The Sporting Class: Inside the Risky Business of Streaming Games Illegally

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Speaker 1 The topic that I bring you guys together to discuss is a topic that I have received more inquiries about quietly, privately, more than any other.

Speaker 1 Because streaming illegally, piracy in sports viewership. John, I want to throw some numbers at you.

Speaker 1 As the former president of ESPN, a guy who ran Dazone,

Speaker 1 a sports streaming company, the claim is, and this is now from a combined NFL, NBA, and UFC statement from last year, that live piracy has been costing the global sports industry up to $28 billion with a B in potential additional revenue annually.

Speaker 1 And of course, any young person knows that this is happening all the time, everywhere, and we'll talk about that too.

Speaker 1 But what is your knee-jerk response to just the scope of the problem and that number?

Speaker 3 Well, that number is bullshit

Speaker 3 and far overstates the issue, which is not trivial.

Speaker 3 But according to a study from Cinemedia, which sells anti-piracy tools, so they have nothing but incentive to make you believe there is an enormous economic benefit to buying their tools.

Speaker 3 Now, it was and the media research firm Ampere analysis.

Speaker 3 They, my guess is they are calculating this number by looking at the number of illegal streams consumed and calculating that if every one of those people actually paid the money they were supposed to pay to receive that legally, that would add up to $28 billion.

Speaker 3 Most people

Speaker 3 sourcing illegal streams are not deciding, hmm, do I pay $100 for that fight? Because I'm thinking about it, but I could get it for free.

Speaker 3 Most of those are people who would not pay $100 for the fight, though it is pay-per-view, UFC fights, boxing fights for which this is the biggest problem. And it is a big problem.
They do lose money.

Speaker 3 I do not believe, and who did you say

Speaker 3 the three, it was NFL?

Speaker 1 It was the NBA, the NFL, and the UFC.

Speaker 3 I don't really believe on a Sunday that there are a whole lot of people sourcing through their computer an illegal stream of an NFL game because it's just too ubiquitously

Speaker 3 available and ubiquitous for 800 bucks on YouTube

Speaker 3 for the price of for a $7

Speaker 3 stein of beer in your local tavern

Speaker 3 or by the way free in your friend's home I just I just don't believe I'm not trivializing the theft of intellectual property. I worked at the Walt Disney Company.
We took that very seriously.

Speaker 3 I worked at Dazone. We clearly leaked revenue because people...
Exactly. I'll give you a fun example.
We

Speaker 3 had several Anthony Joshua fights. We put one of them on Pay-Per-View in Nigeria.
He is the, arguably, the most popular athlete in Nigeria. We expected to get,

Speaker 3 I think we actually had quite an inexpensive price, two or three dollars, which, however, is not trivial for many Nigerians. But

Speaker 3 I remember looking every hour to see how many people from Nigeria have subscribed. I don't think we hit 100.
I'm not even sure. 100 people.

Speaker 3 People. I'm not even sure we hit 25.

Speaker 3 And more than a million people did watch it illegally. Now, how many of those people do I believe would have bought even a $2 or $3 subscription? Almost none of them.

Speaker 3 And so I don't believe there's this $28 billion pool of money that is going to somebody else or is available for these leagues to scoop up if they could simply

Speaker 3 find

Speaker 3 and stop this piracy. I favor finding and stopping this piracy.
In the language of the day, they should be found and they should walk the gangplank after being

Speaker 3 drawn and quartered?

Speaker 1 Pirate maritime justice.

Speaker 2 It's good to talk the way John talks because when he's doing his financials for Dazone, you have to look at, are you budgeting revenue from Nigeria in order to make it work what you're paying the fighters and paying your overhead, et cetera?

Speaker 2 And my guess is what John will tell you is that from a Nigerian revenue standpoint, that it was not a huge part of their P ⁇ L.

Speaker 2 If, however, a large part of their P ⁇ L, which is let's say European revenue or American revenue, that there was leakage to the point where they were no longer comfortable with the amount of leakage, you can bet your bips that you'd have a different view.

Speaker 2 Now, I recognize that you don't necessarily want to budget at Dazone, but at Disney, the budget that you had to protect against piracy was huge.

Speaker 2 Would you, and this is anecdotal, but do you agree that there were a lot of people at Disney who are focused on people who are stealing both from licensed products to streaming to everything.

Speaker 3 There were significant resources put against piracy, which was most acute in those days in DVDs, which would show up just from the low technology application of somebody's phone in a theater where...

Speaker 3 I remember those days. No.

Speaker 3 And it was acute, for instance, in China. In China, you could buy The Little Mermaid.

Speaker 1 In the Philippines, I would go over there to visit my relatives and I'd go to the mall and there would be entire cases of DVDs of every movie.

Speaker 2 So you can't fight

Speaker 2 at every front. And so when you're a company and you're deciding who are you going after, you're not going after the stores.

Speaker 2 It's like Fendi not going after the people on Canal Street here in New York. They don't love it.

