Online Piracy More Sophisticated and Insidious Than Ever

I haven’t written about enterprise scale piracy in a while. Not because it’s gone anywhere. Quite the contrary, it’s still growing. But it is easy to feel as though all the major points have been covered, that there is nothing much new to say on the matter. Somewhere on this blog, there is at least a post or two responding to just about every rationalization for piracy, and there seems to be little value in repeating most of that. But a new report released by Digital Citizens Alliance, in collaboration with NAGRA Kudelski, does reveal a couple of new topics that deserve the attention of consumers, law enforcement, and policymakers.

The report titled Money for Nothing focuses on the multi-billion-dollar trade in illegal Internet Protocol Television Services (PS IPTV) that DCA currently estimates to be worth at least one billion dollars annually from U. S. operations alone. In a nutshell, the consumer sees an ad, often on a social media site, that offers hundreds, or even thousands, of channels for an inexplicably low subscription fee. The customer buys a black box similar to a cable converter that is typically preloaded with firmware that will stream material (both live TV and recorded motion picture content) that is illegally obtained worldwide through a vast network of pirate server operators.

On the one hand, a consumer who takes an offer to access that much material for $10-$15 a month ought to know something ain’t right; but at the same time, I think about the number of senior citizens who so often fall prey to what would seem like obvious scams. And given the dramatic ways in which TV viewing has changed in last decade or so, it is plausible that many a Boomer might believe these services are legitimate. After all, these illegal services look very slick, with on-screen user interfaces that work just like legit services. And isn’t piracy about free access?

“Because subscribers are paying someone for the content, and because the storefront websites and apps are often well designed, and posing as legitimate, some consumers may believe they are using a legal service.

The DCA/NAGRA report estimates that there are about nine million American households currently subscribing to pirate IPTV services, and this is a significant number relative to subscription TV overall. In 2013, there were an about 100 million households subscribing to pay TV, today that number is about 86 million, and it is predicted that by 2023, this number will drop to around 73 million subscribers.[1] Those stats measure traditional paid “cable” services and do not reflect how many households have “cut the cord” but also switched to other paid services like Netflix, Hulu, Amazon Prime, etc.

For instance, Netflix enjoys 167 million U.S. subscribers, and most customers subscribe to more than one of these services, suggesting that willingness to pay for TV and film entertainment is still fairly healthy overall. At the same time, however, nine million pirate IPTV users in a dynamic market is a number to keep an eye on, and it would be useful to have some insight into both the motives and the general understanding among these subscribers. Are they belligerent and still rationalizing piracy? Are they naïve and don’t know that they’re subscribing to criminal organizations? Are they viewers who “cut the cord” but simply want cheap access to TV channels, etc. in addition to the major streaming services?

Whatever the motives or attitudes may be for subscribing to these services, both consumers and law enforcement should be aware that, in addition to harming legitimate production and distribution models, pirate IPTV providers are one part of a whole smorgasbord of online criminal activity. As DCA has reported in the past, piracy sites are honeypots where a visitor has a roughly 30% chance of contracting malware that can be used for identity theft, ransom schemes, spying on households by controlling devices, or directly obtaining money, credit card numbers, or passwords.

Moreover, the new reports states, “NAGRA also found a scheme where the residential Internet connections of pirate IPTV customers are turned over to others – who could potentially use them for illegal activities, such as accessing child pornography, committing fraud, or participating in cyber attacks.” What that means is that the IP addresses of the subscriber base can be tasked as a distributed VPN used by criminals to hide their tracks while engaging in various illegal activities.

So, not only does a pirate IPTV subscription help support cybercrime, but subscribers themselves can wind up implicated if their IP addresses are used in connection with certain activity. So, it is not farfetched to think that paying $10/month for that all-access pass can result in a knock on the door by authorities wanting to question the subscriber about accessing child pornography or some other crime far worse than media piracy. And it cannot be a fun conversation to alibi a major crime by admitting to a lesser one.

 The Money for Nothing title derives from the fact that even the smallest players in the IPTV “industry” can generate substantial profit margins from relatively little investment—because of course they don’t bear the cost of licensing the material they distribute. One irony that’s hard to miss in this regard is that DCA describes a hierarchy of retailers buying distribution credits from wholesalers, which is fundamentally a licensing scheme, albeit for contraband material. Funny how permission is a constant, even among a network of thieves.

As consumers continue to change their viewing habits, and legitimate creators continue to adapt to the changing market, DCA and NAGRA are right to ask that policymakers track the development of these unlicensed IPTV services. Even if they were not directly antagonistic to legitimate distribution models (and they are), they remain intertwined with trafficking, extortion, child pornography, identity theft, and other forms of cybercrime. And nine million supporters of that activity is a lot more than too many.

[1] Source: Statista.

UPDATE: As originally published, I made too casual use of the term IPTV without the qualifier “pirate.” There are legal IPTV services. Thanks to Hugh Stephens for the note.

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