If you or I tried to do this, we'd be sued into oblivion for blackmail because that's what this is, blackmail. Pay us money and we won't tell on you. This world is messed up.
http://en.wikipedia.org/wiki/Corporatism
Some interesting quotes on the subject - http://www.goodreads.com/quotes/tag/corporatism
A few of the accused tend to stand up (grandparents who don't even own a computer, etc.) but I bet most just pay up to avoid the embarrassment of being dragged through the courts accused of pirating some smut.