The Grey Market for Esports Data – How Scraping Compromises Integrity and What Rights Holders Can Do About It
With grey market esports data representing a major integrity challenge, we caught up with Dr. David Weller, a Partner at Lubberger Lehment, to hear his thoughts on the subject and discuss the options that rights holders have right now. Read his guest article below:
The term “grey market” refers to the trading of original goods through distribution channels that the manufacturer has not authorized. This is a common phenomenon in the luxury goods industry: grey market traders buy fashion items or cosmetics at low prices abroad and sell these goods domestically, bypassing the official distribution channels and significantly undercutting the price level of retailers sourcing the products from the manufacturer. Genuine products at low prices – for the end consumer, this looks like a windfall at first glance. In fact, grey market trading causes massive damage, not only to the manufacturer and authorized retailers, but also to the consumer.
This damage is not only reflected directly in lost sales. Manufacturers invest in innovative products and quality, while retailers invest in sales, advertising and high-quality customer service. The sum-total of these efforts shapes the image of the product and brand, resulting in demand and customer loyalty. The grey market exploits these values for itself without contributing to their development. At the same time, it destroys the values created by the manufacturer and the retailers by conveying the wrong price messages and by selling quality products under conditions that do not meet the manufacturer’s standards. This compromises the product and brand image and, in the long run, leads to consumers no longer being willing to adequately pay for the manufacturer’s quality guarantee. This is true not only for luxury brand handbags, but also for data.
If products are distributed outside the official distribution channels, there is also a particular risk of abuse, because the guarantee of product and service quality provided by distribution through the manufacturer and its sales organization falls away. This not only affects the integrity of the products themselves, it also creates a higher risk of fraud in the grey market.
In traditional product markets, the grey market is growing in the shadows. In the market for eSports data, things are different. There is a small group of operators marketing a data offering authorized by the publisher or tournament organizer, compared to a rapidly growing number of operators scraping data from publicly available video streams or from websites and selling it as a proprietary product.
While this data does relate to an original product – an official match or tournament – it does not originate from an authorized source. The grey market suppliers are able to undercut the price level of authorized suppliers quite significantly, because the essential position of the procurement costs does not apply for them, i.e. the license fees that official distribution partners have to pay to the rights holders.
This price advantage is offset by a disproportionately higher quality and integrity risk for customers. When data is scraped from a video stream, quality, consistency, coverage, and accuracy are not guaranteed to the same degree as when the data is obtained from the publisher’s or tournament organizer’s game servers. Even advanced scraping algorithms are technically incapable of extracting the same data points with the same accuracy and speed. And even if they were: While official data is captured in real-time, scraped data is always delayed – up to ten minutes depending on the tiering of the match. These delays are imposed by the organizers to preserve match integrity. For customers depending on up-to-date and reliable data, such as bookmakers, scraped data is therefore highly problematic. Ultimately, however, the fan experience will also suffer if services are based on incomplete and delayed data.
In traditional product markets, there are established strategies for combating the grey market. These include the vigorous enforcement of the manufacturer’s rights, mostly via trademark law. There are, however, no comparable intellectual property rights for data. Fighting the data grey market therefore requires creative legal approaches.
A quick win is to take action against advertisements that promote scraped data offers with terms such as ” live” or “real-time” – if the data comes from a stream that has been delayed for minutes, this is simply not true and thus misleading. Berlin-based Bayes Esports, who are the distributor of, inter alia, the official data offer for League of Legends, has used these arguments successfully in court against two providers of unauthorized game data. It is also illegal to advertise a scraped data offer with the trademark-protected logos of publishers or tournament organizers.
Unlike with tangible products, the esports data market still lacks a common awareness of the fact that data is not just a freely available and replaceable commodity, but the result of valuable work and investment worth protecting. In fact, many customers are not aware that there are considerable differences in quality between official and non-authorized data offerings. To build this awareness, rights holders and their official distribution partners must ramp up their efforts to educate the market. This education must be backed up by robust rights enforcement. Value creation will be destabilized in the long term if the grey market continues to grow unchecked
By Dr. David Weller, a Partner at Lubberger Lehment,