Japan aims to target ad revenue to combat piracy sites

[Len]

Piracy websites have become a major social problem, prompting debates on the pros and cons of blocking access to them on the grounds of copyright violations. To prevent the proliferation of these sites, a scheme is now under consideration to cut off their revenue from internet advertising as it serves as their main source of revenue.

Similar systems have already been introduced in European countries and the United States as a means of combating piracy sites, and it has been reported in Britain that such a scheme helped reduce advertising on these sites by 73 percent.

However, online advertising distribution systems are extremely complex, and maintaining transparency is likely to be key to the success or failure of restrictions on piracy sites.

¥20 mil. paid to Mangamura　

Mangamura is one of three sites the government has named as “appropriate” to block web users from accessing. Its main source of income is internet advertising fees.

In online advertising, the primary model is to charge based on the number of page views. With more than 160 million visitors per month, Mangamura is believed to have earned a considerable amount of revenue.

In the case of online giant DMM.com, the company said that it paid Mangamura nearly ¥20 million in advertising fees from January to the end of November last year, when it stopped placing ads on the site.

Facing criticism that it had “supported” illegal activities through its advertising payments, DMM President Takanori Katagiri said: “[My company] didn’t intend to run ads on Mangamura. We’re not informed where our ads were being distributed, nor could we control it.”

E-book distributor NTT Solmare Corp. has also had their ads appear on piracy sites.

“We’ve asked ad agents not to place our ads on illegal sites, but we don’t know which ones they are actually distributed to,” a company official in charge said. “In this case, we first learned of it when it was pointed out by an external source.”

NTT Solmare takes steps to have its ads suspended whenever their placement on malicious sites is discovered, but the official said the procedure is “like a game of cat and mouse because the sites that ads are distributed on are constantly changing.”

The company said that so far, it has compiled several hundred sites for which they took steps to suspend their ads.

The complex online advertising model in which numerous parties are involved between various advertisers and media outlets that run the ads is at the root of the problem.

Among companies that advertise online, only a small fraction secure ad slots in advance. In recent years, it has become common for optimal ads to be distributed automatically.

In this method, when agents for advertisers and those for media outlets that provide ad space have set such conditions as pricing and targets, ad slots that fulfill the various conditions on each side are swiftly acquired with the advertisements and then distributed. There is also real-time bidding where the pricing of ad slots is impacted by the popularity of a website at a particular time. This makes it difficult to determine in advance which ads will be distributed where.

“As advances in automation and optimization through technology have been made, distribution systems have ended up becoming like black boxes,” said Yuichi Ota, chief executive officer of DataSign Inc., who is an expert on advertising technology.

Existence of ‘hidden sites’　

As long as ads are displayed on problematic sites, it will be possible for web users to see them. Now, there are even cases in which ads are posted on “hidden websites” that are not ordinarily viewable by users.

For example, Ota confirmed the existence of a hidden site on Mangamura as of Jan. 12. Even though the ad placed on the hidden site was not visible, users who visited Mangamura would have been counted as also visiting the hidden page, and therefore the advertisers whose ads were placed on it were billed.

A major logistics holding firm had its ads posted on such a hidden page. “It’s hard for us to believe that our ads were running on Mangamura,” a company official said.

These techniques are referred to as ad fraud, and new techniques are constantly being worked out, such as displaying miniature ads and developing programs to create large amounts of page views or clicks.

“Perhaps 30 percent of overall advertising overseas falls into ad fraud, with the ratio at around 15 percent in Japan,” Ota said. “If we leave these scams unaddressed, it would only help boost the profit of illegal sites and thus support illegal activities.”

Increase transparency

“It’s technologically possible for advertisers to get control over which sites their ads are distributed on,” said Shinji Terada, a senior researcher at the JIPDEC, formerly known as the Japan Information Processing and Development Center, who is an expert on online advertising systems.

For example, a number of services are now available, such as one that blacklists illegal or adult sites that could damage an advertiser’s brand image or one that distributes ads only to highly trusted media outlets.

As part of countermeasures against ad fraud, more and more media overseas are making information available to the public about the ad agencies they authorize to sell ad spaces, with the aim of driving illegitimate business operators out of the market.

While this approach is not yet widespread in Japan, Terada said: “Advertisements are the face of a company. If a company’s ads appear on piracy sites, it can cause serious damage to its brand. To make the [online advertising] industry more legitimate, it’s important for advertisers to increase awareness and demand transparency in the distribution of their ads.”

British blacklist succeeds in slashing big firms’ ads

According to documents released in 2016 by the Cultural Affairs Agency, Britain, France, Sweden and some other European nations have imposed restrictions on placing ads on piracy sites since 2013.

In Britain, police in London share a blacklist with ad agencies, advertisers and rights holder groups to restrict the placement of ads. This measure reportedly helped reduce the ads that major firms placed on piracy sites by 73 percent by 2015.

As it is difficult to determine the illegality of a particular site or service, the police have set up a special team tasked with examining evidence of violations submitted by rights holders groups, as well as creating the blacklist.

In Japan, the Japan Interactive Advertising Association (JIAA), an internet advertising industry group, has just started discussions with rights holder groups. The organization intends to implement a similar scheme after studying the criteria for compiling a blacklist, methods for verifying illegality and other issues.

It is necessary for the whole industry to promote this kind of measure. In particular, ad agencies, which deal directly with media outlets, will be key.

It has been pointed out that some JIAA member companies were involved in the distribution of ads to Mangamura. The organization is currently looking into this, saying it will consider imposing penalties, depending on its findings.