Report Shows Scale and Complexity of Online Piracy and Counterfeiting Problems Businesses Face
A recent study that sampled just 22 brands, revealed that Web sites offering pirated digital content and counterfeit goods generate more than 53 billion visits per year. The results of the study released today by MarkMonitor, showed that sites offering pirated digital content draw a majority of the 53 billion annual visits while sites selling counterfeit goods, including prescription drugs and luxury goods, generate more than 92 million visits per year. The amount of traffic generated by these sites as well as the range of locations used to host and register them indicates the complexity in finding a solution to the global problem of online piracy and counterfeiting.
Global piracy affects a wide range of digital content, including movies, music, games, software, television shows and e-books while the trade in counterfeit goods online touches almost every item, including apparel, footwear, electronics, luxury items, sports merchandise and pharmaceuticals. MarkMonitor estimates the worldwide economic impact of online piracy and counterfeiting at $200 billion annually.
A report that MarkMonitor released in September showed that suspected counterfeit ecommerce sites attract over 120 million annual visits, almost half the traffic generated by the REAL, legitimate dot com Web sites according to the study.
U.S. businesses are increasingly aware of the damage digital piracy and online counterfeiting can do to their brands, which prompted the U.S. Chamber of Commerce to approach MarkMonitor about developing a fresh perspective on the scope of the problem. As a result of these discussions, MarkMonitor produced an independent study of online traffic trends to rogue sites, identifying and prioritizing some of the worst offenders based on traffic, as well as identifying location information.
“In the online world, unlike the physical world, supply and demand are virtually limitless so it is imperative to understand both online distribution channels as well as digital promotional vehicles in order to develop effective mitigation strategies,” said Frederick Felman, CMO of MarkMonitor. “Examining traffic patterns and geographic information are vital in identifying and prioritizing enforcement actions rather than playing ‘whack-a-mole’ with egregious offenders.”
Among the study’s findings were that 67 percent of sites suspected of hosting pirated content and 73 percent of sites categorized as “counterfeit” were hosted in North America or Western Europe. In previous ‘test buys’ of prescription pharmaceutical products from some of these sites, MarkMonitor found that payment processing and order fulfillment took place in countries other than that used to host the site or register its domain name. These findings demonstrate that while reliable infrastructure is a key factor for sites hosting piracy and counterfeit goods, many of these sites conduct business across multiple national boundaries.
“Online intellectual property theft—whether it is the sale of counterfeit shoes and fake drugs or the illegal distribution of movies, music, and software—steals jobs, threatens consumers, and hinders our economic growth,” said Steve Tepp, senior director of internet counterfeiting and piracy for the Global Intellectual Property Center at the U.S. Chamber of Commerce. “We have known for a long time that rogue websites, those dedicated to piracy and counterfeiting, were flourishing at our expense. Now we begin to see the staggering scope of this problem—more than 53 billion visits on rogue sites. And the MarkMonitor study is just the tip of the iceberg, identifying only a portion of the colossal amount of Internet traffic related to online counterfeiting and digital piracy. The study’s findings underscore the urgency to address this epidemic in order to protect consumers, allow the legitimate Internet marketplace to flourish, and create jobs in America.”
MarkMonitor conducted the study during 2010 using a sample of 22 brands from product categories including prescription drugs, luxury goods, music, films and athletic gear. Using its patented technology, the company ran automated scans which identified more than 10,000 suspicious sites that were filtered further to include only dedicated e-commerce and digital content delivery sites which were then ranked by traffic using publicly-available Alexa data. MarkMonitor experts examined the resulting data set to determine whether sites met strict criteria for pirated digital content or sales of counterfeit goods. Because of the small sample of brands used in the study, it provides a snapshot of the scope of online theft of intellectual property and illicit e-commerce. Given the large number of popular brands, it is reasonable to assume that hundreds of thousands of other rights-holders, brands and content creators are suffering the same damage.