Hanging Out For Free Is Piracy

from the free-is-bad dept

Joe Betsill alerts us to an an amusing comic from theWAREHOUSE that seems fitting around here:

Filed Under: free, invoices, piracy, thewarehouse

Why PROTECT IP/SOPA Is The Exact Wrong Approach To Dealing With Infringement Online

from the you're-getting-the-problem-backwards dept

As the various "battle lines" are supposedly being drawn between the entertainment industry and the tech industry in the fight over PROTECT IP/SOPA, it's worth pointing out that nothing is further from the truth. For decades, the tech industry has regularly supplied all sorts of useful new technologies to the content industry that has allowed them to make more money, while decreasing their costs of production, distribution and promotion. Of course, the problem is that every time the tech industry does so, the entertainment industry flips out and misinterprets efficiency as some evil form of "piracy." That's because, as an industry, the entertainment industry has always focused on keeping things inefficient and on making money in the complexity of inefficiency. Making things more efficient messes with that business model... even if it always (always!) opens up greater opportunity.

The latest technological problem is the internet, which is, by default, the world's greatest copy machine. It's also a phenomenal tool for creation, promotion and distribution of works. It's also a fantastic tool for monetization... but not in the traditional ways.

The industry, of course, freaks out and declares that the problem is "piracy." And, let's be totally clear here: "piracy" is a problem for the legacy industries that it disrupts.

But what kind of problem?

The industry has interpreted it as a legal problem, or an enforcement problem. However, there's little evidence to support this assertion. In fact, there's a tremendous amount of empirical evidence that it's not an enforcement problem at all.

Instead, it appears to be a business model problem. The money being spent by fans continues to rise, not shrink. It's just that it's going to different places than it did in the past. That suggests a business problem for the legacy players who have had their businesses decimated. So, again, let's agree on a fundamental point: "piracy" is absolutely a problem for the legacy players. The money is still being spent, but it's a business problem in that the money is shifting to other venues.

Given this simple realization (piracy is a business problem, not a legal/enforcement problem), you can pretty quickly understand why SOPA/PROTECT IP is the exact wrong approach that will actually do more harm to the entertainment industry. That's because what the entertainment industry needs to adapt and change its business are the new platforms that make it easier for them to make money. As we've seen over and over again, the most successful (by far) "attack" against piracy is awesome new platforms that give customers what they want, such as Spotify and Netflix. Services like those have been shown, repeatedly, to be the single best way to cut down "piracy," because they offer something better, something more convenient and with better features.

Unfortunately, SOPA/PROTECT IP actually makes it much harder and much more expensive to develop the next generation of platforms that will help to solve the business problem the entertainment industry faces. The main "enforcement" mechanism in these bills is to put liability on third party service providers coming from the tech industry, undermining the safe harbors of the DMCA and the legal framework that has allowed tons of important internet platforms to evolve. It makes it so that next generation of Spotifys and Netflixes can't even get started. The liability and the risk is much higher. Rather than two guys in a garage coming up with the next great thing, they need two guys and a dozen lawyers. That makes the garage crowded. And expensive. And it means the venture capitalists, who fund innovation, will be a lot less likely to invest.

The end result of attacking a business problem as if it were a legal problem is that it leads to attacking the key thing that the entertainment industry needs to deal with the problem created by piracy. In other words, by misunderstanding the nature of the problem, the entertainment industry is (yet again) aiming the weapons that the tech industry has given them right at their own feet.

Filed Under: business problem, innovation, legal problem, piracy, protect ip, sopa

Record Labels: When You Make It Impossible For People To Pay You, You Drive Them To Unauthorized Versions

from the this-should-be-obvious dept

There are some things you would think would be obvious to record label execs, but often just don't seem to make it through their brains. For example, these days, if someone wants to buy your music, they should be able to. Making it impossible to buy music that is available elsewhere is a pretty sure way to drive people to unauthorized versions. Take the following story from Michael Brandvold, a music industry veteran, talking about the ridiculousness of not being able to buy a bunch of albums he wants to buy:

Consumers don’t understand or care about territories, regions, license agreements… the internet broke down those barriers, it is just the world now. The album has been released and I want to buy it. This is what every musician wants, someone who wants to by their music. I am surely not the only person who has encountered this problem, not the only person ready to buy some music, but is told you can’t, we don’t want your money. What do you think that sort of action results in? My guess is the fan then begins to look for any option to get the album, including illegal download. A quick jump to Google and you can locate a download. Hey record labels you are driving them to do it.

