Walking the streets of Manhattan Aug. 9 past the $5 watches, $10 framed prints, and $20 purses, we saw two young men selling compact discs of recently released music.

Judging by the prices, and their low overhead storefront, it was highly possible their inventory did not come from music publishers.

Several years ago, a CNN/USA TODAY/Gallup Poll showed about 17% of adults with Internet access at work, home, or school had downloaded music. That number has surely risen. Countless CDs are being copied on burners. Sites to download music prosper. The movie and video-game industries are seeing similar trends.

So, too, is Thoroughbred racing.

Countless industries are experiencing the pirating of their products, all made possible because of the Internet. Thoroughbred racing has no idea how many people are pirating signals of races and accepting wagers on them.

“Let’s just say it is very substantial,” said Eugene Christiansen, the head of Christiansen Capital Advisors, a research and advisory firm on the leisure and entertainment industry, particularly as it pertains to gaming and wagering.

Tens of millions?

“No, hundreds of millions,” Christiansen said.

While negotiations over the split of handle from advance deposit wagering platforms continue between racetracks and horsemen’s groups—many of the latter using the new Thoroughbred Horsemen’s Group to bargain for them—potentially hundreds of millions of dollars are being wagered with none returned to the industry to help racetracks put on the show and help horsemen through additional purse monies.

The reason the pirates, and also legal off-shore wagering outlets exist, Christiansen said, is because of demand from high-volume players.

“The underlying reason is the consumer price of betting through state-licensed pari-mutuel facilities is substantially higher than cost-conscious players can get elsewhere, so that underlying circumstance is an incentive for low-cost suppliers to stay in the market,” he said. “An indirect by-product is the signal piracy.”

Dysfunction happens, Christiansen said, because, “The industry uses a higher cost when a lower cost is available. That goes against every principle of the way a market operates and is anti-consumer.”

Racetracks and ADWs must charge more because of takeout, purses, and overhead, while off-shore bookmakers and pirates can offer substantial rebates to players.

An interesting aside, said Chris Scherf, executive vice president of the Thoroughbred Racing Association, is that successful players often get cut off by the rebate shops.

“Both in sports betting and horse racing, if you are winning consistently, they quit taking your bets,” Scherf said.

Of more concern to him than piracy, Scherf said, is the impact the offshore bookmakers have had in shifting those wagering on racing to wagering on sports and online poker.

“We have lost business to that,” he said.

Many racetracks now offer rewards programs similar to those used for many years by casinos. These are no different than earning frequent flier miles, rewards from a charge card, or discounts given to loyal shoppers by nearly every major retailer. Racetracks, however, are unable to match the percentage of handle rebated to high-volume players, forcing many of them to begin playing offshore. In fact, many are recruited by the bookmaking shops.

On Aug. 4, regulators from 13 states—hopefully soon to be joined by others—announced they will begin requiring offshore wagering outlets and secondary pari-mutuel operations to be certified by the Association of Racing Commissioners International before they can wager into pools. The target date is Jan. 1, 2010.

It is important for racing authorities to know with whom they are doing business, and this is a giant step forward in that direction.

This action comes after the closing earlier this year of the offshore rebate shop International Racing Group, which was owned by Youbet.com. IRG was closed following a federal and state investigation into its customers and operations alleging possible illegal activities.

Perhaps the industry cannot stop piracy, but it can stop some pirates.

As the great poet/musician Bob Dylan so eloquently wrote 45 years ago, “The Times They Are a-Changin’.”

Though the rock icon was writing about the political and social upheaval of that era, the title track of his 1964 album is often referred to when any major societal changes are occurring.

At The Blood-Horse, which has been publishing since 1916, the times are also changing.

Though our mission remains the same—to serve Thoroughbred owners and breeders—the ways in which we fulfill that important goal have evolved greatly over the years.

The greatest change in modern-day journalism, the World Wide Web, enables us to reach owners, breeders, and everyone else connected to the Thoroughbred much more quickly. But it allows for  a lot more than that.

Through the Internet, media organizations are able to provide their readers with considerably more information and by more user-friendly means. Space limitations known to print publishers go away. Sortability, unable to occur on a printed page, becomes possible. Archives, previously achieved through old volumes on a shelf, are immediately available by the click of a mouse.

Publications no longer measure themselves strictly by a count of subscribers. They are also keenly interested in unique daily visitors, blog traffic, number of PDF (portable document format) downloads, and the most important thing, visibility via Google and other search engines.

