Rightcorp, the notorious, publicly traded copyright trolls, have warned investors that they're losing money despite a successful claim of mass extortion against alleged copyright infringers.
The company's business model is to do cursory research to determine who might be infringing copyrights it represents, then send those users overblown (and, in Canada, fraudulent) legal threats demanding small-money payments to go away. The company made $931,000 in $20 "settlements" in 2014, but lost $3.4 overall.
The company's major risk is that more users will sue it over its illegal tactics. These lawsuits come straight out of the company's bottom line and cost it millions in legal expenses and damages.
“The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern,” the filing reads.
“The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. If the Company is unable to obtain adequate capital it could be forced to cease operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern.”
While the company’s accounts give cause for concern, the precarious situation is only amplified when one examines Rightscorp’s over-exposure to a limited number of copyright-holder clients. In 2014 a total of 76% of Rightscorp sales came from one client, BMG Rights Management. The company’s contract with Warner Bros. accounted for a further 13% of sales.
If the former pulled the plug (and after a one year contract BMG only needs to give 30 days notice to do so) it could be game over for Rightscorp.
Rightscorp Hemorrhages Cash, Profit from Piracy Remains Elusive [Andy/Torrentfreak]
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