The Cost of Piracy
Online counterfeiting also damages brands in other ways. For example, some people who buy pirated copies of Microsoft Corp.'s Windows operating system may think they have legitimate copies, says Cori Hartje, senior director of the Microsoft Genuine Software Initiative. What they get is software that often includes embedded spyware and malware -- and they expect Microsoft and its channel partners to support the product.
Hartje says she's seen research showing that counterfeiters today can make more money from the spyware and malware than they get from selling the pirated software itself. Meanwhile, the user blames Microsoft for any problems the malware causes. "That hurts our brand," Hartje says.
At WWE, while the onus is on the corporation itself to find and shut down sites peddling pirated videos and other counterfeit wares, most sites do try to cooperate. Many video-sharing sites, such as YouTube, have tools available to report and take down footage that violates copyrights.
Dienes-Middlen says the challenge isn't shutting down the sites that WWE finds, but keeping up with the new ones that continue to crop up. While businesses can assign employees to do that, she recommends trying a third-party monitoring service to get a handle on the problem. Dienes-Middlen thought she had things under control -- until she did a test run with brand protection service MarkMonitor The losses WWE had uncovered on its own were just the "tip of the iceberg," she says.
Soon afterward, she went to WWE's chief operating officer to ask for additional funds to clamp down on the illicit activity. "This was something we needed to attack. Our most valuable asset is our intellectual property," Dienes-Middlen says. "You have to protect [it] or you lose your rights to it."
Social networking sites can be a launch pad for reputation attacks from competitors, customers or disgruntled employees. Jeff Hayzlett, chief marketing officer at Eastman Kodak Co., says he has seen competitors try to hijack conversations -- sometimes anonymously -- with customers on the company's Twitter and blog sites.
In one Twitter exchange between Kodak and a prospective customer, a competitor jumped in and "inundated" the inquirer with negative comments about Kodak's product while promoting his own company's offering. It was, Hayzlett says, "a rude way to participate." He has a name for Twitter users who employ such tactics: He calls them "twankers."
Any time you sell a product or service, you're going to have issues like this, Hayzlett says, so Kodak hired a "chief listener." That person monitors all conversations and routes problems to the appropriate group, be it legal, IT or marketing, so that the company can follow up. When a customer is publishing negative comments, he says, his preference is to have a private conversation rather than use a public forum.
Other threats can be self-inflicted. Hayzlett himself admits to prematurely posting a tweet about the impending retirement of a product. "I accidentally hit Send instead of Save and tweeted out what we had worked six months to protect," he says. In the time it took to delete the tweet, four people had retweeted it. "I had to reach out to them and beg them to [remove it]." Even then, the tweet may have shown up in Twitter searches.
Gartner Inc. analyst John Pescatore says a client that runs a campground chain had an employee who thought he'd be helpful by posting a spreadsheet on Facebook that showed which sites were available and which were booked -- but it included the credit card numbers campers had given to reserve their sites. Data-leak prevention tools won't find such data when it's posted outside a corporate firewall. With social networks, "periodically looking at content has to be part of the cost equation," Pescatore says.
Some threats come from inside. In an April survey of more than 2,000 U.S. employees and executives by Deloitte LLP, nearly three quarters of the employees said that it was easy to damage a company's reputation using social media -- and 15% said they would post comments online if their company did something they didn't agree with.
That could be a big problem for WWE, since employees who know the storylines of its scripted events could spill the beans. "If those outcomes were revealed, it would destroy the experience for the fans," Dienes-Middlen says, so all WWE employees are required to sign confidentiality agreements.