Recent research conducted by the European Union Intellectual Property Office (EUIPO) on content fraud reflects the complexity of the illegal IPTV ecosystem. The diagram the organisation published shows the interconnected network of unauthorised content providers, wholesalers and resellers as well as various enablers (including legal entities) that knowingly or inadvertently support this large scale criminal activity [p.116].
Ecosystem of illegal IPTV (image courtesy of EUIPO)
The EUIPO researchers provide a comprehensive taxonomy of fraudsters, and the list includes multiple players that are directly or indirectly involved in the criminal operations. The paper also defines the following illegal IPTV business models:
1. B2C models
2. B2B model for resellers
The latter model is used by illegal content wholesalers. Let’s take a closer look at these crucial actors and what role they play in the ecosystem that diverts the revenues of legitimate broadcasters and service providers into the pockets of fraudsters.
Obviously data on the amount of revenue that is generated by illegal market players isn’t available – they don’t tend to submit annual reports or tax returns. But it’s clear from the scale of some of these operations, and how well established their brands are in the fraudster community, that they do have a slice of the pie, a share of the overall online content market, that continues to negatively impact legitimate content owners and distributors.
The illegal IPTV providers’ piece of the pie has a few layers: wholesalers are the bottom layer, supporting those above; resellers are the filling in the middle, holding it all together; and end consumers (pirate IPTV viewers) sit at the top. The icing on this particular slice of pie is not as sweet as one might imagine: pirate pie is often laced with malware, identity theft risks and other unpleasant aftertastes.
The wholesale bottom layer is all but hidden by those above it. Unlike viewers, resellers, customer support and other more visible people and organisations, the bottom layer is less detectable by law enforcement, allowing these wholesalers to largely go undetected as they continue to supply stolen content to their B2B customers, the resellers.
As the name suggests, wholesalers supply numerous resellers and sell illegally obtained content to them in bulk. This content, also known as ‘connections’, usually comprises packages of numerous channels, including live sports and other linear channels. Payment methods range from one-off charges to monthly, reseller-rate subscriptions. Resellers are able to pay their wholesale suppliers using such legitimate payment services as PayPal, or even with debit/credit cards; they can of course also pay with cryptocurrencies – a payment method that is encouraged by some suppliers, offering generous discounts for untraceable payment.
Some wholesalers run a sort of franchise business: they offer training and tutorials for resellers in how to set up an unauthorised IPTV service, and even teach them how to manage customers and payments. Some of these wholesalers develop their own brand, complete with professionally designed branding elements one would expect from a legitimate business, including a logo that is well-established and recognisable in this illegal market as a guarantee of reliability and quality. Ironically, logos of well-known illegal brands are known to have been used without permission by other illegal providers – but it is unlikely that the original brand owner could sue the offenders!
As well as serving their B2B customers, wholesalers sometimes provide B2C services. They offer direct subscription sales to those in the general public who are indiscriminate in their consumer behaviour, or who simply don’t suspect that behind the glossy professional looking veneer of the pirate IPTV website or app lies significant IP infringement.
However, such hybrid B2B/B2C business models are not too frequent: the illicit market has greatly developed and specialised. In addition, this market is driven by the viewers’ expectation for a more comprehensive channel list. In today’s fragmented market, with huge numbers of legitimate services offering limited catalogues, this is the area that pirates fully exploit. They know that no single legal provider can offer the catalogue of services that they can illicitly gather together under a single brand or “provider”, for a single monthly fee.
This increased specialisation of unauthorised wholesale and retail suppliers of high-value content, is indeed bad news. Not only is it a worrying sign of increasingly advanced market operations, it is more difficult to uncover the source of the operation when there are middlemen involved. In addition, while resellers are more visible – advertising their services in the most popular social media to drive sales – wholesalers use different tactics, staying in the shadows of closed forums and invitation-only social media groups. As a result of content protection companies’ and law enforcement activities, these crucial players have learned to lay low to avoid prosecution.
The simple answer is yes. Advanced post-distribution content protection services and solutions are available to content owners, broadcasters and service providers, and these can have a genuine impact on the piracy ecosystem, one that is not possible without taking down wholesale content providers.
While using some less advanced solutions will see you endlessly playing the cat-and-mouse game with those that steal your revenue, more advanced intelligence-based solutions are able to cause significant disruption to even the most covert, smoothly functioning illicit operations.
From fingerprint-augmented video-capture content monitoring that detects illegally redistributed content, enforcement and advanced delivery server blocking services, to forensic watermarking, there is a whole content protection and anti-piracy arsenal that can ensure all of your challenges are covered and your revenue is protected from fraud.
Is your content appearing in our ongoing fraud investigations? We can tell you; we forensically examine existing exploits that are used by content thieves, and are able to provide deep insights into how these are exploited and where the illicit content ends up.
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