Rightscorp: a business founded on threats of Internetdisconnection

Rightscorp, a company that went public last year, has an idea: they'll issue millions of legal threats to alleged music file-sharers, threaten them with millions in fines, and demand nuisance sums ($20/track) too small to warrant consulting with an attorney -- and they'll arm-twist ISPs into disconnecting users who don't pay up. Rightscorp has a secret system for identifying "repeat offenders" who use Bittorrent, and they believe that this gives them to right to force ISPs to terminate whole families' Internet access on the basis of their magically perfect, unknowable evidence of wrongdoing. They call this "holding the moral high ground." More than 72,000 Americans have had "settlements" extorted from them to date, though Rightscorp still runs millions in the red.

Rightscorp's rhetoric is that the sums it demands are "deterrents" to prevent wrongdoing, and that it wouldn't really want to sue people into penury. But it is a publicly listed company with a fiduciary duty to extract as much money as it can from the marketplace. It's a good bet that its prospectus and quarterly investor filings announce that the company will hold its "fines" down to the smallest amount that provides the deterrent effect -- instead of, say, "all the market can bear."

The legal theory under which Rightscorp is operating is pretty dubious: a belief that ISPs have a duty to terminate the Internet connections of "repeat offenders" based on a clause in the Digital Millennium Copyright Act of 1998. This theory has been sparsely litigated, but the one major case in which it has been tested went against Rightscorp's business-model. But as Joe Mullin points out in his Ars Technica profile of the company, they may be able to get past this hurdle just by suborning the increasingly corrupt, noncompetitive, inbred and rent-seeking ISP industry by giving them a piece of the action. Read the rest