Problem is, the labels will never admit that their own actions resulted in unauthorized file sharing. No way, no how. To them file sharing is only the result of one thing and one thing only: failure to enforce copyright laws to as strict a level as possible.

Filed Under: copyright, legal access, music labels, piracy

Viacom, 'Decimated By Piracy,' But Its CEO Got The Biggest Raise Of Any Exec Anywhere

from the just-saying... dept

We keep hearing about how "piracy" and the internet are somehow "destroying" the old legacy content players, but the evidence for that seems lacking.... especially in Hollywood. We already saw how Warner Bros. was cheering on its record-setting quarter, while complaining about how it just can't compete with piracy. And now we've got reader Don, passing along the news that Viacom chief Philippe P. Dauman topped the charts for the exec with the biggest pay raise in 2010. His total pay was $84.5 million last year -- a 148.6% raise on his previous year's take home. Yes, that's a $50 million raise. Admittedly, much of that comes from stock options, but still. Not bad for a company being "decimated" by kids in their basements on the internet, huh? Maybe Viacom was just so sure that it was going to win its $1 billion lawsuit against YouTube that it decided to pre-reward Dauman.

Filed Under: entertainment industry, philippe dauman, piracy
Companies: viacom

The Article On The E-PARASITE Act That You Need To Read

from the hollywood's-attempt-to-turn-back-time dept

Not surprisingly, I've been reading up a lot on E-PARASITE/SOPA, and Larry Downes' recent analysis at CNET is, hands down, the most thorough and complete article I've seen highlighting the massive problems of the bill. Here's just a taste:

Stripped of their obfuscations, SOPA and Protect IP suggest increasing desperation by media companies. A bill that was to target only the "worst of the worst" foreign Web sites committing blatant and systemic copyright and trademark infringement has morphed inexplicably into an unrestricted hunting license for media companies to harass anyone--foreign or domestic--who questions their timetable for digital transformation.

Nothing can change the fact that Hollywood's way of life is transforming once again. The only unknown is time--will a profitable future for digital content arrive in a few years or will it take another decade? SOPA only seeks to delay the inevitable, at the cost of wasteful litigation and overzealous law enforcement.

The article is relatively long, but is still worth reading in its entirety, clearly quoting problematic sections of the law, and highlighting where and how it will likely be abused. I'd love for the small group of E-PARASITE defenders in our comments, such as the guy who claims to have worked on the bill and who still (incorrectly) thinks that it only applies to "foreign" sites, to see if they can actually defend against what Downes wrote (without resorting to insults), and actually respond to our concerns directly. Because, so far, every time we've raised key issues, we've been lied to and insulted, rather than having anyone address these issues. It's really quite amazing.

In the meantime, one other point that Downes raises, which is absolutely true, is that this bill shows the downside to Silicon Valley's general position of ignoring what's going on in DC. That has to change, and if one "good" thing comes out of this bill, perhaps it's that it's so insanely bad that it'll jolt people awake in Silicon Valley, and get them to recognize that they need to speak up.

Filed Under: e-parasite, hollywood, larry downes, piracy, regulations, sopa

Spanish Judge Gets It: Pirated Copies Not Necessarily Lost Sales, May Boost Purchases Later

from the the-tide-is-turning dept

One of the favorite assumptions of industries based around copyright used to be that every pirated copy is a lost sale. More recently, that rhetoric has been moderated somewhat, as a review of the area in the report "Media Piracy in Emerging Countries" shows, but a variation of that fallacy lives on, expressed now as vague "losses" caused by piracy.