Speaker 2 They're not happy with Canal Street, but they've got a lot bigger fish to fry. And the Nigerian stealing of revenue, it's the sort of the Rolexes on Canal Street.

Speaker 2 We're going to leave it be and we're going to write it off like retail shops write off as a cost of goods sold. They write off stuff that gets walked out the door.

Speaker 1 But I want to point out that streaming as it is pertaining to young people is omnipresent. And there are a bunch of websites that have been named in the news.

Speaker 1 Dana White has gone to war against at least one of them. StreamEast being one of the most popular platforms.
This is from September. Dana White saying, trust me, we know exactly how to combat piracy.

Speaker 1 I won't tell you extensively what we do every event, but we go after piracy hard and threaten prosecutions, all of this stuff.

Speaker 1 And so I just want to point out that this seems like a very difficult problem to comprehensively address.

Speaker 1 And so, David, if you're running a team, if you're working for a league, what is the appropriate approach then?

Speaker 2 Well, I'm spending money. And I want to just segue to Wall Street.

Speaker 2 They spend billions of dollars of their P ⁇ L every year is against protecting against hackers because they want people to feel safe when they are going online and doing all their online banking.

Speaker 2 It's a business that 25 years ago, they were spending 20 million on, and now it's billions per year is the budget to try to be one step ahead of hackers, which, as you know, is hard to do.

Speaker 2 When you go down to leagues, it's been 50 years of leagues having boots on the ground at the World Series, going around and shutting down the people, selling stuff across the street that's unlicensed apparel.

Speaker 1 The merch.

Speaker 2 You literally walk up to them, you take all their stuff, and you send them away. You sometimes can use the police to corral them.

Speaker 2 They never get charged, but at least they're gone for that particular game. You've got people who are doing it.

Speaker 2 The reason why you can't bring water and food into many arenas or into a movie theater is we want you to buy your stuff from us.

Speaker 2 So it naturally will have people selling water and candy and popcorn outside of an arena. You can't stop everything.
Piracy of streaming, you say it's not 28 billion.

Speaker 2 Okay, I will take the over on $20 billion. And the reason I will take the over is that your Nigerian example is a good one.
But let's talk about here. Let's talk about where the rights fees happen.

Speaker 2 There's so many young people stealing what they have no right to have. And they can't go the route of just letting it go because it is way too much money.

Speaker 3 I didn't suggest that, but I did suggest. that to me for the NFL, it's the equivalent of Canal Street.
Most people

Speaker 3 are watching on

Speaker 3 a television set at home, in a bar, in a friend's house that has a legal signal for their game. They do care a lot about it, but it's not easy to find.

Speaker 3 I do find it interesting that Dana White is among the most vocal about this because I do think proportionally he has a lot more to lose than NFL because a pay-per-view event is probably in sports the most pirated thing.

Speaker 2 The NFL thinks that it's Canal Street.

Speaker 2 I would only point out that if Canal Street, the people who are selling those fake bags and watches, if they relocated out of Canal Street and were doing what they're doing in front of big box retail stores, I believe that all of a sudden Fendi would be far more interested in shutting that down.

Speaker 2 So the NFL, they may not be worried today, but they are. I really do believe it, because it's not as big a percentage.

Speaker 2 But I think that they've got to very much invest in protecting that it doesn't get worse.

Speaker 2 And my view is streaming is getting worse, piracy not better, which is why they're spending money to stop it now.

Speaker 3 It certainly is getting worse. Now, are you suggesting there's potentially $20 billion

Speaker 3 of income revenue? Let's say you shut it all down tomorrow. Just somehow magically, you got Aladdin's lap and the genie could grant your wish to shut it down.

Speaker 2 It wouldn't even be my fourth wish, but anyway,

Speaker 3 I don't think the NFL would see a billion dollars.

Speaker 2 Every bit of streaming would add up to over $20 billion because it's everything. Every bit of streaming would be movies, it would be music, it would be sports.

Speaker 3 It theoretically adds up to $28 billion

Speaker 3 of hypothetical revenue. How much of that revenue do you think would actually convert if you could not, if you could not stream?

Speaker 2 50%.

Speaker 1 So, here, here's some.

Speaker 1 Here are are some just surrounding bits of data, right, to inform this parlor game, which is that Stream East reportedly, as of August 2024, when it was seized, and again, it's hard to whack them all these places because of VPNs and because they can go to countries that have, of course, more legal protection, or at least are far more hidden from American authorities.

Speaker 1 But Stream East had over 15 million monthly visitors. They have a strong focus on American sports in particular.

Speaker 1 In the Harvard Business Review, just another piece of information here, and again, this is a privacy tracking firm, VFT, as aforementioned.

Speaker 1 They estimated that 17 million viewers watched the Super Bowl this year on illegal pirate streams.

Speaker 1 And a 2023 survey of 3,200 NFL fans, again, just 3,200 of them, found that 35% reported that they regularly watch NFL games on pirate streams.

Speaker 3 Are you worried yet?

