UFC 264, headlined by Dustin Poirier defeating Conor McGregor, generated as many as 1.8 million pay-per-view buys, with revenue in the ballpark of $125 million.
Less measurable is the extent to which online piracy—the illegal downloading and distribution of copyright material—took potential revenue away from the UFC and its fighters. According to a person familiar with UFC takedown notices, UFC 264 generated among the top three or four highest notices for a UFC event held over the last year.
Piracy is an ongoing problem for the UFC and other content creators whose ability to curtail the illegal practice is limited under federal law. As Lawrence Epstein, the UFC’s chief operating officer, explained to Sportico in a phone interview, the UFC (like other creators of copyright content) rely largely on the Digital Millennium Copyright Act to curtail piracy.
President Bill Clinton signed the DMCA into law in 1998, long before streaming became an established method of distributing live content. It features a notice and takedown process whereby a copyright owner can notify an Internet service provider, such as YouTube, Comcast or Twitch. The notification requires the provider to review potential infringing material and, under certain conditions, remove the material. A failure to remove infringing material can lead to liability for the provider.
The DMCA is a “very reactive type of protocol,” Epstein notes, since the law places the onus on the copyright holder to act. This presents a timing problem for a live sports broadcast. The highest value for that broadcast—especially one distributed through a PPV arrangement—is when the event happens. A notice and takedown can take several minutes, even a half hour. By the time an illegal stream is removed, it could be too late. The Poirier-McGregor match lasted only about five minutes before McGregor suffered a leg injury and Poirier was credited with a TKO victory.
“It’s not an appropriate remedy,” Epstein charges, adding that the “vast majority” of the piracy is taking place on “big platforms like Facebook, YouTube and Twitter.” Epstein also stresses that “we see the same people doing it. There are repeat offenders who aren’t deterred by the process.”
The UFC would like to see the DMCA amended to include a “stay down system” whereby the copyright holder need only notify the service provider of infringing material. It would then become the obligation of the provider to monitor repeat infringers and prevent them from engaging in illegal streaming and other piracy on the provider’s platform. “These big platforms have to take responsibility for what happens on their platforms,” Epstein asserts. “It can’t be reactive.”
Ryan Vacca, a copyright law professor at UNH Franklin Pierce School of Law who has represented clients in the sports and entertainment law industries, agrees that placing the burden on copyright owners to police copyrights creates persistent challenges for owners in a world where streaming has become so omnipresent. “Given the enormous amount of copying and performing that occurs online,” Vacca explains, “it’s understandable that content owners want to shift that burden to other actors in the online ecosystem.”
Yet Vacca also sees “countervailing concerns” that could arise ”if the law is changed to make it too easy to have materials taken down.” He cautions that some copyright owners make infringement claims “not to protect their copyright, but to censor legitimate uses of copyrighted materials, such as critical commentary or parody.” Vacca adds that placing the burden on platforms “has the potential to disadvantage startup competitors by imposing additional costs on them that are more difficult to absorb than for established companies such as Facebook, Twitter and YouTube . . . This could have a negative effect on innovation for online platforms.”
Reliance on the DMCA is part of a multi-pronged strategy for the UFC in combatting piracy. As an overarching principle, the UFC is mindful of the critical role video content plays for the fan experience. “We love our fans and want more fans,” Epstein stresses. “We’re not trying to stop them from showing video of Conor or other fighters.” Instead, Epstein underscores, “We are going after the pirates . . . we are trying to stop illegal profiting and reselling of copyright material.”
Education plays a key role. Epstein emphasizes that the fighters are financial partners in PPV events. “Every buy that’s stolen is hurting [McGregor] and other fighters. This is not a victimless crime or one that just hurts the big corporation—it hurts the individual athletes . . . remember they have as short window [of life] to monetize” their athletic abilities and skills.
Epstein adds that those who engage in piracy are often involved in other illegal or even criminal practices, including stealing identities of those who share personal data and selling fake products. “There’s a lot of bad stuff when you enter this ecosystem.” Vacca concurs. “Many online pirates tend to be unscrupulous individuals—there’s a risk of viruses and stealing users’ personal or financial information. “
The UFC also works closely with service providers to identify and take down illegal streams of events, and, along with UFC vendors, attempts to take advantage of the latest anti-piracy technologies. Similarly, the UFC works with colleagues at ESPN and Disney to strategize ways for updating the legal landscape and making criminal prosecution more effective. To that end, the UFC pushed for the Protecting Lawful Streaming Act of 2020, a law that makes it felony to stream copyright material (previously it was only a misdemeanor to stream and typically not prosecuted). The UFC also sometimes turns to litigation, but Epstein concedes that online piracy “is a problem that you don’t sue your way out of.”
Vacca maintains that any effort to target online pirates “is really just setting up a cat-and-mouse game. Infringers will still pop up and can’t be shut down permanently.”
He sees the music industry, which embraced online music sales in the face of piracy-led revenue losses, as a good example of content owners “harnessing existing technology and developing new technology to generate revenue and make it less profitable for infringers.” Demand for online piracy in music diminished, especially as the music industry “worked with YouTube to create the ContentID system that sidesteps the DMCA’s notice-and-takedown system and permits copyright owners to monetize otherwise infringing uses.”
Live sports raises a different set of issues and challenges, but it will be interesting to see how the UFC and other leagues change incentives for viewers and pirates.