Rightscorp, locked in court battles, signs Sony Music as a client

Rightscorp, the Southern California company struggling to turn a profit as the Internet's premier copyright cop, has signed Sony/ATV Music Publishing LLC as a client.

Sony is the third major music company that has hired Rightscorp to scan the Internet looking for pirates who download their songs illegally. The new client was announced in an 8-K form filed last week with the Securities and Exchange Commission.

While Rightscorp works for many copyright owners, a few big clients form the mainstay of its business. Last year, a full 76 percent of Rightscorp revenue came from its deal with BMG, while Warner Bros. made up 13 percent of sales.

"This is a monumental agreement for Rightscorp, in that partnering with one of the world’s largest entertainment and media conglomerates in Sony not only legitimizes the market they serve as a growing concern, but opens the door for others to follow in Sony’s footsteps," said Rightscorp in a statement about the new deal with Sony.

Like Rightscorp's other clients, Sony will get 50 percent of the money Rightscorp collects from infringers.

Rightscorp has a proprietary system it uses to gather IP addresses of Internet users it believes are downloading its clients' songs illegally. The company then demands subscriber information and threatens those subscribers with legal action by telephone and e-mail unless they admit violating copyright and pay $20 per song. Recent reports suggest that in at least some damage demands, Rightscorp has increased its fees to $30 per song.

The company trades on the public markets as RIHT. Its stock value has generally traded between $0.10 and $0.20 per share throughout 2015, although it's dropped as low as $0.06.

In financial filings, the company admits it's in danger of bankruptcy. The company has no revenue source that's sufficient enough to allow it to "continue as a going concern."

At the same time, Rightscorp is embroiled in a bitter litigation against Cox, an Internet provider who it sued in 2014 after Cox refused to forward its copyright infringement notices to its users. It's also facing a class action suit claiming it illegally made robocalls to people's cell phones.