Publishers, Not Advertisers, Should Fear SOPA

The digital media industry is abuzz this week regarding SOPA, the Stop Online Piracy Act, which Congress is currently considering. Reading the bill can easily conjure up apocalyptic scenarios, in which the government in effect controls the Internet — and most companies doing business there — under the guise of fighting piracy. In truth, it will affect different parts of the Web differently. Within digital media, although there are concerns for advertisers, networks and exchanges, it’s clear that publishers have much more to fret about.

In essence, SOPA proposes the U.S. government should be given the power to shut down or “blacklist” websites that violate copyright laws. They would do so by ordering entities like ad networks, search engines, and Internet service providers to completely cut off services to offending sites. An ISP could be legally required to block all traffic to a domain, for example, while ad networks could be forced to cease serving ads to it, hence cutting off its revenue source.

Publisher concerns about the proposed legislation are legitimate. If passed, any site that facilitates the infringement of copyright — intentionally or otherwise – could be shut down within days with little or no recourse for the site operator. Though the bill appears mostly intended to combat the growth of services such as torrent sharing and video streaming sites, it could have major implications for social networks, online communities, and virtually any site that enables the publishing or syndication of user-generated content. It’s no mistake that Tumblr, a popular venue for sharing photos, protested SOPA by virtually censoring all users’ dashboard pages.

Google, AOL, eBay, Facebook, LinkedIn, Mozilla, Twitter, Yahoo, and Zynga have submitted a letter to Congress firmly opposing the bill. Though they support its intended goal, the companies argue that measures such as these “pose a serious risk to the industry’s continued track record of innovation and job-creation.”

As explained by Julie Ahrens, associate director of the Fair Use Project at Stanford Law School, “By vastly increasing the risks associated with hosting user-generated content, SOPA will make it far more difficult to start new Internet companies. If SOPA had been the law, it is doubtful that Facebook or YouTube would have been able to launch.”

That’s a major concern, although clearly not the intention of the law. It would appear, at first glance, ad networks, DSPs, exchanges and other ad tech companies would be as worried. Yet while they play a key role in the food chain, their risk appears, for the most part, minimal since many other direct steps could be taken against sites deemed piracy centers

The bill requires that online advertising services create a position of an agent dedicated to fielding piracy complaints from copyright holders and regulators, but as long as they comply promptly in shutting out blacklisted sites, there’s little reason to believe the law would substantially hamper the ad industry’s growth. Cutting off a few publishers with arguably shady content shouldn’t be a huge loss for the online ad space, unless of course the legislation leads to vast numbers of popular sites being permanently removed from the Web.

This shouldn’t be a major revenue loss for many ad providers, although it’s clear that many are directly involved in sustaining piracy sites. Visit Cuevana.tv, for example, where you can stream full episodes of HBO series and many movies. Using a browser plugin Ghostery will show you that an entire raft of industry players are involved behind the scenese supporting Cuevana: supply-side platform Pubmatic, Yahoo-owned exchange Right Media, retargeting firm Media6Degrees and others.

Google argues, rather implausibly, that existing mechanisms are sufficient for limiting the financial viability of sites that flaunt copyright laws, and that those should be built upon, rather than replaced with heavy-handed legislation.

“We employ a wide array of procedures and expend considerable financial resources to prevent our advertising products from being used to monetize material that infringe copyright,” the search giant’s copyright policy counsel Katherine Oyama testified before a House committee this week.

That said, it appears major ad companies — including Google — continue to support some of the most popular online destinations for surfacing copyrighted content. Cuevana.tv, which enables the streaming of U.S. TV shows such as Mad Men, drops cookies from Google AdSense, AppNexus, Yahoo-owned Right Media, and WPP’s Media Innovation Group, amongst others. Meanwhile Torrentreactor.com serves ads with help from Google-owned DSP Invite Media, OpenX, and TargusInfo. Numerous torrent-sharing sites make use of Google’s analytics tools, also.

If passed, the impact of SOPA will ultimately depend on the way it’s implemented. Site owners are right to worry about the extent to which the new legislation could be enforced, but unless it serves to obliterate half the Internet, the Act would likely be little more than an inconvenience for the online ad business.

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