basements," Prewitt said. "This is an industry that is commercializing the content, but not in any way that contributes to creating that content."
INTERACTIVE: TVs highest paid stars
INTERACTIVE: YouTube's viral videos of 2012
PHOTOS: Hollywood back lot moments