Speaker 3 No,

Speaker 3 I'm not worried. I think it's all heinous.

Speaker 3 Don't misunderstand me, but do I believe 35% have used a stream.

Speaker 3 So when you had 18 million people watch a game on Sunday, do I believe if there was no piracy, suddenly that number would become 24 million? It would not.

Speaker 1 The question of like, would these people be converted into paying customers speaks also to the heart of just young people and their expectations for what it means to be a sports fan at this point, right?

Speaker 1 It's just so easy. There's no friction.
You just Google or go to a Reddit or a Discord and you'll find the link.

Speaker 1 But which of the companies today takes this the most seriously when it comes to leagues or broadcasters or distributors?

Speaker 2 Well, I think we agree. It's likely Dana White because he has an entire system in place, but he's also just more public about it.

Speaker 2 There's a huge budget budget within Major League Baseball to protect against piracy and illegal licensing. It's millions of dollars.

Speaker 2 And if you add it up, it becomes all the leagues, all the different people, all the different studios. And I just,

Speaker 2 it's reprehensible to me that people have an expectation to get something for free. There is no reason in the world.
And John is laughing because it's his dream.

Speaker 2 His dream somehow is to pay people to perform a service, but then the people who engage with the service don't have to pay for it.

Speaker 3 That's how you get crushed. No, you go bankrupt.
I'm not amused by that pirating activity. I'm amused at your umbrage that anybody should expect to get anything for free.

Speaker 3 I agree.

Speaker 2 Look, I like people who jump turnstiles.

Speaker 3 No, I think it's wrong. I think it is unethical, and they should, if it were possible, be caught in punishment.

Speaker 3 When you suggested that baseball's budget was millions of dollars, I believe that you have, but is it tens of millions of dollars? It's going to be.

Speaker 2 That's the whole point.

Speaker 2 It's growing because they can't stop it.

Speaker 1 But it's an interesting question, though, right? When you say turnstile jumping, of course, yes, that's wrong.

Speaker 1 But the question then becomes, well, how much do you put towards the theater of stopping those people? Or is it the actual attempt to stop them?

Speaker 2 It's theater. It's theater.
It's hard to do. But the money that's lost, though, John, and this is what I'd like to think about, it's to upkeep trains.
It's to keep you safer.

Speaker 2 It's to have more trains on time. They need money.

Speaker 3 Again, my amusement is not because I find it to be

Speaker 3 acceptable behavior. I do not.
I was.

Speaker 3 I personally found it extraordinarily reprehensible when many, many of my friends thought logging onto Napster and stealing music, and that's what it was.

Speaker 3 And when I would say to them, you know, you're stealing music it's the same as walking into a store and putting three cds in your coat pocket would you do that they're like no that's bullshit done it's not stealing and they're charging me too much money anyway for a cd so i'm just getting back i'm taking

Speaker 3 but where i was going to go with the money baseball spends is if indeed

Speaker 3 If indeed NFL fans on a regular basis, a third of them were were stealing, that would be worth billions and billions of dollars.

Speaker 3 If that was the case and it was a doable activity, their budget would not be millions. It would be hundreds of millions of dollars to recover that money

Speaker 3 if they could get it. I'm suggesting they know.
that they are spending an appropriate amount to try to keep it from appearing to be just a trivial activity to set an example, but they're not doing it.

Speaker 3 Roger Goodell didn't get from 10 billion to 25 billion by shutting down piracy. And he's not going to get, in my opinion,

Speaker 3 he's not going to get from 25 to 30 by shutting down piracy. I want to give a shout out for once to Dana White.
He is right. He is every, I am, despite my smile, just as

Speaker 3 unhappy. And it hurt us at the zone that people were stealing our signal.
It was detrimental to our actual bottom line. But that is where it matters.
It's a $100 event. People, that gives them pause.

Speaker 3 I don't think anybody has any trouble figuring out where to appropriately watch an NFL game on Sunday.

Speaker 2 The reason why you go to a dermatologist once a year is to find something before it becomes stage four cancer.

Speaker 2 And so the investment that companies are making, while it may not be the end of your revenue model today,

Speaker 2 you can see it from here, just like you can see a spot that can all of a sudden become a real problem.

Speaker 2 And that's why all these firms are investing and why all these firms are popping up that selling their wares as, hey, we can help protect you.

Speaker 2 This is a real now area of business and an area of concern. And it's not too early to be not panicked, but diligent is what I would say.

Speaker 3 I don't think you're wrong. And if we think back, I used the Napster example of something that bothered me that didn't bother lots of my peers and friends.

Speaker 1 I illegally downloaded a lot of music in college. Shameful.

Speaker 3 I never did. People would say, why don't you just

Speaker 3 download from Napster? I never did it. And by the way, your point is correct.
Napster ended up destroying billions of dollars of value in the music business. Because what was the solution to Napster?

Speaker 3 The solution to Napster was a very, very, very inexpensive streaming service from Apple that gave you all the music you steal for, I don't know what Apple music was when it came to Apple.

