back to article Digital River runs dry, hasn't paid developers for sales since July

Digital River has not paid numerous merchants since midsummer for software and digital products they sold through its MyCommerce platform. The biz is a decades-old US-based e-commerce provider that's used by, among others, a ton of software developers to sell their programs online. It handles their online payments, and claims …

  1. Tom Chiverton 1 Silver badge

    I must be missing something. Who the hell are Digital River ? What do they make/do ? Why should I care ?

    1. katrinab Silver badge
      Meh

      An App Store from the 1990s. You pay them money for a link to download software. Parallels for example used to sell through them, possibly they still do.

      1. David 132 Silver badge

        I seem to recall that at one point Microsoft used them for digital downloads too, although this was 15-20 years ago so I could be mistaken.

        Essentially, Digital River are a caching and merchant-services platform for digital download products - games, applications, licenses, whatever.

        1. TonyB

          I'm one of hundreds who would remember DR from the late 1990s early 2000s Shareware Industry Conferences. Initially they were one of a dozen or so payment processors who would rock up at the conference offering generous hospitality to us delegates - virtually every meal was sponsored by one or other of them; the DR Saturday evening entertainment spectacular outdid everyone else. All the others would vow that they were going to stay independent so as to be able to give better service to us little guys, but one by one the DR seven-digit cheques talked. Now I can't even remember the names of all those who were swallowed up saved for SWREG who I used for many years before switching to BlueSnap, but I do remember the wonderful food.

          How can you lose money doing this? You collect the payment, deduct your percentage (~7% in my case IIRC) and pass the net on at the end of the month. If the unremitted balances weren't held in a trust account, then they should have been.

          1. Twilight

            By accounts that I've been reading, they are essentially operating like a Ponzi scheme and not keeping enough cash. Essentially they are relying on sales of following months to pay the vendors for previous months. Kaspersky (now banned in the US) used DR for payment processing - there is an unverified theory that Kaspersky may have been a VERY significant portion of DR income so losing those ongoing sales means they can't pay vendors.

      2. Giles C Silver badge

        I have in years gone by I bought quite a lot of software through them, you used to get the student editions of Autocad, as Katrina says Parallels (vm software for macs) and quite a few others I have probably forgotten about.

        To say the developers who rely on them for their income aren’t creditors is a bit strange, especially as it is a low risk business. Essentially dev pays you a fee to handle sales, a sale is made and you send a license key to the end user, then send the money to the dev less your fees.

        1. drankinatty

          It looks worse. The Mintz & Gold firm involvement and the "sucks to be you" weasel-worded letter appears to be a classic delay-while-the-owners-sweep-the-accounts situation. All with plausible-deniability, "we didn't know Digital River was doing that, we were just hired to handle customer invoices..." Spend a few dollars on a law firm on the front-end, leave by the back-door with the spoils. By the time the class-action unwinds the chain of events, the company is denuded and an empty-shell unless they move quickly and file for relief to sequester the accounts. Call me skeptical.

          1. CrazyOldCatMan Silver badge

            The Mintz & Gold firm involvement

            I'd be very loath to use a law firm that didn't actually realise that a contract is between two parities and isn't valid if both sides haven't agreed to it.. So plonking a new contract in place and basically saying "we signed it for you" is. pretty much illegal.

            1. yetanotheraoc Silver badge

              The other side of the coin

              "I'd be very loath to use a law firm that didn't actually realise that a contract is between two parities and isn't valid if both sides haven't agreed to it."

              You would be loath, some would be happy.

            2. Twilight

              Ah but it isn't a contract - it is a service agreement (that just happens to look exactly like a contract (albeit probably pretty one-sided)). Companies in the US (and possibly elsewhere) have been massively pushing the bounds of what is legal for a couple decades now. The bigger ones, at least, seem to just figure that they may have to, at worst, pay some fines if what they've been doing is determined to be illegal.

              It often seems like the US is trying hard to turn itself into a cyberpunk corporate dystopia. Although none of the authors I've read seemed to predict exactly the shape it is actually going (Neil Stephenson in Snow Crash seemed to come closest).

        2. Richard 12 Silver badge

          It's a delaying tactic

          It's false, but takes long enough to prove that the CEO and directors will have already run away with all the money.

          Of course, the lawyers are getting paid up-front to say this, and for some reason the US don't disbar them for making obviously false claims.

          1. bombastic bob Silver badge
            Unhappy

            Re: It's a delaying tactic

            The NYC tort system (and criminal justice system for that matter) has OBVIOUS GROSS and EGREGIOUS FLAWS and INJUSTICES within it, even OUTRIGHT CORRUPTION. Good luck to anyone slugging things out within THAT system... YEARS from now attorneys will burn through whatever settlement you MIGHT have gotten. [it has been ON PARADE *ALL* *YEAR* after all]

            1. Anonymous Coward
              Anonymous Coward

              Re: It's a delaying tactic

              Donald, is that you?

