November 21, 2007

By By Antony Bruno, N.Y.

Anti-piracy firm MediaDefender was hit with more than just a little egg on its face after hackers posted 6,000 internal company e-mails online this past September. According to an SEC filing by parent company ArtistDirect, the stunt cost the company more than $800,000.

MediaDefender offers file spoofing services to record labels-flooding pirate P2P networks with dummy tracks meant to make it more difficult for those downloading song for free to find what they're looking for. The company has long been a target of criticism by P2P proponents.

The leaked e-mails revealed previously undisclosed details on the company's pricing, effectiveness, and its involvement in a digital sting operation it earlier had denied operating.

According to the SEC filing, MediaDefender paid about $600,000 in service credits to clients affected by the leak, but it did not name the clients involved. Another $225,000 was paid towards legal and consulting fees.

The company also noted that both federal and state law enforcement agencies are conducting an investigation into the leak.

ArtistDirect acquired MediaDefender in July, 2005.

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