Speaker 2 It started as 99 cents a song. The newer songs like $1.99, but now they've made it if you just buy for $12 a month, you can get any song you want.

Speaker 2 And frankly, now you don't even need to download songs.

Speaker 2 If you have Wi-Fi, you can just listen

Speaker 2 to songs and there's so many different places, but it has crushed the music industry.

Speaker 1 Yeah, Apple Music now $10.99 a month for individual subscriptions.

Speaker 3 And if you could have the problem too, we can move to another thing, is just the difficulty of finding and prosecuting these people. It is really, really hard.

Speaker 3 And if the music business could have found them, stopped them, they would have. Instead, they had to change their entire business model.
So your point's well made.

Speaker 3 The sport sports leagues do not want to find themselves in the same position the music companies did, and they are investing to try to find ways to catch them. They should catch them.

Speaker 3 Again, Dana White isn't dead right.

Speaker 3 I would happily watch a pay-per-view special with Dana White marching pirated pirates to the gangplank and into the shark-infested waters.

Speaker 3 I think it's a good idea for a Netflix live show.

Speaker 2 Very Austin powers of you.

Speaker 1 So just legally speaking, it's worth noting, 2020, the Protecting Lawful Streaming Act came to be, part of the Consolidated Appropriations Act of 2021,

Speaker 1 signed into law on December 27, 2020, increasing criminal penalty significantly for those who do these things. Previously, notably, illegal streaming was treated as a misdemeanor.

Speaker 1 Under the new law, the DOJ, Department of Justice, can bring felony charges against providers. as opposed to users of such illegal services.
And the question, of course, is, well,

Speaker 1 who are the kingpins here who are actually organizing all of this stuff?

Speaker 3 Good luck finding them.

Speaker 2 I mean, there are documentaries about people who are overseas and in countries and they're sitting in their basements and they're doing a lot of things to disrupt.

Speaker 2 We are in the age of disruption where people are able to hide behind keyboards and hide behind their technical skills.

Speaker 2 And my view is that you have to keep going after them, even if you know it's one finger in the dike of piracy.

Speaker 3 And of course, there are bigger actions that could be taken and there are companies that are culpable. You could go right now onto Amazon and buy yourself a fire stick,

Speaker 3 which can help you steal signals.

Speaker 3 And they will not discuss why those should be taken out of their available things to buy.

Speaker 2 Can't you build a bomb with stuff you buy off Amazon?

Speaker 1 I mean,

Speaker 1 okay, but the philosophy of this, right, is an interesting one.

Speaker 1 It's the question of for in this part of the tech company ethics philosophy course we're teaching, what responsibility does Amazon, as the proprietor of the biggest store in the world, have to regulate products that in this case are a one-stop shop for a jailbroken fire stick with all the software you need to stream illegal content?

Speaker 2 I'm not going to blame a company as much as I'd like to for people who misuse the products.

Speaker 2 There is a thing for you can go to a drugstore and buy certain, for example, can you imagine if you couldn't sell cough syrup anymore because there are people who drink it when they're alcoholics.

Speaker 1 Now, notably, they do lock it behind glass now.

Speaker 3 They do lock everything in order to attain.

Speaker 3 It is one of the more difficult discussions in our culture right now,

Speaker 3 which is.

Speaker 3 Are you as a distributor of content through some kind of technology, do you have any responsibility to make sure that content is accurate, is not inflammatory, cannot be used to defame people.

Speaker 3 And the big tech companies have hidden for many years behind the,

Speaker 3 I don't do anything wrong. The fact may be that people are doing very bad things with this technology.

Speaker 3 By the way, the greatest, you know, I'll give Dana White a shout out and give Elon Musk the middle finger.

Speaker 3 Thinks it doesn't matter what he puts on his own personal social media site that he has up and running.

Speaker 3 He thinks he has no responsibility for shutting down information which is patently false, inflammatory, and being used against people, including those poor folks in Ohio who are not eating cats and dogs.

Speaker 2 Do the people who build highways have responsibilities because people speed on the highways and there are crashes?

Speaker 3 Absolutely. If you have an accident on a highway and you want to sue, you want to, because they have, if you want to sue, because you run into a pothole, you can sue, you can sue the city of New York.

Speaker 2 I meant the DOT with going too fast and you get into an accident like Jack Dougherty, who exactly is texting and driving.

Speaker 2 Do I have the name wrong?

Speaker 1 Yeah, Jack Dougherty.

Speaker 1 Point taken in terms of that.

Speaker 2 I just, you're going to blame. Listen, I'm not a fan of Elon Musk, don't get me wrong, and I'm tired of him in my timeline when I don't follow him.

Speaker 2 But I'm not going to blame someone who provides a place where people are conversing. Threads were started, but then sort of disappeared because people on Twitter or X are looking for news.

Speaker 2 We could stop Twitter right now. All of us could, except we're all on it.
We're all complicit and we're all getting information from it.

