Chinese Gaming Company Recognizes That 'Pirates' Are Underserved Customers

from the grasping-the-basics dept

Jeffrey Nonken points us to the news of how Chinese online gaming firm Shanda seems to have grasped some of the idea that so-called "pirates" are really just underserved customers. While the company still seeks to shut down private servers for its games, it will sometimes try to attract the users of the unauthorized server, sometimes by getting whoever ran it to help:

Shanda will set up its own server in the same geographical area in hopes of luring the private server’s users over to a legitimate Shanda game. Shanda may even rope the operator of the former private server into helping promote the licensed game.

Separately, in recognizing that sometimes the reasons why such unauthorized servers are put up is because users don't like particular restrictions on a game, Shanda is apparently looking to develop more flexible games that will allow players to have more choices within the official version:

The other prong of Shanda’s strategy against private servers acknowledges user demand for the sort of games they offer—where the rules can be changed and players can level up without weeks of effort.

For example, Shanda is developing a game platform called World Zero that will allow users to create their own game world and modify its rules, Tan said. A partner is also developing a game called “Jue Zhan Shuang Cheng” (roughly: “Decisive Battle of the Two Cities”) that imitates private server rules—allowing users to level up very quickly and engage in battles against other powered-up characters.

It's certainly not a full embrace of what users are doing, but it's a recognition that the folks involved are not just "dirty stinking pirates who want everything for free," but rather underserved customers who are really performing a type of free market research.

Filed Under: china, gaming, piracy, servers
Companies: shanda

Wil Wheaton Explains Why Hollywood Needs To Compete With 'Piracy'

from the nicely-done dept

An anonymous user pointed us to this nice quick video of actor/geek Wil Wheaton discussing how the entertainment industry needs to catch up with the 21st century when it comes to dealing with "piracy." It starts out with Wil saying: "As soon as the entertainment industry provides an alternative to Bittorrent or an alternative to piracy, that makes it just as easy for honest people to get access to the programming, then the piracy dries up." Of course, plenty of us have said this for years, but it's nice to see another actor speaking up about this, even if it's one as "in touch" with the tech world as Wheaton. Wheaton goes on to quote Gabe Newell, to explain how the industry is too often focused on pirates who will never pay, and to talk about the ridiculousness of him not being able to watch videos he had legally purchased while travelling in Canada because he was outside the proper territory. The whole (short) video is completely worth watching. He notes that it's difficult to pull the entertainment industry into the modern era and suggests that they're just about reaching 1997 right now.

Filed Under: compete, entertainment industry, piracy, wil wheaton

Bjork Hopes Pirates Crack Her New Music App, But Perhaps She Should Have Made It More Widely Available

from the why-wait? dept

Apparently, famed Icelandic singer Bjork's latest album was released only as an app -- and only for Apple's iOS platform (iPhones, iPads and iPod Touch), meaning anyone who wants to get the music in another format is out of luck... unless they get it through unauthorized means. In response to some of the criticism, Bjork has now said that she assumes those who want the music on other platforms will "pirate" it:

“I’m not supposed to say this, probably,” she told Drowned in Sound, “but I’m trusting that the pirates out there won’t tie their hands behind their back.”

Two thoughts on this:

1. At least she doesn't seem upset or annoyed that people will get these tracks through unauthorized means -- in fact, she almost appears to be encouraging it.
2. However, it seems like it's still a pretty short-sighted move. She clearly knows that other people will want the music who don't have access to the platform -- and while she calls them "pirates," most people would just call them fans, who aren't being well served by Bjork. So rather than "embracing" the unauthorized cracking of the iOS app, why not release the music in a format others can use so that they can pay for it if they want to?

It's always nice to see artists not freak out about unauthorized access, but in this case it seems like much of it was entirely avoidable.

Update: Someone in the comments claims that the album will be released in a bunch of different formats. That's not what the original article claimed, and I'm at a loss as to what people are complaining about if it will be released in a variety of formats.

Filed Under: apps, bjork, music, piracy

More Game Developers Realizing 'Piracy' Isn't Necessarily A Bad Thing

from the depends-on-what-you-do-about-it dept

We've written in the past about Minecraft's developer, Notch (Markus Persson), and how he's been quite vocal in arguing that game developers are making a huge mistake in worrying about "piracy" and he's still making bucketloads of money by treating his fans right and giving them reasons to buy. It appears that some other video game developers are recognizing the same basic truth. HothMonster was the first of a few of you to send in the story of "Team Meat," developers of Super Meat Boy and The Binding of Isaac. It appears that the two guys behind Team Meat are pretty clear that they're happy when their games get pirated. In fact, they hope they get "pirated" more, because, in the end, it seems to lead to them getting more money. As one of the guys, Edmund McMillen notes:

"If the game gets pirated heavily, if it's a good game that people really like, they're going to either buy it eventually or they're going to tell other people about it. Either way it's just going to come back to a sale."

He later noted his disappointment in it not being seen higher on the charts on The Pirate Bay:

"When Meat Boy came out on PC and torrents started going up on Pirate Bay, I would check, I had a friend of mine who said, 'congratulations, I just saw your game in the top 50 on Pirate Bay for games,' and I checked and we were 30th and I was depressed because it wasn't higher, because that's a measure of success."