      3. katrinab Silver badge

        I checked, Parallels now sell via Cleverbridge. Not sure when they made the change, and archive.org is down at the moment so can’t check there.

      4. simonlb Silver badge

        Just checked my old emails - Avast AV renewals and an online NVIDIA GPU purchase from a few years ago.

        Wouldn't have thought their business model was so precarious, but it sounds like someones been fiddling to extract a lot of the liquid capital from the company. Unless they were taken over by a private equity company a couple of years ago and I missed it, as that is the standard operating model once that happens.

        1. katrinab Silver badge
          Unhappy

          They were taken over by Private Equity in 2015

          https://www.digitalriver.com/our-company/newsroom/press-release/digital-river-announces-completion-acquisition-investor-group-led-siris-capital-group/

          1. simonlb Silver badge

            2015? What's taken them so long?

          2. ecofeco Silver badge

            And there you have it.

            It all makes sense now.

            Good find!

        2. frankvw
          Unhappy

          I also remember them as handling payments for Avast. That experience put me off Avast. Multiple debit orders, repeat debit orders after subscriptions were canceled, and no response to complaints. They should have gone under long ago.

    2. elDog

      Looking back at my purchases/licenses, MediaMonkey used them.

      I think I have a "lifetime" Gold license for Media Monkey. Haven't tried exercising it recently.

    3. ibmalone

      The Lenovo store also appeared to use digital river for hardware purchases, at least back at the end of 2021 when I last ordered something from them.

    4. Anonymous Coward
      Anonymous Coward

      MS Office home use programme (used) to be done through Digital River too... Registered in Ireland, go figure. Tax advantages.

    5. Snake Silver badge
      Thumb Up

      RE: Who the helll are they?

      Indeed. A bit of overview of their reason for existence in the first paragraph would be very welcome.

    6. AB 1

      Small software companies like mine don't want to deal with all the hassles of international tax, shopping carts, credit card processing etc. So we pay a third party to do that, they then pay us the money minus a fee.

      Digital River was such a third party payment processor. They were one of the larger players, due to buying up lots of other companies. However they have had a terrible reputation for shady practises since I can remember.

      1. Always Right Mostly

        We just learned about this as a DR customer for decades from this article. They refused to put anything in writing only phone call. We yanked them off our site and are working out alternatives.

        Would you mind sharing who you switched to? Most of the alternatives are waaaay to complex for a small biz...on IIS website at that.

        1. AB 1

          I use Verifone (who swalled up Avangate, 2Checkout and others). They have been ok, but I prefered it when I was with Avangate.

          Paddle are another alternative.

    7. diodesign (Written by Reg staff) Silver badge

      Who are they

      They're pretty well known payment processor for people selling software online. We've added a paragraph explaining this. Thanks for the feedback.

      C.

    8. Anonymous Coward
      Anonymous Coward

      e-commerce

      They also do e-commerce to essentially act as a payment processor for websites. Sounds like they are not long for this world.

    9. Dustyn
      Facepalm

      OMG

      Since you've never purchased something online before, this doesn't affect you.

  2. Michael Hoffmann Silver badge

    Pity

    Like others I went through my purchase history and they come up a lot for some very useful "fringe" tools, especially for conversion - of just about anything to anything. For then the freely available ones just didn't do their job.

    My first purchase was 1999 and my most recent 2020. Good gods...

  3. Grunchy Silver badge

    Krazy Krazy

    We used to have Krazy Krazy store here in Western Canada, who went bankrupt (of course), but even up until the night before they locked the doors they were going hard to sign up layaway purchases.

    So you go to Krazy Krazy to buy a VCR and they have one you want, but you can’t afford it right now, so the salesman guarantees to keep one for you if you start up a layaway purchase agreement, in which you leave them some money, and keep going back and pay a little at a time, until the whole purchase price is paid, and then you get the VCR (if they still had one).

    Except if they go bankrupt, at which point you’re just another unsecured creditor who is never gettin’ anything.

    https://en.m.wikipedia.org/wiki/Krazy_Krazy

    1. Grogan Silver badge

      Re: Krazy Krazy

      I never understood "lay away" purchases. If you can't afford it, lay your own money away until you can, if you have no source of credit. Buy now, pay later schemes are a much better trap :-)

      1. collinsl Silver badge

        Re: Krazy Krazy

        I think some people used it to prevent them or their partner from spending the money on something else - sort of like a savings account but you'd get goods at the end rather than the money.