Speaker 1 So, the question of content moderation and the question of responsibility as, again, an online store or an auto manufacturer, which has been beholden to lawsuits in terms of safety, right?

Speaker 1 And also, just to get the full scope of the American experience, the immunity that gun manufacturers have in terms of what their customers do once they obtain them.

Speaker 1 All of this stuff is a hot zone in terms of legal scholarship.

Speaker 1 And you could argue, in the latter case that I mentioned, incredibly incomprehensible as to why they are immune, except for lobbying efforts that I imagine brings us back to the power that certain tech companies have when it comes to what's happening.

Speaker 3 The

Speaker 3 gun manufacturers are the only manufacturers of any product in our country who cannot be sued. Can you imagine that? It is the most dangerous thing you can buy.

Speaker 1 Placa is the law that we did an episode about this with Jason Kandor, and it's, I recommend to anybody.

Speaker 1 But to John's point, yeah, this was government legislation that protected gun manufacturers in a way that continues to haunt America. But I now officially digress from all of this.

Speaker 1 David, I want to bring us back, though, to like something that I want our listeners to understand, which is

Speaker 1 the people who run sports, okay, are they trying to put the person at home, the fan, or what they believe themselves to be under a new definition, a non-paying, pirating estream fan in jail, right?

Speaker 3 Like

Speaker 1 what do they have to fear here?

Speaker 2 They have to fear that the the platform they're using is going to disappear. If I'm a league, I'm going after the platform.

Speaker 2 It's like when you're going in the mafia, you're going, you're trying to get people to turn and because you're trying to go higher up the chain.

Speaker 2 That's when you give immunity to people lower on the chain. The end consumer who's stealing, you know, sitting in their skivvies

Speaker 2 watching pirated stuff,

Speaker 2 they're not going to jail. But the websites and the URLs,

Speaker 2 which is the platform they're using, that is really what you're focused on. And of course, that's the whack-a-mole where you're done with one platform, you go to another.

Speaker 3 I agree with that. It's worth mentioning that, to my knowledge, the most successful company at protecting their sports streaming from piracy is NBC Comcast during the Olympics.

Speaker 3 They have a very active, very well-resourced

Speaker 3 effort to immediately

Speaker 3 get

Speaker 3 and an army of lawyers to get platforms to immediately cis and deceased, bring down those illegal streams. Because right now, you can, they all have the obligation to take the stream down.

Speaker 3 But if you see something you think is wrong and you're at a small, you know,

Speaker 3 minor league baseball team and you try to figure out how to get that taken down, you won't, you will not get a reaction before the game is over. The NBC guys,

Speaker 3 and somehow it bears studying and looking at what they do.

Speaker 2 It's resources.

Speaker 3 It's resources, and it's also the heart intent that we're going to go after. It also helps, of course, that it is an enormous audience for 17 days.

Speaker 3 Really hard on a pay-per-view fight where your actual window might be

Speaker 3 a minute, might be 11 minutes, might be an hour and 15 minutes because

Speaker 3 that's the duration.

Speaker 2 But under that theory, it would be okay for the NFL leagues to do it because you could pirate week one through three, but weeks four through 17 or 18, you would lose the right.

Speaker 2 So you're saying that the 17 days for a pay-per-view fight, it's three hours. By the time you get to it, the fight's over.

Speaker 3 No, no, it's because it has to be done exactly at that moment.

Speaker 3 So they resource for the 17 days, a large number of people who are finding those sites, a large number of lawyers who are firing off cease and desist letters.

Speaker 3 I'm sure they've been in conversations before the 17-day start with lots of people to say, you're going to get this, and we expect you to act upon it.

Speaker 2 I think the NFL is in the same position, though.

Speaker 3 Well, they are in the same position, but what you do on day one doesn't stop somebody from stealing it on day two, three, four, five, six, seven.

Speaker 3 Because this is, it is, as you point out, whack-a-mole. They just keep coming, and this concerted effort does make a dent.
And I probably,

Speaker 3 I guess, I do not know this, that the people who do engage in this activity may not find it worth their while to spend a lot of time trying to disrupt the Olympics because they have made it clear they're going to find you.

Speaker 3 I don't think they prosecute a lot of people.

Speaker 2 So it's a deterrent. So now we're talking about something even more interesting to me.

Speaker 1 Well, I also want to ask.

Speaker 3 I don't know that, but

Speaker 3 your implication that it might be is probably accurate.

Speaker 1 So just some more surrounding detail here, right? So of course, yes, UFC, NBA, NFL, their shared experience per this reporting is that many

Speaker 1 of these service providers, the internet service providers, take frequently hours or even days to remove content in response to these takedown notices.

Speaker 1 And of course, for a fight, only have so much time. First round knockout, maybe you've already also, therefore, been knocked out yourself.

Speaker 1 Comcast, though, when you talk about NBC, it's not merely their immediate company, they're also Comcast, right? So, how does that affect what they are able to do?

Speaker 3 I'm not sure I understand that. I would assume it's pretty easy to get it taken down.

