[USA TODAY] Digital pirates steal signals, money from leagues

http://www.usatoday.com/story/sport...es-pay-per-view-ufc-nfl-nba-nhl-mlb/16871583/

LAS VEGAS — Parading into the Octagon, the fighters brawled, unleashing kicks and punches that drew lusty cheers and, more often than not, ample blood bout after bout.

"Just keeps on coming," said Clint Cox, Director of Content Protection for Ultimate Fighting Championship (UFC) that stages the mixed martial arts events. Yet Cox was less focused on the fighters than on the action on the six computer screens he monitored.

From his second-floor office, almost five miles from the UFC's show at the MGM Grand Garden Arena recently, Cox chased digital pirates — computer hackers who steal the UFC's pay-per-view signal and rebroadcast it online for free rather than the $54.99 the UFC charges.

On the attack, Cox fired off a flurry of cease-and-desist notices. Then he clicked on one of the video streams he'd been tracking.

Dead link.

"That's what I like to see," he said.

Soon after he saw something else: 10 new links.

"There's always someone to go after," he said.

Cox quickly pivots between watching links, sending warning letters, forwarding evidence to attorneys and law enforcement and patrolling social media for references to illegal video streams.

The pirates steal signals from virtually every notable sporting event and operate from around the world, with raids having broken up operations in Botswana, Belgium and Egypt.

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Some pirates are high-tech hackers using special decryption devices to steal satellite signals. Others go a cheaper route, unscrewing the coaxial cable from the back of their TVs, connecting the cable to a $20 adapter that plugs into a computer and using inexpensive software to transmit the signal over the Internet.

Either way it appears business is booming.

The NFL, NBA and Major League Baseball have suggested millions of dollars have been lost to piracy, and a leading anti-piracy firm says the perpetrators are raking in millions, primarily with banner ads that generate money based on the number of people who view the illegal broadcasts. Although no study has calculated ad revenue associated with digital sports piracy, a 2014 report from the Digital Citizens Alliance claims online piracy last year generated more than $220 million in ad revenue.

More than a million viewers will watch an illegal broadcast of a major sporting event such as the World Cup, according to one report.

"The popularity of piracy has definitely grown, and the awareness of it has definitely grown among the general public," said Ricky Bruce, an analyst for NetNames, an anti-piracy company based in London. "Consumers are always going to find the cheapest way to consume content, especially if you're going to have to pay for something that you previously had access to for free."

Therein explains the rise, and appeal, of digital pirates.

Time was when American sports fans could fill up on a steady diet of games available for free on network TV. But with cable networks such as ESPN offering rich broadcast deals, sports leagues have cashed in. The NFL, MLB and NBA collectively make more than $6 billion a year in TV rights — not counting the lucrative local contracts signed by individuals team — which has forced fans to pay for premium cable to watch many of the games. Or look for alternatives.

An increasing number of fans rely on pirates, who set up renegade websites and illegally broadcast the games while keeping Cox and his counterparts scrambling.

"As more companies make something available only behind a paywall, it's going to clearly lead to an increase in piracy," said Nate Glass, an anti-piracy expert.

EVEN TOM BRADY

Brian McCarthy, a 32-year-old from Deer Park, Texas, set up a popular site called ChannelSurfing.net and operated it from an upstairs bedroom at his parents' house before eight federal agents arrived, put him in handcuffs and shackles and held a gun to his head. "Oh, my God, what's going on?" Patricia McCarthy told USA TODAY Sports she remembers thinking when authorities led her son to jail.

However, Rojadirecta, a popular site based out of Spain, successfully fought the U.S. government's attempts to shut it down.

Who's watching the pirated broadcasts? More than 50% of 1,115 Americans between the ages of 18 and 34 surveyed this year admitted to watching pirated content, according to the results provided by YouGov and Populus. The survey results support the notion that younger, tech-savvy viewers are more inclined to embrace sports piracy.

Cord-cutters, those who have canceled their cable subscriptions because of fast-rising monthly bills, are potential customers. But experts also identify the "never-cords," young viewers who never bothered to pay for cable TV because they found pirated content.

Even New England Patriots quarterback Tom Brady, 37, admitted in 2012 to watching the previous year's Super Bowl on a pirate website.

