Are Rights Holders Making a Fortune With P2P Lawsuits?

A new study released by a German consumer advocacy group is estimating that entertainment and software companies sent roughly 450,000 cease-and-desist letters to local file sharers alone in 2010 2009, yielding some $370 million in damages. That’s a steep jump from 2008, when the group tracked closer to 250,000 of such cases.

It’s hard to independently verify these figures, but experts agree that the number of individuals affected by P2P lawsuits is likely in the hundreds of thousands. Add to it the fact that similar campaigns are also waged in countries like the UK, and suddenly piracy is starting to look less like a threat and more like a not very kosher way to make money.

The German non-profit organization Verein zur Hilfe und Unterstützung gegen den Abmahnwahn e.V., which (very) loosely translated means The Association Against Cease and Desist Madness, released a detailed study this week based on multiyear investigations of anti-P2P lawsuits. Germany has in recent years become an intense battleground for file sharers and content owners, with companies like Digitprotect GmbH scouring P2P networks to find users that are offering files for download. Armed with this evidence, they’re using legal means to force ISPs to reveal the identify of such users, to whom they subsequently send cease-and-desist notices complete with an order to pay as much as 1,300 euros (around $1,900.) Users unwilling to pay are threatened with even more costly lawsuits.

The study concludes that Digiptotect and similar companies were acting upon the request of 159 rights holders in 2009. Most lawsuit threats were related to music sharing, but 10.8 percent had to do with Hollywood or German movies, and another 15.2 percent with pornographic videos. The group is basing these numbers on around 2,700 cases it was able to analyze in detail based on data provided by the alleged offenders. It also scoured various web forums to collect data, and estimated the total number of cases based on publicly available data and previous estimates.

Granted, that doesn’t sound very scientific, but experts view 450,000 cases as a realistic ballpark figure, as the German IT news site Netzwelt.de is reporting. The site is quoting a lawyer named Alexander Wachs who’s been defending accused file sharers as saying that rights holders have started to send multiple demands to file sharers who happened to share more than one movie. However, Wachs believes that the total amount of damages paid may be lower since not everyone ends up paying. Still, P2P users may have paid close to $190 million to rights holders in 2009, according to his own estimates.

That’s a whole lot of money, and it explains why companies like Digiprotect are advertising their business with promises to “turn piracy into profit.” In fact, a Digiprotect competitor recently made headlines trying to convince rights holders that they could make 150 times as much money by hunting down a file sharer as they would if the same user would buy a legitimate digital download.

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