The RIAA-lite strategy to getting piracy off the Internet isn't working out.
Los Angeles-based Rightscorp launched in 2011, with the goal of helping big content companies reduce piracy on peer-to-peer networks. The basic idea is that rather than using costly lawsuits, if ISPs forward Rightscorp's sternly-worded emails, piratical users could be brought to a site where they could settle for the sum of $20 per infringed work.
Newly released earnings numbers show that Rightscorp is contacting more people than ever before, fining more people for infringement than ever before, working with more ISPs than ever before—and yet is reporting record losses. Its stock is near all-time lows at about $0.11 per share.
Rightscorp lost a staggering $3.4 million over the course of 2014. The company earned $930,729 in revenue, but that was outweighed by $4.3 million in expenses. One of those expenses is fees paid to its copyright holder clients, who get paid 50 percent of everything Rightscorp pulls in. In all, the company says it's closed 180,000 cases of infringement.On an earnings call today, company executives talked about how piracy is a gigantic problem in general, and painted an optimistic picture.
"Rightscorp is recognized as a pioneer in the fight against piracy," said CEO Christopher Sabec. "We've established the company as one of the only viable solutions to the multi-billion dollar problem of peer-to-peer piracy."
They noted that their top-line growth is up 187 percent from the previous year, and pumped up a statistic they mentioned in a press release last week, saying that Rightscorp had experienced a 466 percent increase in the number of ISPs the company is working with.
However, that's not a very meaningful increase. While Rightscorp may have gone from 50 to 233 ISPs, most of those are very small providers, with at least some of them being individual universities who forward notices to students. The amount of the US population who have Internet service providers that cooperate with Rightscorp remains stable at about 15 percent.
More and more, most of Rightscorp's business is made up of two big clients. In 2013, BMG Rights Management made up 25 percent of Rightscorp sales, while Warner Bros. Entertainment accounted for 7 percent. Last year, a whopping 76 percent of Rightscorp revenue came from its deal with BMG, while Warner Bros. made up 13 percent of sales.
Rightscorp's newest 10-K filing notes that the company has no source of revenue that's sufficient to allow it to "continue as a going concern."
One growing expense is Rightscorp's legal bill, which last year rose to $480,755. In November, the company was sued for allegedly violating federal laws when it made robo-calls to people it identified as infringers. Rightscorp has moved to dismiss that case, and says it "plans on mounting a vigorous defense" if it does move ahead. Last month, it was slapped with a second such lawsuit in Georgia.
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