"I was rehabbing my foot in Costa Rica watching the game on an illegal Super Bowl website and now I'm actually playing in the game, so it's pretty cool," Brady said.

"I can definitely see where that younger generation is more likely to seek out alternatives," said Mike Masnick, a noted technology expert who argues that UFC and others are failing to address the problem effectively. "What I think it comes down to is, the more these organizations do to make (content) accessible, and accessible at a reasonable price, the less piracy is going to be an issue."

The leagues and television networks are sharing data and strategy. The Coalition Against Online Video Piracy includes many of the world's major sports leagues and rights holders, and members will meet throughout the year to address issues.

"We are very proactive and takes this seriously," said Matthew Gould, a spokesman for Major League baseball Advanced Media, which oversees anti-piracy efforts for MLB.

Recruited from NBC a year ago, Cox heads the UFC's six-man team that monitors the unauthorized use of video on Twitter, Facebook and YouTube; bootleg DVDs; and restaurants, bars and other commercial establishments that broadcast events without paying a licensing fee. But Cox said his priority is the illegal broadcasts because UFC makes most of its money from pay-for-per view revenue.

Last month, long before the UFC fighters got taped and paraded into the Octagon, Cox engaged in the less-publicized fight. He arrived at his office four hours before the pay-per-view portion of the show began and started looking for websites advertising illegal broadcasts of that night's broadcast. He also had use of an anti-piracy company, an intern and attorneys. And no one has been as aggressive as the UFC, which once threatened to sue not only the pirates, but fans who watched the illegal broadcasts.

"UFC: Please don't sue me," read a post Cox found on a message board discussion about pirated broadcasts of the UFC's show.

The chances of viewers getting sued are about as high as the chances of UFC banning the closed-fist punch. A bigger deterrent is the sometimes questionable software many sites require users to download before granting access to the pirated streams.

But with plenty of people willing to take the risk, UFC called for help.

In 2009, at the urging of UFC and other sports leagues, Congress held hearings to address the matter. Legislators already had armed those fighting pirates with the Digital Millennium Copyright Act (DMCA), a U.S. copyright law that, if violated, carries a maximum sentence of five years in prison and a $500,000 fine.

Then the Justice Department launched nationwide stings.

In 2011, as the Super Bowl approached, federal authorities shut down a slew of domain names for sites involved in pirated broadcasts. In the case of McCarthy, the Texas man, federal authorities seized his computer and car and froze his assets even though it turned out he made only $15,000 a year during the six years he'd run the illegal site.

A 28-year-old from Comstock Park, Mich., Yonjo Quiroa, about $13,000 in two years from his illegal streaming operation before he was detained for nine months and then deported.

The government was sending the pirates a message — steal signals at your own risk.

NEW TECHNOLOGY

Two years later, as Cox hunkered down in his office at UFC's headquarters last week, one could measure the net effect.

As the pay-per-view broadcast began, Cox counted 120 computer links to illegal broadcasts of the UFC show, and he lamented the elusive pirates. Track them down on sites hosted in the U.S., and they scurry to the safe havens like Russia, the Netherlands and countries overseas with lax anti-piracy laws and scant enforcement.

Cox said it's impossible to know how many people are viewing the illegal broadcasts of UFC's events without expensive research. But he said the UFC has made progress, and cites a settlement with a pirate who was distributing rebroadcasts of the pay-per-view events. UFC also has effectively disabled sites by reaching out to the advertisers associated with the piracy and companies processing payment for sites that request donations or small fees, according to Cox.

Now he eagerly awaits new technology: watermarking, which will allow the UFC and other organizations to identify who owns the signal being rebroadcasted and go directly after the culprits.

"That's a game changer,'' he said, adding that the technology is expected to be available later this year, and he momentarily entertained the thought of digital sports piracy extinction.

"If we're really good at this, we work ourselves out of a job,'' he said.

Christopher S. Yoo, a law professor at the University of Pennsylvania who in 2009 testified before Congress about the matter, is less optimistic about that as leagues cash in on broadcast rights that leave fewer games available on network TV for free.

"We have breached what used to be an inviolable wall," Yoo said. "The big question is, 'Will the Super Bowl ever go to pay-per-view?'"

If it does, and if the NFL charges viewers to watch the most celebrated game in American sports, Yoo knows one thing for sure: the digital sports pirates will pounce.