As you can see here (change the view to 1m), ARTISTDirect's stock opened last Monday at $1.80, after a two-week plateau at $2.24, a 20% drop. What could cause such a substantial drop for an otherwise stable company?

The answer is MediaDefender. ARTISTDirect bought MediaDefender in August of 2005 and over last weekend some very interesting news came out regarding MediaDefender. For those not in the know, the unit is, according to its website "the leading provider of anti-piracy solutions in the emerging Internet-Piracy-Prevention (IPP) industry. [They] provide services that stop the spread of illegally traded copyrighted material over the Internet and Peer-to-Peer networks." In particular, they offer decoy and spoof torrent files, e2k links, Kazaa, and other file sharing links. The files are blank, random noise, or in some cases advertisments for legal download services.

That's all well and good. That much they admit in their public website. However, it's been suspected for some time that they have been up to much, much more, and it turns out they were. On the 14th a group called MediaDefender-Defenders posted on bittorrent sites a leak of thousands of internal MediaDefender e-mails, containing, among other things, logins and passwords for internal servers, employee names, SSNs, and addresses, detailed descriptions of how they do what they do and their plans for the future, and most importantly, a clear description of how they created www.miivi.com specifically to be a "honeypot" to catch users uploading copyrighted content. Some of the more amusing e-mails involve discussions about what to do when people torrent sites figured this out.

A group then put the e-mails up on a website in HTML format. The company then tried to take the site down, both with cease and desist letters (with an amusing response and even an illegal denial of service attack. However, now that the cat is out of the bag, they are learning quite well how impossible it is to take something off the internet. Since then, even more leaks have come out, including a phone call with the Attorney General of New York's office, in which they discuss how the e-mail link could have happened (apparently they weren't encrypting their e-mails...).

Then today someone leaked the source to the host of tools MediaDefender uses to post decoys and spoof downloads, with names like BTPoster, BTSeedInflator, BTDecoyClient and BTInterdictor. MediaDefender has now been completely owned.