By Thomas Hauser
There was a time not long ago when boxing's pay-per-view industry was undermined by illegal "black boxes". Authorized cable boxes contain filters that impede the flow of unauthorized signals to a subscriber's home. Black boxes negate the filter. Thus, a subscriber could install a black box and, for the price of basic cable, illegally receive premium channels, pay-per-view events, and everything else that was available from the local cable company.
At one point, it was estimated that as many as half of all viewers who watched pay-per-view fights on television did so with the aid of illegal black boxes. Satellite signals were also compromised but on a lesser scale because satellite companies scramble their signals and send consumers new software to descramble them every few months.
The pay-per-view industry fought back on several fronts. First, it conducted a largely-ineffective advertising campaign with print and television ads that advised users of the black boxes that they were breaking the law. Next, it took legal action against the manufacturers and sellers of black boxes. But given the need to prove criminal intent, these efforts involved repeated warnings, time-consuming sting operations, and extensive legal costs.
There were also technological undertakings such as the random inclusion in transmission signals of "silver bullets" that theoretically disabled boxes that were improperly receiving signals. One particularly creative industry foray involved a message that was filtered out by legal cable boxes but made its way through to fight fans who were watching on illegal boxes. Viewers were advised to call a toll-free number during the telecast to receive a free T-shirt. Anyone who called was presumed to have received the message via a stolen signal.
Through it all, the lawbreakers remained one step ahead of the enforcers. Then, with the development of digital cable, the landscape changed. The integrity of digital signal delivery has remained largely in tact. To avoid piracy, many cable companies no longer even offer pay-per-view events to analog customers.
Cable piracy is now under control. But a burgeoning threat to the economics of pay-per-view exists today in the form of Internet piracy. Within an hour of a fight ending, fans around the world can download a file and watch the fight for free. In some instances, entire pay-per-view cards can be viewed without charge in realtime. This practice is spreading rapidly. It's only a matter of time before it impacts significantly upon pay-per-view buys.
Internet piracy transpires as follows. One person buys a pay-per-view fight, video-tapes it, and transfers the tape to digital format on his computer. Windows Movie Maker (which is designed to edit home movies) is one software program commonly used for this purpose. Alternatively, the person can plug his cable-TV line directly into an inexpensive piece of equipment that connects directly to his computer and converts the TV signal into a digital format that his computer can read. This is faster than video-taping the fight and then transferring it to the computer.
Next, the fight is "resampled" to a slightly lesser quality, which reduces the file size exponentially and makes uploading and downloading the file less time-consuming. The person then uploads the fight file to a server and posts a link to it. After that, viewers click on the link and download the file. The number of simultaneous downloads that are accommodated depends on bandwith and how the server is configured.
Most PCs and Apple computers have built-in software that allows them to watch the downloaded files. If not, a viewer can search the Internet, easily find the software, and download it for free.
In other words, for the cost of a high-speed Internet connection, fans can now get pay-per-view fights for free. If a viewer doesn't want to watch the fight on his computer monitor, he can burn a DVD and watch it on television.
Many boxing websites and file-sharing networks have reader forums that offer direct links to URLs where viewers can download the fights. Some readers offer to send fight files directly to fellow forum members via messenging software. Here, it should be noted that SecondsOut.com considers this file sharing to be illegal and has a policy against allowing postings on its website that violate the copyright laws of any country. But many websites actively promote the postings and go so far as to "pin" references to downloadable fights in conspicious places. Also, if a potential viewer wants to watch a fight and can't find a link to it, he can make a request in a chat room and either the link will be forthcoming or the file will be emailed to him. Alternatively, he can use the search facility within a given forum or Google to find the desired URL.
In some markets, this is the only way that fans can see a particular fight. For example, John Ruiz versus Nikolay Valuev was unavailable in the United States except through piracy. But more and more viewers are taking advantage of this piracy simply because they don't want to pay for fights.
The new piracy is more attractive to consumers, technologically and psychologically, than the old black boxes. The boxes required a clear crossing of the line; buying a piece of equipment for illegal purposes and installing it. By contrast, for the viewer, Internet piracy simply involves logging on.
To draw an analogy; suppose a rogue cable system announced that it was carrying HBO's pay-per-view telecast of Roy Jones versus Bernard Hopkins for free on one of its public access channels. Which boxing fan wouldn't tune in? How many people would say, "I don't want to watch the fight for free. I think I'll pay $49.95."
At present, virtually every pay-per-view fight can be seen on the Internet within an hour of the final bell. Archival fights (including almost every fight ever shown on HBO, Showtime, and ESPN Classic) are also available. Most of the pirates are acting on a non-profit basis. It's people sharing files for free. In theory, it's no different than taping a fight that's on television and then lending the tape to a friend. But here, the fights are going to thousands of friends. And it's just a matter of time before pirates with a commercial agenda step in.
Also, black boxes facilitate one theft at a time. Internet piracy is exponential. Some servers limit the number of times a file can be downloaded to a total of twenty times or twenty downloads per day. But other servers have no such limitation. And often, viewers who download a file proceed to upload it themselves to keep the chain going. If twenty people download a file and share it with twenty more people, that's four hundred viewers. Multiply by twenty again, and eight thousand people are watching for free.
Moreover, the technology keeps advancing. Instant messaging software (such as Skype, Microsoft Messenger, Yahoo Messenger, and AOL Instant Messenger) now provides for file transfers. A device called Slingbox (sold in four thousand stores in the United States alone) allows consumers to stream video and audio in realtime from their own cable box or satellite television hook-up to computers with the appropriate software and broadband capacity (including laptops away from home). The assumption is that, by 2007, video conferencing will also allow for realtime transfers of pay-per-view fights.
Meanwhile, corporate inertia is stalling a response. If the music industry had dealt with Napster earlier, it wouldn't have become as significant a problem as it did. But Napster got a foothold because of the perception that the music industry didn't care. Users downloaded thousands upon thousands of songs, shared them with strangers and friends, and soon there was a crisis. The same phenomenon is moving out of infancy now in the pay-per-view industry.
How can the industry fight it? The answer involves a panoply of legal issues ranging from copyright law to the governance of cyberspace.
Initially, the pay-per-view industry can be expected to make an effort to impede the flow of information that directs viewers to free fight files. Some websites and file-sharing networks go so far as to promote Internet piracy by referring people to a particular area of their site. It's likely that, in the near future, copyright holders will seek to shut down website forums that carry this information. First Amendment issues in the United States and similar free-speech considerations in other countries will be involved. But as a practical matter, most United States and United Kingdom websites will capitulate and remove the offending material under threat of a lawsuit. Then, most likely, the industry will seek civil and criminal penalties and make an effort to seize offending servers. Advertising dollars will be used as a carrot and a stick.
Technological steps will also be taken. Many file-sharing networks are now installing software to curtail music piracy and appease the music industry. The same will happen here.
But whatever happens, it's clear that the implications reach far beyond boxing. Pay-per-view piracy will soon expand to feature films. In the United Kingdom, consumers already have access to 24-megabyte broadband that allows them to watch the equivalent of high-definition television with Dolby surround-sound in real time over the Internet. As bandwidth expands around the world, the problem will spiral out of control. Imagine King Kong (and every other movie) being available for download online and transferable to DVD for free the day it opens. The adverse impact on box office receipts, revenue from cable-TV movies-on-demand, and DVD sales will be enormous.
Meanwhile, for the moment, boxing is on the front line. And the powers-that-be should take note. A person can sit at the edge of the ocean and pretend that the tide isn't coming in. But sooner or later, the tide comes in.
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Thomas Hauser can be reached by email at email@example.com