This is pretty interesting method. The problem is someone would post it online for free or with advertisements at some point.
Yes but I think those people would typically be at the bottom of the chain, so ultimately it might be served up for free, but everyone has already made their money at that point. Some people might try to wait until it's free, whereas some people would probably be willing to pay a little to get a faster and more immediate download.
This would be even better if there was a week or so between auctions. I suppose the people selling the content each round also have an incentive to not leak it. They don't necessarily lose that incentive after selling either because it could mess up their opportunity in future distributions.