For more than 10 years now, those desiring the latest Thoroughbred industry news have turned to BloodHorse.com, meaning when the weekly magazine arrives, a simple rehashing of news stories, stakes results, and auction data is not good enough. But analysis, features, commentaries, and stories about a stakes winner’s family make the print product as valuable as ever.

The change does not just apply to editorial content, but to advertising as well. While printed ads are still vital in driving home a message, online provides an immediate avenue for the delivery of marketing information via ads, sponsorships, and now more than ever, through video.

Posting on the Web is not even the fastest way to deliver news. This spring, The Blood-Horse became the first Thoroughbred industry publication to begin sending “breaking news alerts” via e-mail. Because so many people receive e-mail through their phones or PDAs, headlines reach industry stakeholders regardless of where they are.

Less than two weeks after beginning the breaking news alerts, we launched mobile.bloodhorse.com, a platform allowing those able to access the Web through their phones or PDAs the ability to read stories on BloodHorse.com without being in front of a computer.

Last month, The Blood-Horse discontinued printing hip-by-hip sale results in the weekly magazine. That decision, too, is a sign of the changing times.

A visit to BloodHorse.com, and a click on Auctions, will direct readers to auctions.BloodHorse.com, where the hip-by-hip results of every major Thoroughbred auction in North America in 2008 are archived. Also available is a five-year history of each sale, a breakdown by session, and lists of leading horses, buyers, consignors, and sires.

Every newspaper and magazine in the country is printing fewer pages in 2008 than in 2007. Part of the reason, as described, is the availability of the Web, where more information can be provided. For example, in its July 26 edition, The Blood-Horse included a special report entitled “Losing the Iron Horse?” While it would be impossible to print the entire 232-page report the study was based on in the print magazine, the data is available as a free download at BloodHorse.com.

Magazines and newspapers are also being hit hard by the economy, with escalating costs for paper, fuel, and postage.

By using the Web in concert with the print product, The Blood-Horse is even better able to serve owners and breeders.

The times they are a-changin’.

Something important must happen before a problem can be solved. It must be acknowledged that a problem exists.

After analyzing the data in a study released this week by The Blood-Horse, and listening to a discussion of the information by six industry participants, it is clear that a problem exists.

It is far from clear what must be done to fix it.

More than six months ago, The Blood-Horse began compiling data going back to 1970, searching for trends that relate breeding to racing. The results are not all that surprising. But they are very revealing.

Interestingly, the topic of where the breed is heading has come to the fore since the collection of data began, making headlines following the breakdown of Eight Belles in the May 3 Kentucky Derby Presented by Yum! Brands (gr. I).

One of the key statistics in The Blood-Horse study is the average number of starts per foal, which was 20.42 in the 1970s, 17.84 in the ’80s, 16.89 in the ’90s, and so far this decade (crops from 2000-03) is registering 13.15. Starts per starter has seen a similar decline, from 29.03 in the ’70s to 16.72 today.

What makes these numbers more disturbing is that during the same period, the percentage of starters from foals has increased. So, more horses are getting to the track and starting, but they are making fewer starts.

For two hours July 11, The Blood-Horse invited Bobby Trussell, Rob Whiteley, Duncan Taylor, Rob Keck, Mike Pons, and Arthur Hancock III to discuss the trends as seen in the study.

A few snippets from the participants are revealing about their strong opinions on the subject of current breeding practices:

• Trussell wants to know why the horses he sends to race in Europe routinely make more starts and stay sounder than his domestic runners. He is quick to point out the differences in medication policies and produces a lengthy list of drugs administered to his U.S.-based horses so far in 2008. “We need incentives for the owners. If I can avoid $100,000 in vet bills a year, and my horses run more, not less, that would do it for me.”

• Keck sees a different mindset among breeders. “Success is now breeding a sales horse, not breeding a grade I winner,” he said. His best line: “We don’t have sound horses because people aren’t breeding to sound horses.”

• Whiteley stated his belief that the breed has not changed, but the handling of the breed has. With the current practices, he said, “We may not be damaging the breed, but damaging the industry. Perhaps what we need is a structural analysis of how the game has changed, not how the breed has changed.”

• Hancock, a proponent of federal guidelines, also decries medication and believes the industry would best be served by a return to the days of hay, oats, and water. “We need a level playing field, zero tolerance,” he said.

• Taylor, an advocate for a national governing body, said it is important to “give the fans what they want­—drug-free racing.” Because much of the evidence about breeding is anecdotal, Taylor said more studies should be done because “what we need to search for is the truth.”