Speaker 2 They're calling themselves. Yeah.
It's one department calling its own other department in the same company. But remember, a company is as big as that,

Speaker 2 you never have any privity to certain parts of your own company. It's so huge.
But in this case, it's far easier.

Speaker 2 But the question is, are they getting things taken down Comcast at a better rate than Optimum or Spectrum or other such platforms? I don't, I obviously, there's no numbers on that that I've seen.

Speaker 3 I've not either, but I would assume that the major streamers, the ones you just mentioned, are the best at this.

Speaker 3 I would assume that a lot of this activity happens on secondary and tertiary internet providers.

Speaker 2 I don't believe that because there's an existence of the dark web, that that puts into jeopardy what we do in the regular web.

Speaker 2 There's always going to be a nefarious action by people whenever there's anything. And this didn't start with the internet.
This was going on with satellite TV when you could get a fake car.

Speaker 1 Can you explain the days of stealing cable for the people who may not remember us? What that meant?

Speaker 2 This is a real thing. There was,

Speaker 2 it used to be, this is how it all started: where you only had a few channels, then cable happened, and you could get like HBO After Dark, which was of great interest to people. Your grandfather.

Speaker 2 Love it.

Speaker 2 Very Skinamax, great interest to people um channel 35 in new york channel j for those new yorkers out there channel j uh al goldstein robin bird curious george you're gonna pretend you know ugly

Speaker 3 ugly george it was not curious george that's the monkey that's monkey i i like this channel sounds real weird so you've never heard of channel j no no channel j on midnight oh oh this is the public access yeah public access

Speaker 3 midnight blue midnight blue you would see Robin Bird naked.

Speaker 3 Not that exciting, by the way. And there was a guy.
What was his name?

Speaker 1 Ugly George.

Speaker 3 Ugly George. Ugly George, who was who would who would troll the city with a camera on his back and invite women to accompany him to what he, I believe, referred to as the Polish penthouse.

Speaker 3 And this was big business. Shockingly enough.

Speaker 1 I feel so uneducated.

Speaker 3 Shockingly enough, the old ridiculous college theory that, oh, if you just ask enough people at a bar, someone will say yes.

Speaker 3 Ugly George actually put it to the test. He also was ugly, and

Speaker 3 he wore a little short pants,

Speaker 3 jump shoes,

Speaker 3 without sleeves,

Speaker 3 with kind of had hairy underarms, a bad Richard Simmons.

Speaker 2 It's amazing how much you know about Midnight Blue. I'm loving this.

Speaker 1 He wore, it seems. Everybody knew about this.
It seems a backpack with like a dish on it of some kind.

Speaker 2 That's how you had it rolling. You didn't have your phone with you.

Speaker 2 There were no phones.

Speaker 3 And not only were you accompanying this very unattractive man in very bad clothing to a mediocre apartment, but you were being filmed and then having the action distributed.

Speaker 3 It was not hardcore pornography.

Speaker 1 I will say that it sounds like a lot of what YouTubers are doing now.

Speaker 1 It sounds like it is the spiritual forefather of the aforementioned people who may or may not be crashing their luxury vehicles in a rainy year.

Speaker 2 All of these shows that we're talking about that were a long time ago, that many of which were watched through squiggly lines when you did not have

Speaker 1 channels retreating to give you a sense of

Speaker 2 what part of the body it is and thinking that it's a nipple when it was an elbow. We've all been there.
And, well, I've been there. I don't want to speak for everybody else, and I'm fine with that.

Speaker 2 Think about what that has led to. It was a huge business then.
I had a kid drop out of.

Speaker 1 I get the sense that you didn't care if it was an elbow.

Speaker 1 There's a lot of, there's a lot of the

Speaker 2 there's no reason. That's the whole point.
Is that nowadays I care greatly, but back then you have to work with what you got.

Speaker 1 I want to read this New York Post Post headline and bring us back to what I was actually asking about. Because the headline is just to validate your collective memories:

Speaker 1 New York's public access TV was a cesspool of softcore porn.

Speaker 1 And it goes on to explain in great detail all of this stuff, the nascent days of cable television, giving rise to, yeah, access to people to make shows.

Speaker 1 And of course, this sounds a lot like the internet the more we talk about it.

Speaker 3 Stealing cable, though, this was john for you at espn did you guys worry about this at espn not much why not first of all even if people were stealing signals a hundred million households were paying for

Speaker 3 it just it it was a calculation as david said before it was a calculation that putting resources against stopping people from pirated from pirated signals was not potentially material. Now,

Speaker 3 there was another precursor, which also people kid themselves that they're not stealing. They'll be offended when I say it is stealing.
Sharing your password inappropriately is stealing.

Speaker 2 So, this is this is now 100% stealing, and they're shutting it down.

Speaker 1 Netflix, of course, all the streamers are.

Speaker 3 So, this is the perfect example.