Against that background it's heartening to hear a Spanish judge dismissing the idea that pirated copies are necessarily lost sales, and suggesting that they can act as a kind of marketing that promotes later purchases (original post in Spanish):

it is not possible to determine the damage and corresponding compensation due to loss of benefits to the rightsholder, for the simple reason that customers of pirated copies of music and movies, when making the purchase of pirated copies, externalize their decision not to be customers of music and movies as originals, so there is no profit that could have been gained. In other words, those customers either buy a pirated copy at a low price or they don't buy an original at a price between 15 and 20 Euros.

In any case, reversing the legal argument, it is conceivable that a customer, after hearing or viewing the pirated copy, may decide to purchase the original, finding it to their taste, so that the sale of pirated copies, far from harming, benefits the market for original items.

It's only one judge, and in a not very important case, but it's another welcome sign that an increasingly broad swathe of people have realised that the simplistic economic analyses of piracy offered by the copyright industries just don't stand up to scrutiny.

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Filed Under: lost sales, piracy, spain

Just As Valve Shows That You Can Compete With Piracy In Russia, Russia Starts Cracking Down On Piracy

from the so-that's-how-it-works dept

Bill Bliss was the first of a whole bunch of you to write in with a version on the story of how Valve has continued to show how to compete with free. This alone, isn't new. We've been covering these kinds of stories concerning Valve and its CEO, Gabe Newell, for years. There's a lot in this latest talk by Newell that repeats what he's said for years, but there are also some new experiments in there as well. Such as the following:

Newell: The easiest way to stop piracy is not by putting antipiracy technology to work. It’s by giving those people a service that’s better than what they’re receiving from the pirates. For example, Russia. You say, oh, we’re going to enter Russia, people say, you’re doomed, they’ll pirate everything in Russia. Russia now outside of Germany is our largest continental European market.

Ed Fries: That’s incredible. That’s in dollars?

Newell: That’s in dollars, yes. Whenever I talk about how much money we make it’s always dollar-denominated. All of our products are sold in local currency. But the point was, the people who are telling you that Russians pirate everything are the people who wait six months to localize their product into Russia. … So that, as far as we’re concerned, is asked and answered. It doesn’t take much in terms of providing a better service to make pirates a non-issue.

Now that's doubly interesting, because at the same time as we got this story, we also got another submission (anonymously) about how Russia has finally started cracking down on infringement by arresting a Russian couple who was caught distributing movies online. Assuming they're guilty, they certainly don't deserve any sympathy, but it does seem intriguing to see these two stories juxtaposed.

The entertainment industry has been pushing hard for Russia to crack down on infringement, insisting that there's no way they can make money in the Russian market. And yet, Valve is proving that's false. It's just that these other companies are incompetent, don't know how to adapt, and don't know how to provide a good service. If you do that, you can make a ton of money even if the products are available in unauthorized ways.

Filed Under: competition, gabe newell, piracy, russia, steam
Companies: valve

Mainstream Press Account In Australia Makes The Case For Why 'Piracy' Is Not The Problem

from the a-wonderful-essay dept

You don't quite expect to see this sort of thing on a mainstream press source, but ABC, down in Australia, has a feature piece entitled, The case for piracy, which sounds quite similar to many of the things we tend to talk about. It argues that the old school opinion that "piracy bad, copyright good" may not be particularly accurate -- and, in fact, it could be argued that "copyright owners" are in many ways their own worst enemies. If you think that sounds like the same thing we've been saying for over a decade, then you're correct -- but you probably haven't seen something like this show up in the mainstream press.

Much of the article focuses on how various industries abuse copyright to do anti-consumer activities, and how infringement is often the only way around it -- even for people who want to pay. The article also covers the recording industry's own suicidal tendencies.

Rather than give customers what they wanted publishers threw every toy they had out of the pram and hit the litigation button. One example saw the recording industry sue a 12-year old girl and won $2000. From her point of view she was simply using a free service on the internet that all her friends were using and discussing. One wonders how happy the recording industry was with its $2000 payout. Over the years industry bodies have spent far more money suing people than they recouped through the courts.