  4. Tubz Silver badge

    Abandon ship, abandon ship, got shares, sell up now, have accounts close them now and employees start updating your CVs.

  5. Androgynous Cupboard Silver badge

    Aha.

    There are a few vendors of software tools use daily that use Digital River, but I think that should be "used Digital River" - they emailed me last week telling me some subscriptions were cancelled, but the vendors says otherwise so I guess it's just Digital River being removed from the picture.

    It's difficult to understand how a firm that simply enables sales and takes a cut can go bankrupt, or why they need international subsidiaries. I suspect the answer to those two questions is related.

    1. katrinab Silver badge

      Re: Aha.

      International subsidiaries are likely the most efficient way to deal with sales taxes in different locations. In the UK for example it is much easier to set up a subsidiary in a virtual office or your accountant's office than to register as an overseas trader.

    2. I could be a dog really Silver badge

      Re: Aha.

      I suspect it goes along the lines of :

      Sound company taken over by vultures. Vultures then (because they now have a controlling say in how it's run) have the business borrow lots of money from another of their ventures at silly interest rates. Over time, the other business gets it's money back (in cash terms) thanks to the high interest rates - but the victim business still has a massive debt because a lot of what they've paid has been just the interest. Victim business eventually runs out of cash due to the cost of servicing the debt and goes under. Vulture then steps in and (using preferential terms as a secured creditor, which was part of the loan agreement) takes the entirety of what's left and leaves unsecured creditors with nothing. Result, champagne all round for the vultures, pain and misery for anyone else - especially the staff and small businesses that use used the service. In this case, finding excuses not to pay the small developers for a few months while still selling software merely increases the amount of cash in the bank that the vultures can take.

  6. clyde666

    Lots of pies in that pork barrel

    I used to get lots of Easystreet software through them.

    I also see lots of other software through them.

    One called Synchronize Outlook back to 2012. From memory it worked.

    But they were just the payment processors. Facilitating other people's products.

  7. Anonymous Coward
    Anonymous Coward

    How do you screw this up?

    You take a payment. You pay the vendor less after taking your %. It seems impossible to screw up.

    1. hobnob

      Re: How do you screw this up?

      Digital River have been told by the US gov to stop selling Kaspersky Anti-Virus in the U.S.

      so it could be political, as funds from that company have passed through the U.S. company Digital Driver.

    2. Jimmy2Cows Silver badge

      Re: How do you screw this up?

      Simples... embezzlement.

  8. Anonymous Coward
    Anonymous Coward

    Ah Digital River.

    What could have happened though?

  9. cfbsoftware

    You also might recognise them from earlier days as ShareIt and more recently MyCommerce.

    1. Ken Moorhouse Silver badge

      Re: ShareIt

      I offered some genealogical software through ShareIt, back in the day. ISTR they put a wrapper round your executable to help reduce piracy. Don't remember ever selling anything via that route though.

    2. AB 1

      They bought up a load of smaller software payment processors and wrecked them all. Everything Digital River touches turns to shit.

  10. icarmon

    One of the affected vendors here, they refuse to pay without any reasonable reason just excuses, after working with them for more than 20 years I never thought this may happen. We've moved to another MOR and stopped sending using Mycommerce platform and of course we'll never return to Digital River.

  11. mycomregister

    Yes, No payout from july onwards

    We have also not received any payout from july onwards. Around USD 20000 are not paid. We are so desperate as our business is going down due to Non payment from digital river.

  12. alexcayman

    Approximate size of potential DR fraud is USD360M

    Not so many of people did the calculation - while DR normal business model is get 5% of overall sales, and it resulted in ~6M/month, freezing payouts for 3 months means that they collected 60x os this value, around 360M of USD. The actual amount can be less, since people started to leave the platform, and some did refunds to customers (which still work, as well as "sales").

    1. Richard 12 Silver badge

      Re: Approximate size of potential DR fraud is USD360M

      If refunds still work, perhaps tell DR to refund everyone where Digital River have unlawfully withheld payment.

      You're almost certainly never going to see that $300M+ lost money, but if DR have to refund the customer then at least they may not run away with all the money.

      1. hobnob

        Re: Approximate size of potential DR fraud is USD360M

        They have to approve refunds manually and they charge the software company for both ways Credit Card change and an extra $20 per refund on top.

        yep! the banks changed the refund system so they didn't loose out a few years ago.

        1. AB 1

          Re: Approximate size of potential DR fraud is USD360M

          But they are going to subtract that $20 from money you almost certainly aren't going to get anyway.

