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Ad Disruption is the Key to Disrupting the Mother of all Black Markets

by Julia Smith

19 November 2020 10:45am

By Peter Szyszko, founder and CEO, White Bullet

Even in a world that grapples every day with a huge choice of home entertainment content, the return of sport after the initial lockdown lay-off still felt like a strikingly big deal. We’ve got music, games, films, and decades’ worth of on-demand TV to work through, but there’s still nothing that trumps the appeal of fresh sporting action. From Premier League to UFC - even when it’s crowdless, even when it’s a bit different from usual - we just can’t get enough.

Not coincidentally, that’s also the view from the illegal streaming world. Live sport is the mother of all black markets, accounting for thousands of highly illegal but user-friendly domains and apps worldwide - some of them offered on a subscription basis, but very many moving stealthily towards a revenue model driven by big-brand advertising.

Western sports leagues, whose content is in particularly great demand all over the world, wrestle constantly with the global appeal of their pirated content. Given the boom in live streaming through mobile devices, app piracy is the growing threat. So content owners’ understandable impulse is to identify the apps infringing their copyrights and insist the relevant app stores take them down. Problem solved.

Except not quite, because as good as it feels to wipe a pirate operator off the map, a short while later, the same criminal outfit invariably finds a new means of distribution and resumes trading. And what’s more, all those who have already downloaded the technology continue to enjoy illicit access to the cream of the world’s sporting content. Once an app is on a phone, no app store takedown will make the slightest difference.

An underground business that markets its stolen streams through social media and Reddit links might sound like a fairly scruffy bunch of opportunistic pirates, but that’s not the reality of the situation. Our always-on research and analysis operation, which not only crawls the internet for pirate content but also gauges the value of the advertising these outfits draw, calculates that the ten most popular pirate domains each generate $6.8m in ad revenue yearly. Not scruffy at all.

So what is the antidote to this wily, dynamic, shape-shifting pirate industry? The answer is to look harder at its advertising business. As with legitimate publishing and broadcasting, subscriptions alone are only part of the picture. Much as with domains, what we are seeing is that a vast and growing number of the most popular pirate apps - in western markets, that’s 98% of apps, compared to 94% of domains - run at least partly on ad revenue, sucked out of the legitimate programmatic advertising business.

It seems unlikely we can kill off demand for free sport; and we know that takedowns, while beneficial, have their limitations. But if we attack the advertising supply to these operations, we undermine the very viability of the pirates’ business model.

Their critical weakness is that much of their advertising stems from above-board brands, whom we know in general are not particularly pleased to find that their ad budgets are supporting an illegal industry built on IP infringement.

Between January and August this year, we reached out to the 50 mainstream brands whose advertising we had observed most often on pirate sites. We informed them of their exposure and advises them there were measures they could take to reduce or eradicate that exposure entirely.

We carried out pre- and post-outreach analysis and found that after our approach, 36% of those premium brands ceased advertising on pirate sites entirely, while 88% of them saw fewer pirate sites in their ad supply chain overall. Now, we are developing a similar approach for apps.

So while we may never entirely stamp out piracy in all its irrepressible, sneaky dynamism, this is a powerful strategy by which we can hack at its tentacles. By focusing on taking down apps before consumers can install them and denying ad revenue to active illegal services, we severely disrupt ad-supported sports piracy. So while sport will go on - and continue to be a beacon in these gloomy pandemic times - we will continue to squeeze the margin available to pirates who have done nothing to earn it.

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