Industry Voices—Hawley: Opening doors to video piracy and the ‘theft of you’

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Steve Hawley Industry Voices

It’s useful to break video piracy down into four categories: theft of content, theft of services, theft of advertising and theft of you. This time, we’ll look at that last one, and how “the theft of you” enables the piracy economy.  Your device may be securely in your pocket or sitting beside your home TV, and so you ask, “How can they steal me?” There are several ways.

The Web browser on your computer has the longest history of exploitation, by websites that offer browser plug-ins and extensions (ostensibly) to enable the pirate service to work. Streaming devices are also not immune, including your smartphone, tablet, connected TV device, media center PC and IP-hybrid set-top boxes available at retail. 

While app store and media center providers now monitor developer app submissions proactively for the possibility that they may enable pirate streaming services, pirates also offer apps that can be downloaded separately and then manually installed (sideloaded) to these devices. The more sophisticated pirates offer technical support to help end users through the process.

Once the pirate software is installed, what are the threats?

The most obvious threat to you is the theft of your dollars, the majority of which is their profit. The Digital Citizens Alliance recently released Money For Nothing, an investigative report which estimates that U.S. consumers pay about $10 to $15 per month for these fraudulent services, diverting that revenue away from the industry ecosystem that creates and distributes the programming, times 9 million households and 30 million individual users.

Once a pirate video account is opened and its software installed, the pirate can access other things that you do on your computer. One is to run spyware or keystroke loggers to steal media service and financial account information.  Another is to implant automated processes (bots) that steal processing power from your device to mine for cryptocurrency. 

The most dangerous form of consumer exploit comes in the form of ransomware, which is designed to extort large payments from consumers.  In some cases, the creator of the malware collaborates with the pirate who distributes it, and when the money comes in, they split the proceeds.

Pirates also damage streaming businesses

Another threat – to streaming businesses this time - is from fraudulent advertising on pirate sites that steal legitimate advertising that is placed programmatically. While the ads themselves don’t inflict direct damage on a consumer by themselves, the pirate may implant malware. Then, any association between the pirate and the advertiser may damage the advertiser’s reputation.

As new online video services continue to proliferate – witness Peacock, HBO Max, Globo and others – pirates have turned attention to their apps. Pirates can break into legitimate app software and modify it to expose the app provider’s backend and advertisers, or to perform the kinds of malicious processes noted above. By attacking consumers through such broken apps, pirates now can inflict the same kind of reputational damage against streaming services that they have with advertisers. The good news is that software tools and platforms are emerging to help legitimate streaming providers mitigate such corruption to their apps.

Piracy through tiered distribution, fueled by consumer revenue

The Money For Nothing report also illustrates a two-tiered pirate distribution model, in which wholesalers average more than $1.3 Million in profit at 85% margin, by selling to retailers and direct-to-consumer. In turn, retailers make more than $300,000 per year with an average 56% profit margin. At the time of the report, DCA and Nagra estimated that at least 3,500 such operations are running in the United States.

Unlike legitimate pay TV and streaming services that invest heavily in secure video delivery, pirates typically distribute their content without encryption. Ironically, while that approach reduces the pirate’s cost of delivery, other pirates can steal that pirate’s programming.

Enabling shadow economies

In July, Singapore-based cybersecurity company Group-IB released a study that profiled a global piracy operation in Ukraine and Russia, funded by criminal networks, which attracted an estimated 80 million visits, nearly a quarter of which were exposed to malware and viruses.

The operation uses hidden CDNs operated by pirates, to distribute stolen sports and series video programming. The ecosystem is driven by bookmakers and online casinos who advertise on pirate sites that act as resellers, and pay a 20% to 40% cut of the gambling revenue that they attract.  Resellers are said to make as much as $22,000 in revenue per month.

As part of their expansion efforts, sponsors of these pirate networks even hire and pay talent to record voice-overs in the local languages for the consumer markets where the programming is distributed: in English, Spanish, Tagalog, Portuguese and other languages.

What’s being done about it

While attacks such as these are usually highly technical in nature, technical solutions are not the only lines of defense. Government-run intellectual property agencies work closely with law enforcement and with companies and organizations within the media industry to find, catch and punish pirates - with varying degrees of success.

But consumer education is an unsung hero. One example is CTAM’s new StreamSafely initiative, which is in the process of attracting trusted opinion leaders who can help consumers understand the risks that piracy exposes them to.

Such initiatives may not be as exciting as international intrigue, but they’re starting up around the world and they’re effective. In Australia, there’s Creative Content Australia. Previous installments of this column have made note of CreativeFuture, which advocates for the creative community; and of FACT in the U.K. And there are others.

All of this further reinforces the necessary mindset about piracy: that anti-piracy does not succeed as a “one-and-done” exercise, but rather, as a broadly collaborative ongoing effort between video providers, industry partners, technology suppliers, and law enforcement; seasoned with consumer education and smart regulation that recognizes the threats of today.

Steve Hawley is managing director of Piracy Monitor, which provides news and insights about video and audiovisual content piracy, and its effects on video providers, creative professionals and on consumers. Subscribe to the E-Newsletter to receive news and updates. Piracy Monitor is active in four areas: Piracy awareness, Market intelligence, Industry marketing and Consulting. Mr. Hawley is also a contributing analyst to Parks Associates and S&P Global Market Intelligence.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceVideo staff. They do not represent the opinions of FierceVideo.

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