The Digital River Mystery

Digital River is a large eCommerce service, used by thousands of developers and software companies worldwide to distribute their software. oP group Germany, developers of the Zorro platform, also sells their licenses and subscriptions through Digital River. They have large clients, such as Adobe. The first hint that something strange was going on with Digital River was an email in July to their clients.

They told that they will now charge hefty fees for using their store, for asking support questions, and for paying out. Mentioning the payout, they also told that they will from now on hold back payments for 2 months. Aside from the fact that they cannot legally change conditions in this way without their client’s consent, emails like that are normally business suicide. Since all competitors offer much better conditions, it was clear that Digital  River would sooner or later lose all their clients in this way. So this email was the first mystery. 

But Digital River did not hold back payments for 2 months. They stopped paying altogether. They did not give any explanations. Reminders were answered with meaningless text blocks, for example:

Please know that we are fully aware of the situation and are working diligently to resolve these issues as quickly as possible. Our team is investigating the cause of these delays to ensure they address them effectively and prevent such occurrences. We understand how important these payments are for you and your business. We are committed to ensuring that all outstanding payments are processed and that our communication with you is clear and timely moving forward. We appreciate your long-standing partnership and your trust in us over the years. Rest assured we are taking your concerns very seriously and trying to rectify this situation.

There is a lot of speculation about what is behind it. Some believe that Digital River ran in liquidity problems, and originally intended to still pay, although later. The other theory is that this is a prepared exit fraud with the intention to keep all their client’s sales of several months. In that case the mysterious email had just the purpose to delay legal action.

On their website, Digital River gives no hint of any trouble, and continues to run the stores and charge the customer’s credit cards as if nothing happened. The only thing certain is that clients are now hurrying to switch to other eCommerce providers, such as FastSpring or Paddle, and that their last three months earnings are possibly gone. Unless some part of if can be recovered from remainders of any upcoming insolvencies, lawsuits, or criminal proceedings.

Since most Zorro S license subscribers run their subscriptions through Digital River, oP group has activated a fallback server for verifying subscription tokens. So all subscriptions will remain valid. In case of a Digital River collapse, subscriptions will continue for free until oP group has established a new eCommerce provider. 

More details: Digital_river_runs_dry

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