Speaker 2 I don't know why it took so many minutes for my brain to get there. Netflix, in the beginning, hey, it's fine.
We know people are sharing passwords, it's not costing us too much.

Speaker 2 We're going to let it go. And then there was the inflection point.
And the inflection point was, wait a minute, we're going going to change it.

Speaker 2 And it made a lot of people angry, feeling that though they deserve to be able to get Netflix everywhere.

Speaker 2 And you're talking to a Hulu customer who has to have two different accounts in various places because you cannot share amongst locations, even yourself.

Speaker 2 So that inflection point, you say ESPN didn't worry. And I would argue Disney was worrying while you were not.

Speaker 3 Probably were. And by the fact, I am slightly wrong in that there was a colleague of mine named Sean Bratches who was prescient about this and said, we should be worried about this.

Speaker 3 We could drive some incremental revenue.

Speaker 3 He was somewhat shouted down, and I bet it happened in Netflix as well, with, look,

Speaker 3 we're actually better off that more people are watching. And it's okay.
We did introduce a college program where

Speaker 3 you could get an inexpensive ESPN because one of the greatest abuses of it was as your kids went off to college, you just let them keep using your password for your cable television.

Speaker 3 So it had come up. So I stand a little bit corrected.
My memory has been a little bit

Speaker 3 stimulated.

Speaker 3 Color bars are

Speaker 3 also. And indeed,

Speaker 3 there was some discussion about it, but it wasn't viewed as an acute problem, right? You can only prioritize so many things. I think it was right, by the way.

Speaker 3 And I do think you will note that it has helped Netflix and its relationship with Wall Street. They were happy to see this.
I think it has been cited at earnings calls as one of the reasons that

Speaker 3 their revenue is going up.

Speaker 2 I'm just shocked into silence, charging people for a service. It's outrageous.

Speaker 1 So this was

Speaker 1 earlier this year. Yeah, and this was about...

Speaker 3 Well, nobody's going to quarrel with you, David, that charging for a service is an appropriate thing to do.

Speaker 3 I'm just going to slightly refocus the issue. The issue are the number of people who think gaming that system is okay.

Speaker 2 There's always going to be people who think gaming the system is okay, but it's our job to figure out when the point is that it's too much.

Speaker 1 I do want to express what I think is a populist sports fan view on this, which is

Speaker 1 sports is making more money than it ever has, right?

Speaker 1 This is the equivalent of taking the pennies out of your sofa cushions, you guys being the people who run sports.

Speaker 1 And what they're saying is, isn't it also what you want to go to what you alluded to there, John, right? The reason why it is smart for, and leagues have had varying policies on this.

Speaker 1 Why it's smart for leagues to not crack down on posting short clips that people post online of your product is because this is advertising for your product.

Speaker 1 And of course, some leagues have been better at that than others. Some leagues are more litigious at that than others.

Speaker 1 But doesn't it also amount to some marketing argument of like more people are consuming your thing? You're more important. This is all going to bounce back to your, to your sofa cushions in the end.

Speaker 2 No, it's the Canal Street argument. The people on YouTube or TikTok who are using the little things and getting, you know, 20,000 views or whatever they're getting, that's the Canal Street Fendi.

Speaker 2 But you all of a sudden get someone. The reason why

Speaker 2 CBS Sports HQ cannot do certain things, they don't have the rights to it, because the NFL, as an example, has very significant rules of when you can show highlights, when you can't.

Speaker 2 And CBS obviously has NFL, but with MLB, they don't. So there are times when you can show a highlight, times you can't.
There's the number of seconds you can show a highlight.

Speaker 1 Oh, just so people understand, every bit of video licensing is negotiated.

Speaker 2 And it's a huge business for the provider of the content. You are a provider of content, Pablo.
If no one thought that your content was worth anything other than free, that's what you'd be paid. Zero.

Speaker 2 You need people to value what you do three to four times a week, depending on us.

Speaker 3 I do believe Pablo is accurate, though.

Speaker 3 In many cases, there were leagues which were less interested in trying to suppress highlights being distributed because they believed that it would create interest in the league.

Speaker 3 I could have this wrong, but I don't think so. When House of Highlights started, they did not have a license to show NBA Highlights.

Speaker 1 They were just an Instagram account.

Speaker 2 Can you find a guy named, I'm going to give him attention here. I want to say his name is Bob Menery.

Speaker 1 How do I know that name? He's a YouTuber.

Speaker 2 He had millions of people when he would talk about highlights and he would do it in a very funny way. And guess what? When it was growing, he was stealing it.
And all the leagues, everybody was fine.

Speaker 2 Then he got too big.

Speaker 1 And now, look. Well, by the way, as a side note, right? So the person who ran House of Highlights is Omar Raja, young guy.
I've gotten to know him.

Speaker 1 He now is the person at ESPN who they hired to run their social channels. So they just brought him in-house.

Speaker 2 Join the man.

Speaker 1 Well, yeah, because it at a certain point, you re, and this speaks to like the larger sort of arms race here, right? And I think about this with the government.