  13. LazLong

    Crucial

    I bought a couple of NVME drives from Crucial last January, and DR was their e-commerce platform, which I was surprised to see.

  14. Slabfondler

    I know that name...

    I checked and Pioneer DJ/Alpha-Theta use them for Rekordbox subscriptions. Recall quite a lot of music software going through them.

  15. Ken Moorhouse Silver badge

    Dam

    (If you are/were using them).

  16. ethindp

    Is it even legal for them to "pre-sign" agreements like this? Particularly when it's on behalf of a business? I would think that it would be easy to argue the agreement isn't valid if the business doesn't have a record of the agreement being signed or a copy of it.

  17. PRR Silver badge

    In 2022, I ordered DRAM from "Crucial", as I have done for 20 years. THIS time the transaction went through Digital River.

    20 years ago DR was a fine operation. Handled a lot of shareware and small hardware. Didn't hear complaints (I was sysop on a Compu$serve forum which would have attracted gripes). Even in 2009 when I ordered a copy of Win7 from Microsoft, DR fulfilled it fine.

    But the 2022 deal was not going through. Seemed to be stalled at DR. I had not expected DR to be involved and had had fine past experience, but this was different. Google turned up dozens of recent non-fulfillment complaints. After a week, I *called* to cancel the order (took two weeks but they did it) and ordered from another marketer. Hah, my DRAM shipped an hour later! But my 2nd source was even faster; anyway I thought DR was pretty scummy, shipping RIGHT after cancellation. Did get a refund.

    The #4 PC here needs a new SSD ASAP but I did not order from Crucial. Lost my 25 year confidence.

  18. mikecoppicegreen

    Most recently....

    Bought software licences at the end of 2023..... via their Ireland subsidiary, MyCommerce.

    Time to wait and see, I guess.....

  19. markdiss76

    VMware used them before Broadcom

    Our last pre-Broadcom VMware renewal (November 2023) was done via Digital River in the UK. I'd guess at VMware prices that a huge chunk of revenue they lost when Broadcom took over.

  20. Anonymous Coward
    Anonymous Coward

    Vendors who chose Digital River should assume its responsibility

    bartelsmedia.com is cancelling the licence to those that paid to the intermediary that bartelsmedia.com selected...

    1. I could be a dog really Silver badge

      Re: Vendors who chose Digital River should assume its responsibility

      Yes, a bit sucky. But, depending on the amount, the customer could go to their bank for a refund, which the bank will take from DR - note, take from*, not ask for.

      * I assume it's not changed, but years ago when I was in retail, to take cards we had to sign an agreement that basically gave the bank the right to take any reversed transactions directly from our bank account.

  21. Digital Coward

    RE: Vendors who chose Digital River should assume its responsibility

    This morning I got an email from a software vendor (I'm putting their name here, because they are very small and totally honourable).

    They sent an email basically saying "We have been screwed by Digital river and we are refunding your card, could you possibly pay us again with a fat discount for your time and trouble"

    The payment was for updates to an existing product hence it has sort of turned into a sort of "Nagware" as of this morning.

    I checked the bank and there was no payment. Then I checked the document I was sent by Digital river and actually no card refund is mentioned .. it just says "credit memo"

    Is it possible that Digital River has moved to a new phase?

    As far as my software supplier is concerned I will pay them regardless, they are two guys who make a superb product and are always on the end of the phone if there is trouble ?

    1. homestar17

      Re: RE: Vendors who chose Digital River should assume its responsibility

      A 'credit memo' is the document that Digital River provides when doing a refund.

    2. homestar17

      Re: RE: Vendors who chose Digital River should assume its responsibility

      A credit memo is what Digital River sends for a refund.

  22. Twilight

    Not just digital products

    Digital River does (or at least used to) have a decent sized warehouse and handled fulfillment of physical products (largely computer-related) as well as digital-only products. I wonder if they still do the physical fulfillment the same way and if those vendors are at least getting their physical merchandise back? My detailed knowledge of them is quite old (I consulted for them in the late 90s and my wife consulted for them in the 00s) so I'm not sure if they kept up the warehouse in the last decade (possibly they shut down direct physical fulfillment with the VC buyout in 2015).

  23. Anonymous Coward
    Anonymous Coward

    micron / Crucial - cannot order due 3rd party payment partner ?

    got an email re cannot order due 3rd party payment partner from

    crucialnews@email.crucial.com

    is there a known continuing problem with

    Digital River

    ( Digital River delays sales payments to vendors since July

    )

    Or have they got another processor in place

    Since when I long ago ordered from them and it is a different problem?

    ( Future support is my concern for consumer drives. I know about the patent

    accusations and accusations of price-fixing by large suppliers of memory for SSDs .. )

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