• Pons said owners need to be in control of their stables. “What I see today is less horsemanship…if we don’t agree with the vet or the trainer, then we need to make a change,” he said.

Owners lose money, hoping to hit the one big lick. As Trussell eloquently stated about the industry: “We have the biggest collection of optimists ever assembled in one place.”

Hopefully this study, and others to follow, will help continue the ongoing dialogue on the current state of the Thoroughbred breed.

The Blood-Horse presents "Losing the Iron Horse?", an in-depth report, available as a free PDF download, which investigates whether the Thoroughbred racehorse is as tough today as it was 30 to 40 years ago. 

Video: Losing the Iron Horse? Part I Six prominent breeders and owners debate the durability of the modern racehorse. 

At the tender age of 85, after nearly three decades in the business of owning and running horses, Harry Aleo finally felt the love of the racing gods.

They delivered unto him the horse that would fulfill his wish to travel his beloved United States of America and run that horse in top stakes races, earning cheers of fans from coast to coast. Decked out in his Western-style suit and cowboy hat, Aleo gave off a contagious boyish enthusiasm that would have been remarkable from a man half his age.

The beauty of him, though, was he felt the same joy when he’d come out to Golden Gate Fields on a Tuesday morning to watch a horse work.

“Lost in the Fog was the pinnacle,” said trainer Greg Gilchrist, the only conditioner Aleo hired in his 30 years in the business. “But he had that same enthusiasm for a $10,000 claimer. He missed three races in 30 years of running his horses. That’s how much he loved the business and the horses and the people who worked around them.”

Harry Aleo was what people like to call an American Original. As far as I can discern, that goes to being honest, hardworking, fun-loving. A person who says what he thinks, proper etiquette and political correctness be damned.

The great thing about Aleo—and his kind are all too rare—is although he was outspoken in his politics, he didn’t judge you on your political beliefs or the cut of your hair. If you measured up as a person, he embraced you and let you inside his world.

A lot of that world was his horses and his beloved San Francisco. He lived and worked virtually his entire life in Noe Valley, in the Mission district of the city south of the skyscrapers. His parents ran a grocery store in the neighborhood, and Harry drove the delivery truck. Between runs, he became a regular at John’s Pool Hall, two doors up from where he would eventually open his realty office. Billiards was not his thing; laying 50-cent bets on horse races with the bookie in the back room was.

On his 22nd birthday, Dec. 7, 1941, Aleo climbed to the roof of his apartment building and oversaw a darkened city, its electricity turned off to thwart a possible Japanese air strike.

Shortly after, Aleo wore the uniform of the Army’s 87th infantry, fighting in France and Germany and serving under Gen. George Patton in the Battle of the Bulge.

Returning home, he opened Twin Peaks Properties on 24th Street. He did well in business, and equally well by people, keeping rents affordable even after gentrification of the area led others to make “killings” in the market.

Aleo didn’t much care for the gentrification or the alternative lifestyles that took root in the city. He kept a shrine to Ronald Reagan in his storefront to tweak his political adversaries. But he also fought like hell to keep chain stores out of the area, fearing they would hurt the small businesses that made up the fabric of the neighborhood. He served on various boards and in organizations to fight for the independents, and today 24th Street bears the fruits of his labors.

Walking into his office was like entering a time tunnel. The wood-burning stove, 1940s-era radios, papers and files stacked everywhere. The one computer, on Harry’s desk, he employed to track his horses, not realty. The walls were adorned with photos of Joe DiMaggio; Sonny Shy, his first winner; and Lost in the Fog, his great champion.

Oh, how he loved where Lost in the Fog took him. After watching him win the King’s Bishop Stakes (gr. I) in 2005, Aleo gushed, “I love Saratoga. All those big Victorian homes with the porches, dormers, an American flag in every yard. People lined up at 6:30 a.m. to get into the track. Musical groups everywhere. That’s my kind of place.”

When the multi-million-dollar offers started flying in to buy his star, Aleo was shocked; and then flabbergasted at the people who said he should go ahead and sell.

“All those millions wouldn’t change my life, and I wouldn’t have the horse that has given me all this excitement and enjoyment,” he explained. “I’m not in the selling business. I’m in the racing business.”

Said Gilchrist after his client and friend passed away too soon June 21 at the age of 88, “The problem is, when we lose guys like Harry Aleo, there is nobody to replace them.