VentureBeat

Crunchyroll, a sharing site primarily for anime, is attracting attention — not only for its content and fast-growing popularity, but also for its revenue model.

Rather than just putting up ads, Crunchyroll accepts “donations” in return for providing users with higher video quality. The site makes a respectable $75,000 a month in revenue, according to Techcrunch. But it’s also getting money for copyrighted anime content uploaded to the site (much of which apparently uploaded by the site owners) plainly violates the DMCA.

Pirated content isn’t all that makes the company notable. The site also makes its mark with niche content from foreign markets. While there’s plenty of noise about the global reach of the internet, language barriers still exist, keeping ideas and content from flowing as freely as they otherwise would. Crunchyroll gets around the problem by using fansubs, or foreign-language versions of anime subtitled by fans.

Many of the anime series on Crunchyroll, without the efforts of fans, would never have otherwise been dubbed and released in English-language markets. But the site’s growing popularity could be its downfall. The question is where anime distributors and licensors draw the line. Some anime that gets US distribution has already been removed from Crunchyroll. Cowboy Bebop, Gundam Wing and Dragon Ball Z, three of the most popular series, all bear removal notices stating that they are licensed by Bandai Entertainment and FUNimation Entertainment.

While other content remains, it seems unlikely that venture capitalists or buyers will be willing to touch Crunchyroll until companies and organizations based in Asia, like the Japanese Society for Rights of Authors, Composers and Performers, indicate whether they’ll take action against the company. Past experience indicates that they will — last October, Youtube removed almost 30,000 videos at the request of a group of Japanese businesses, and the JSRACP regularly criticizes YouTube for its slowness in removing Japanese-language content.

The site is reportedly run by employees at HotorNot. James Hong, HotorNot’s founder, did not respond to a request for comment on this story.

Additionally, Crunchyroll risks action from foreign licensors. Singapore and the Philippines each account for more than 20 percent of the site’s million-plus monthly unique viewers, according to Alexa — countries where artist’s organizations have been active in stamping out illegal sharing. Crunchyroll, semi-anonymously run out of San Francisco by unnamed employees of Hot or Not, likely won’t find itself able to hide behind local courts, as the Russian music vendor AllofMP3 has so far.

As Crunchyroll waits to learn the fate of its videos, it may yet be building the foundations for its future success — a huge base of anime-obsessed users. Like YouTube, Crunchyroll has some user-created content, mainly in the form of anime music videos (AMVs), which combine cut-scenes from animes with music.

Even if the content that originally drew users eventually disappears, it may be possible for Crunchyroll to hold onto a portion of its users and become a social sharing site. And while the past experiences of US-based sharing sites with American content owners has made cutting deals seem like an impossibility, Crunchyroll could yet make arrangements with internet-savvy Asian companies whose content would never have otherwise reached outside markets.

Of course, Crunchyroll shares another similarity to YouTube: As the largest site of its kind, it is the first that licensors will go after. Meanwhile, smaller competitors like Animecrave.com , which has an inferior site design but keeps all its videos behind a pay wall, can continue to offer content no longer on Crunchyroll. And, as always, the more popular series are available through sites that make no bones about having links to illegal content, like tv-links.co.uk.