Digital Citizens Alliance and NAGRA released a joint report revealing that illegal piracy subscription services — Internet Protocol Television (PS IPTV) — are now a $1+ billion industry. “Money for Nothing” describes an ecosystem of retailers and wholesalers enabled by legal businesses and consumed by at least nine million U.S. households. The report also looks into its infrastructure, supply chain, and ad-supported business models. Piracy injures consumers via malware among other risks.

In respect to the report, Digital Citizens Alliance executive director Tom Galvin pointed out that, “when it comes to piracy, the scope of the risk to consumers, small businesses and others is in direct proportion to the size of the industry, which is why we need to stop the reach and depth of this ecosystem before it grows even bigger.”

He added that the report “underscores how outdated laws and a lack of focus and enforcement has let thieves, hackers, and scammers create a major criminal enterprise.”

NAGRA director of data analytics and anti-piracy services Michael Sharp said that, “understanding the impact and tactics involved in the business of subscription IPTV piracy outlined in this report is the first step in addressing the evolving fight to protect content, the most valuable asset in the media and entertainment industry.” He lauded Digital Citizens Alliance “for bringing the issue to light.”

Other facts uncovered by the report include that the nine million “fixed broadband subscribers” that use a PS IPTV “get these services from at least 3,500 U.S.-facing storefront websites, social media pages, and stores within online marketplaces that sell services.” Although it pegs the industry at $1 billion, the report notes that, “the overall piracy industry is in fact much larger when the sale of pirate streaming devices used to receive the content and ad-financed piracy are included.”

Profit margins range from 56 percent for retailers to 85 percent for wholesalers. It notes that, “the ecosystem also depends upon legitimate players, including hosting services, payment processors, and social media,” although it’s unknown whether “legitimate players are aware of their role.”

Digital Citizen Alliance also documented “how pirates generate revenue by partnering with hackers to install malware within free apps that expose consumers to risk of theft of their personal and financial data, cryptocurrency mining, adware, ransomware, and botnets using computers to perform distributed denial-of-service (DoS) attacks.”

NAGRA discovered “a scheme where the residential Internet connections of pirate IPTV customers could be turned over to other users — who could potentially use them for illegal activities beyond their control, such as accessing child pornography, committing fraud, or participating in cyber attacks.”

“Given that some players offering Piracy Subscription IPTV services openly brag about their profits online, it’s clear that law enforcement is not their biggest concern,” said Galvin. “Given that piracy is not only a source of revenue loss to creators but an established risk to consumers, it’s time to take this billion-dollar black market seriously.”