July 28, 2014 Issue
The Most Powerful Name In Corporate News and Information
Copyright Monetization Service for Digital IP Content
Rightscorp, Inc. (OTCQB: RIHT)
RIHT) is a leading provider of monetization services for artists and holders
of copyrighted Intellectual Property (IP). The Company's patent pending
digital loss prevention technology focuses on the infringement of digital
content such as music, movies, software, and games and ensures that owners
and creators are rightfully paid for their IP. Rightscorp implements
existing laws to solve copyright infringements by collecting payments from
illegal file sharing activities via notifications sent through Internet
Service Providers (ISPs). The Company’s technology identifies copyright
infringers, who are offered a reasonable settlement option when compared to
the legal liability defined in the Digital Millennium Copyrights Act (DMCA).
Based on the fact that 22% of all Internet traffic is used to distribute
copyrighted content without permission or compensation to the creators,
Rightscorp is pursuing an estimated $2.3 billion opportunity and has
monetized major media titles through relationships with industry leaders.
3100 Donald Douglas Loop North
Santa Monica, CA 90405
CEOCFO: Mr. Sabec, what is the concept at Rightscorp?
Mr. Sabec: We are a copyright monetization service that monitors the Internet 24/7 for violations of our clients’ copyrights on peer-to-peer networks. We then exchange the liability an infringer incurs under the Digital Millennium Copyright Act (DMCA) for a twenty dollar payment and an agreement not to continue infringing.
CEOCFO: How did you decide on twenty dollars?
Mr. Sabec: We saw the big problem in the entertainment content space where the copyright log gives a very big stick, but that big stick is $150,000 in statutory damages. In order to get that, you need to take somebody to court. It proves to be very costly and time consuming but it is also very unpopular with the public. We felt that creating more of a parking ticket or speeding ticket model would allow us to protect our rights holders and effectively enforce it. Current technology allows infringements to occur very easily and our solution overcomes the negative public perception that the damages are too great on an individual infringing.
CEOCFO: Who is using your service today?
Mr. Sabec: Major film studios, platinum artists, and major music labels like BMG Music. We also represent Academy Award winning films, top TV shows as well as book authors. Anyone who creates content on the Internet would benefit from our services.
CEOCFO: How are you able to monitor everything?
Mr. Sabec: We have created a proprietary patent-pending software that crawls the Internet, allowing us to see the infringements on an ongoing basis. We actually see all the infringements in the world right now but we filter out non-U.S. infringements for the time being.
CEOCFO: You see an infringement, then what?
Mr. Sabec: Our automated software will send a notice with cease and desist as well as an offer of settlement to the ISP where the infringement took place on its network and that has identified the infringer by IP address. The ISP will then look that infringer up against their data tables, confirm that we are correct, (that the infringers where who we said they were at that time) and then forward our notice to the infringer.
CEOCFO: At the end of the day, how many people pay attention?
Mr. Sabec: Simply a lot. More than 70 ISPs forward our notices including five of the top 10 ISPs in the U.S. We have resolved over 75,000 cases of copyright infringement since we have started in 2011 and that number goes up every day. We had nine quarters of steady revenue growth and are constantly adding ISPs. We feel our solution provides us a great opportunity to make a difference in the rights holders’ ability to enforce their rights.
CEOCFO: Is the word spreading among the general public?
Mr. Sabec: We are not trying to end piracy; we are just trying to protect our client’s rights and recover lost revenue. The word is spreading though. We just had a really great article written about us in Ars Technica, which is more of a publication that we favor, reviving copyright. For looser copyright laws for example, they wrote favorably about our business model because it makes sense the way technology is unfolding and every month we get more payments, every month we have more ISPs participation. I believe it is going in the right direction.
CEOCFO: Are the ISPs easily on board?
Mr. Sabec: I do not think we will ever be shoulder to shoulder with the ISPs. We are a compliance mechanism for them and the ISPs that do participate see us as a way of freeing up their bandwidth, a way of complying with the law and especially in the film side, enhancing their own ability to sell this content on pay per views and through pay channels.
CEOCFO: How do you reach out to the movie studios and customers?
Mr. Sabec: That is my job. I have a 22-year career in the entertainment business, so I am just working my rolodex. Copyright infringement is a problem every studio faces and they have generally responded really well to us. They are very thankful when we speak to them and inform them of the problem and our solution that does not cost them anything. They seem to really like our services.
CEOCFO: How is business?
Mr. Sabec: It is great! Nine quarters of growth and we are well funded. We have a couple instruments in place that we are using that will help our business grow and makes the future look great.
CEOCFO: What is the business model? Are you paid up front by your clients or are you paid when you collect?
Mr. Sabec: We do a revenue share: Our business model is disruptive to other people in the space that do fee for services. They charge the rights holders so much per month to monitor their copyrights. We do not charge people anything per month, we want every copyright we can get and then we do a 50/50 revenue share with the client. We collect monthly and pay quarterly.
CEOCFO: What happens when an infringer does not respond?
Mr. Sabec: They get their service suspended. We are the first Company that has been able to successfully get large-scale suspension of service on Internet Service Providers.
CEOCFO: Is there a way around it, such as signing up with someone else or are you able to alert others?
Mr. Sabec: Theoretically, you could sign up with someone else but there are many problems with that. If you ever have to wait to get your Internet on, you will know what I mean. Where I live in Marin, there are only two possible ISPs that you could sign up with. We think that while some people might claim that they are going to change their Internet Service Provider, it is not always possible. Still, our technology allows us to find repeat offenders even if they have changed their IP address or moved to a new ISP so we can still find the offender.
CEOCFO: What may be different a year from now at Rightscorp?
Mr. Sabec: I think we will be bigger and we will have more clients. We currently represent the music space, the film space and the book space and I believe by next year this time, we will also be in the game and software space.
CEOCFO: How are you reaching software people?
Mr. Sabec: Through word of mouth, and we have been successful with business trade associations, music, book and the film side. We will just approach those basics as well. We are not ready to reach out to software yet; we are building silo by silo, so we have chosen not to enter the software and games space at this point but we will open that shortly. The other change in a year from now is we should be in business in other countries. We are exploring Canada and the UK right now.
CEOCFO: Because they are English speaking?
Mr. Sabec: Correct. The law is different, so we have to re do the law in each country because not all countries have the same legal structure as the U.S. The fact that they speak the English language allows us to roll out to those countries faster.
CEOCFO: Do you see the ISPs responding the same way? Have you tested the waters there yet?
Mr. Sabec: We have not tested the waters internationally yet but we are quite certain that we will have similar success as we have in the U.S.
CEOCFO: What were the challenges in the technology?
Mr. Sabec: Creating the technology was the hardest part. My business partner is very successful in the technology space. The two of us went to middle school together, so I really relied on him and he was able to create this technology. It has been something that has really eluded the content industry for a while. The Digital Millennial Copyright Act has been on the books for 15 years since 1998. It was signed by President Clinton and nobody had been able to thread the needle of solving this infringement problem. We have a great model, our technology works and content owners are responding.
CEOCFO: Put it all together for our readers. Why pay attention to Rightscorp today?
Pay attention to Rightscorp because we believe we have the best solution, it
is the way forward in the content industry for maintaining control over
infringements on the Internet. It is also a great investment opportunity. We
are now a small public company. We trade under the symbol of RIHT and we are
the first to market in a $2-3 billion market opportunity.
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