MediaDefender Leaks Cost The Company $825,000

The anti-piracy organization MediaDefender lost $825,000 as a result of the leaked emails according to a recent filing submitted to the Securities and Exchange Commission (SEC). It is beginning to look like they have to walk the plank to bankruptcy after all.

This September we were the first to report that nearly 700mb of MediaDefender’s emails leaked on BitTorrent. The leaked emails gave the world a unique insight into the workings and the effectiveness of their BitTorrent decoy operations and revealed much more sensitive information.

The leaked emails were published by a group that goes by the name “MediaDefender-Defenders” and they were soon followed by other leaks such as a tracking database, a phone call and several anti-piracy tools.

From a recent SEC filing by MediaDefender’s parent company ArtistDirect we now learn that these leaks have cost the anti-piracy company some serious cash, $825,000 to be exact. Most of the money, $600,000, was spent to compensate their customers and the rest of the money was used to cover legal expenses.

In the SEC filing we read: “MediaDefender recorded approximately $600,000 for service credits to customers, which were recorded as a reduction to revenues during the three months ended September 30, 2007. This amount was determined based on various factors, including discussions with customers, and is subject to adjustment in future periods based on additional information. MediaDefender also recorded approximately $225,000 of legal, consulting and other direct costs related to the breach during the three months ended September 30, 2007.”

Surprisingly, the company does not think that the leaks have hurt the goodwill of MediaDefender on the long run, well, I hope for them that future clients don’t use Google then.

(via P2P-Blog)

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