The Big Fat Lie Behind Pirated Sports Video Sites

Tuesday the United States Department of Homeland Security shut down several highly-trafficked websites known to link and embed video streams of live sporting events along with all other forms of live and archived video entertainment. (Movies, television shows, etc.)

Veetle stolen content hosted from the United States

(Widespread pirated video mainly enabled by U.S.-based sites)

Beginning Tuesday morning the homepages of those pirated video sites, which I will not identify, had been taken down and replaced by the below message from the Department of Homeland Security (DHS).

DHS shutdown message on pirate sports video sites

Naturally the overwhelming negative reaction from those supporting such activities was to claim that the U.S. government was overstepping its authority.

Justin TV scam reveald

(The scam: How it works)

Actually, we didn’t go far enough. Not even close.

Our laws governing the online dissemination of proprietary electronic content are woefully outdated. That enormous loophole allows large U.S.-based websites like Justin.TV and Veetle.com - along with a small number of other stateside sites - to facilitate its site visitors in the illegal dissemination of such content to millions of web users.

And despite what the owners of sites like Justin.TV and Veetle.com will tell you, their entire business model is based on such activity.

Here’s the scam:

1) A user sets up an account at Justin.TV or Veetle.com and - with the site’s software - uploads either a live video stream or archived video to that account.

2) That video content is then provided a virtually untraceable (by design) embed code.

3) Sites hosted mostly outside the United States, many of which were shut down today by DHS, create pages with the embed codes of the stolen videos hosted on Justin.TV and Veetle.com.

4) Everyone gets paid except the originator of the content.

a) Justin. TV and Veetle.com by featuring various forms of advertising before, during and after the stolen, embedded videos are accessed.

b)  The foreign sites that embed (link) the videos via myriad ads placed on those pages. And in some cases, pre-roll video ads.

c) In some cases, the user who uploaded the stolen video content in a revenue sharing agreement with the originating site based on the number of views of the content. (Youtube also employs a revenue sharing program for users who upload what can often include copyright-infringing content.)

The crazy part about today’s action is that the sites shut down by DHS would not exist if it wasn’t for the U.S.-based sites that originate and host the content. Yet the purveyors of those sites are somehow within their legal rights in the blatant propagation of such content.

The operators of Justin.TV and Veetle.com have already encountered legal challenges but have so far have successfully argued that since their user registration agreement - which the majority of times is completely unenforced - forbids uploading copyright-infringing content, they bear no responsibility for what they host on their own servers.

Never mind that the millions of views derived from stolen video, as uploaded by those same users, are  the only reason those sites are financially viable. Legitimately original content produced by site users is a tiny fraction of the overall traffic to Justin.TV and Veetle.com.

Since the DHS took action Tuesday morning many of the foreign-based sites linking and embedding stolen video hosted by the usual online suspects in the United States are already back in bidness at new web addresses.

That of course has prompted the tired refrain that attempting to limit any and all pirated online video is futile.

But now you know that the wack-a-mole charade we witnessed again today wouldn’t exist if well-known U.S. sites originating the problem were forced to stop - unintentionally or not - distributing stolen online content.

Follow Brooks on Twitter for real-time updates.