One of the main reasons we all have anti-piracy slogans embedded in our brains is because the music industry chose to try and protect its existing market and revenue streams at all costs and marginalise and vilify those who didn't want to conform to the harsh new rules being set.

It really is a fantastic piece. Kudos to ABC for running it, and to writer Nick Ross for publishing such an article.

Filed Under: adapting, business models, piracy, press

New Research Brings Much Needed Objectivity To Game Piracy Numbers

from the objective-research dept

Thanks to Neppe we have learned of a trio of researchers who took it upon themselves to objectively study game piracy over BitTorrent and determine some quantifiable data on game piracy. (PDF and Embedded Below) The researchers, Anders Drachen, Kevin Bauer and Robert W. D. Veitch, observed a huge lack of objectivity in research from both sides of the piracy debate. They saw a lot of negativity on the side of the industry and positivity on the flip side.

According to Forskning.no, this lack of objectivity has led the games industry to inflate piracy numbers:(from the Google Translation)

These include an influential 2009 report, made by the U.S. trade association for game manufacturers, ESA. It is this which, according Drachen indicate that piracy is two to three times greater - depending on how the ESA press release is interpreted.

The Danish researchers estimate that is 290 million games a year. In comparison indicates ESA figures that 600 million games pirate copies in a year, and because of uncertainties in the measurement method, which is highly secret, the American figures to be considerably larger, according Drachen.

To counteract this subjectivity, the researchers took a sampling of all commercial games from November 2010 to January 2011 and watched the activity of those games on BitTorrent and combined that information with other information on the games, such as genre and review scores. In all, they listed 173 games of interest, of which 127 were found on BitTorrent. Using this data, they came to the following conclusions:

• The majority of games they tracked had fewer than 50,000 unique peers observed on BitTorrent. At the same time, the 10 most popular games had a combined 5.37 million unique peers.
• 'Action' games made up the lion's share of BitTorrent activity, comprising 45.61% of unique peers in all. 'Role-Playing Games', of which only 10 were observed, accounted for 15.58% of unique peers. However, when they looked at individual games, 'Action' games were less popular than 'Racing', 'Role-Playing', and 'Simulation' games, comprising 0.95%, 1.6%, 1.43%, and 1.08% respectively.
• Aggregated review scores correlated positively with the number of unique peers. Meaning, the higher the MetaCritic score, the more unique peers will be found on BitTorrent.
• In all, observed about 12.6 million unique peers accessing the 127 games on BitTorrent.

The researchers plan to continue their research by observing other features of games such as the ESRB ratings, marketing strategies and international release dates. They also plan to observe time-frequency distribution rates as well. They had already tested this by looking at 20 randomly selected games and found that games have a high peak around initial launch and then drift down to fairly low levels of unique peers.

This is a great first step in bringing objectivity into piracy debates. Hopefully, what will come of this is more interest in objective studies on piracy not just for games but also for other entertainment such as movies and music. The more information that is available will help content creators and distributors to make educated decisions on how to minimize the risk of piracy and better connect with their fans. Sadly, this study has made no headway on any of the major games industry news sites. One would hope that objectivity and quantifiable information would make for some interesting news.

Filed Under: piracy, research, studies

And Of Course: Study Shows That Getting Rid Of DRM Reduces 'Piracy'

from the no-surprise-here dept

We've been noting for years that, contrary to the popular wisdom within much of the content industry, adding DRM to a product is not good for business. DRM restricts the legitimate buyer, thus making the product less valuable. When you take away value, it shouldn't be a surprise that fewer people are willing to buy. This seems obvious to some of us, but many companies still insist that DRM somehow increases sales. A new academic study has backed us up with empirical evidence that DRM hurts sales, and removing DRM actually tends to decrease infringement, because the product is more valuable to buy. Again, nothing in this research strikes us as that surprising, but we're wondering when the content industry will finally realize this basic fact about the counterproductive nature of DRM.

Filed Under: drm, piracy, studies