Speaker 1 It's like, do you have more faith in the young person who is independently and creatively scheming, fluent to this language and this internet culture?

Speaker 1 Or do you trust the policemen who are older to keep up with them?

Speaker 2 It's a great question. And I would only ask you,

Speaker 2 being a content provider who monetizes the content, it's a bit like being a professional athlete. There are a lot of people out there who play basketball.
Very few get paid to play.

Speaker 2 There are a lot of people making content. There's a lot of people everywhere, podcasts and all on down, and they're not making money.

Speaker 1 Establishing that you are making something that is worth paying dollars and cents for is something that, of course, it's why I do have a residual shame at having illegally downloaded so much music in college, sometimes resulting incidentally in songs that were viruses, or in some cases, just like movies I didn't.

Speaker 1 There was a lot of weird shit on my laptop computer in college.

Speaker 3 I do think that

Speaker 3 the internet has done many wonderful things, but one thing it has done is convince people that they should get stuff for free.

Speaker 2 Why should they pay for it? Or that they're famous.

Speaker 3 Yeah.

Speaker 2 There's a lot of that.

Speaker 1 I do want to point out that the DOJ, Department of Justice website,

Speaker 1 has this update from now 2023.

Speaker 1 A Minnesota man was sentenced to three years in prison for a scheme to commit computer intrusion and illegally stream content from four major professional sports leagues.

Speaker 1 This is a guy named Joshua Streit, S-T-R-E-I-T-A-K-A, Josh Brody, sentenced in federal court.

Speaker 1 for intrusions into MLB's computer systems, illegally streaming copyrighted content from MLB, the NBA, the NFL, the NHL.

Speaker 1 And he offered this streaming content to the public for profit.

Speaker 1 And he obtained it by gaining unauthorized unauthorized access to the websites for those sports leagues via misappropriated login credentials from legitimate users of those websites.

Speaker 1 And then what happened was,

Speaker 1 because this guy was doing David's favorite thing, illicitly streaming copyrighted content from MLB, he attempted to extort approximately $150,000 from MLB

Speaker 1 in exchange for, you know, his knowledge of the vulnerabilities in MLB's internet infrastructure.

Speaker 2 Well, they did that because MLB was famous for paying people like with the Biogenesis and A-Rod. Sometimes they'll pay people in order to get them on their side.

Speaker 2 But what you just read, that's the opposite of Canal Street. That is someone who was taking piracy to a level of profitability where it was having a negative impact on revenue.

Speaker 3 That's a good example of a dumbass.

Speaker 3 Right? That's a dumbass. Because he got caught.
Yeah, well, because he had a ridiculous scheme to

Speaker 1 put up a storefront, it seems.

Speaker 1 Not just was carrying around the knapsack full of watches.

Speaker 3 While you can turn a blind eye to House of Highlights, you can't turn the blind eye to a guy who has hacked into your internal

Speaker 3 system

Speaker 3 and now tried to extort money from you. That sort of invites a harsh response.
I would consider that a dumbass.

Speaker 2 The metaphor works perfectly, and we're going to keep using it for non-New Yorkers.

Speaker 2 If you're going to do something illegal, if you get too big, you're going to catch the attention of those trying to stop illegal piracy or anything that you're doing.

Speaker 2 If you keep it small and don't get greedy, we see it in all the mob movies. Don't steal money and then go buy a Ferrari in a fur coat.
It's a good way to get whacked.

Speaker 2 If you're going to do a robbery and steal money, you know, buy a Camry and try to just lay low. So what this guy did, clearly, he got too big for his britches and now he's behind bars.
And I love it.

Speaker 3 So it doesn't sound like a big time. I guess it is a big time scheme to try to extort 150 large from Major League Baseball.

Speaker 2 I'd like to maybe extort you because you're saying that that's 150 isn't the number that gets your attention. I'm just saying.
That gets your attention. 150 million if I try to get that from you?

Speaker 3 No, no, apparently 150,000 got enough attention to land

Speaker 3 to land him in the huscal for three years.

Speaker 1 I appreciate that we end this episode with both of you throwing sharp elbows at each other notably not quite the elbows previously mentioned

Speaker 2 i thought it may have been his nipple i was going after for a little nurpy well

Speaker 1 it has been a little purple here today

Speaker 1 thank you john thank you pablo look at this jacket by the way can we just acknowledge it's lovely that you can't get that on canal street john no no you can actually

Speaker 3 i think david stole it

Speaker 1 Pablo Torre Finds Out is produced by Michael Antonucci, Walter Ravaroma, Ryan Cortez, Sam Dawig, Juan Galindo, Patrick Kim, Neely Lohman, Rob McRae, Rachel Miller-Howard, Ethan Schreier, Carl Scott, Matt Sullivan, Chris Tuminello, and Juliet Warren.

Speaker 1 Our studio engineering by RG Systems. Our sound design by NGW Post.
Our theme song, as always, is by John Bravo.

Speaker 1 And all of us will talk to you on Tuesday.