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South African Startup Raises Funding to Fight Digital Media Piracy With Bitcoin

South African Startup Raises Funding to Fight Digital Media Piracy With Bitcoin

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According to the latest Theatrical Market Statistics report released by the Motion Picture Association of America (MPAA), global box office revenues reached $38.3 billion in 2015, up 5 percent from 2014. But Chris Dodd, chief of the MPAA, said that if the issue of piracy could be tackled it would add a healthy $1.5 billion more to the movie industry’s bottom line.

But currently available piracy detection technologies are ineffective in tackling digital media piracy because most illegal downloads happen on peer-to-peer networks.

Custos Media Technologies, a startup based in Stellenbosch, South Africa, recently unveiled a  technology that uses Bitcoin to track pirated media.

Speaking to Bitcoin Magazine, Fred Lutz, chief operating officer at Custos, said that the process basically involves embedding an invisible and difficult-to-remove watermark into the digital content, the watermark in this case being a Bitcoin private key. If the watermarked content is then leaked there is a small Bitcoin reward that can be collected by the first person to find it.

“The code that we embed throughout the movie is a Bitcoin private key, and we top-up the associated account with some bitcoins,” Lutz said. “We have a tool available publicly at with which anyone can read the watermark and extract the bitcoins. This means that a movie or ebook that goes out of the control of the intended recipient now has some vulnerability ‒ if it lands in the wild, the bitcoins will be extracted and we are notified through the blockchain that the funds were moved. We notify our clients of the identity of the customer that is associated with the private key and they can respond accordingly.”

According to Lutz, Custos is a spinout from research done by him and his partners; G-J van Rooyen, and Herman Engelbrech, at the Media Lab at Stellenbosch University.

Lutz said that the initial seed funding for Custos came from Innovus, the Technology Transfer Office of Stellenbosch University, in the form of a $140,000 USD prize from the SeedStars World competition last year.

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Lutz said Custos generated $265,000 USD in the second round of the seed funding, part of which came from a local angel investor and the rest from New York-based Digital Currency Group. 

“We are very fortunate to have investors that believe in the team, and see the potential of this new approach to content distribution,” Lutz said. 

Besides their anti-piracy solution, Custos Media Technology also offers a screener distribution platform,, that lets filmmakers distribute pre-release movies to reviewers or the media without having to worry about piracy leaks. They also offer ebook protection services in partnership with Erudition Digital.