There's also a fun rant in there about the "old way" of thinking:

"The dinosaurs of marketing are really upset by piracy. They think it's literally stealing... They're old. That's really the reason. They're old and their ideas are old. They don't understand where we are now. They don't understand the mentality of people who are pirating things. They see them as thieves, the same people who go and shoplift. I don't f*@#ing shoplift but I have pirated sh@%-loads of stuff. Like it's just not the same, it's not the same thing at all."

There are more quotes along those lines. While I like the attitude, they do still seem to take something of a "give it away and pray" attitude. I would think that there could be more effective ways to monetize what they've done beyond that, but I'm sure their general attitude wins fans... and at least makes lots of folks willing to test out their games to see what they're like.

Filed Under: copyright, developers, games, infringement, marketing, piracy

Another Day, Another Study That Says 'Pirates' Are The Best Customers... This Time From HADOPI

from the damn-that-data dept

We've pointed out that a whole series of studies have all suggested that the biggest infringers of content online also tend to be the best customers of content, rather than just "freeloaders" who refuse to pay for content. Critics of these studies brush them off (without any evidence) by simply saying if that were true, then sales of content wouldn't have dropped so much in the music industry (other industries, it should be noted, have not seen such a drop-off). But that's misunderstanding (or misapplying) basic statistics. No one is saying that this means that file sharing automatically leads to more sales. But it does suggest that treating those people as just "freeloaders who just want stuff for free" is absolutely the wrong response. It shows that these people are willing to pay money if they're given a good reason to buy. The problem is that they're not.

From a strategic standpoint, this impacts how one responds to increased "piracy." If you realize that they're merely underserved customers, the correct response is to come up with better business models. If the problem is that it's "free, free, free!" then perhaps enforcement could make some sense. But... all of the studies seem to suggest it's the former, rather than the latter... and thus the enforcement/stricter copyright responses won't help at all (as we've seen).

Joe Karaganis, from SSRC, points us to the news that there's been yet another such study... and this one is from HADOPI, itself. Yes, the French agency put together to kick people off the internet for file sharing did a study on the nature of unauthorized file sharing, too. Not surprisingly (and consistent with every other study we've seen on this topic), it found that those who spend a lot of money on content... were much, much, much more likely to also get content through unauthorized means. HADOPI released the results in a somewhat convoluted way (perhaps trying to downplay this result), but Karaganis reformatted the results to make this clear: Karaganis suggests, then, that HADOPI's method of dealing with this -- threatening people to stop their file sharing, won't do very much to help the bottom lines of the entertainment industry:

If piracy is a sampling and discovery tool for high spenders, then suppressing piracy could depress legal sales. If–as I’ll argue at more length in a subsequent post–we’re in a mostly zero-sum market in which consumers are maxed out on discretionary media expenditures, then enforcement won’t significantly expand but at best just cannibalize one media sector for another. Music, games, and movies, let’s say, competing for the same discretionary dollars–and all of them competing with rising, increasingly non-discretionary internet access and data charges. If we’re in this type of market, then HADOPI is just in the business of eliminating its best customers. Good luck with that business model.

And suppressing the means of communication at the same time -- collateral damage for no good purpose. Brilliant!

Filed Under: customers, file sharing, piracy, studies
Companies: hadopi

New Study: Piracy Increases The Quality Of Content

from the well-that's-not-going-to-play-well... dept

Eric Goldman points us to a very, very interesting new research paper by Atanu Lahiri and Debabrata Day, showing all sorts of real examples about how "piracy" appears to increase the quality of the related goods that are being infringed upon. Of course, this counters the "common sense" argument that such infringement inevitably lowers the quality of content, since the creators and distributors of said content can no longer invest as much in the content.

The key explanatory factor here: the best way to compete with piracy is to offer a better product yourself. And one way to do that is to increase the quality. For example:

A case in point is the European unit of the cable TV channel HBO, which is fighting against unauthorized distribution of its content by illegal torrent websites by raising the quality of its offerings. The piracy rate faced by HBO is estimated to be between 30% to 50%. HBO has responded to this high piracy rate by churning out new high quality contents in different European languages (Briel 2010). New contents are available through both HBO’s cable TV channels as well as its new IPTV channels. HBO’s innovative offerings have reduced piracy and brought in new subscribers. Valve, a video game manufacturer, has also adopted a similar strategy. Since releasing its game Team Fortress 2 in 2007, it has made frequent quality enhancements, including addition of new weapons and avatars. This strategy has encouraged enthusiastic gamers, who have a strong preference for the latest version, to switch to legal downloads.

The study doesn't just look at such anecdotal cases. It digs in on some evidence as well, showing how investments in R&D from software companies continues to increase, almost directly in line with claims that "piracy" rates for those companies has increased. The conclusion: less enforcement of copyright laws will likely lead to greater quality in output in many cases, and conversely that greater enforcement likely leads to less social benefit as the quality decreases, in markets facing the same conditions. In fact, they find that content creators (or distributors) are likely to increase profits by focusing on product quality, rather than enforcement.

Most of the paper focuses on creating and testing an economic model that explains this behavior, and highlights when such factors apply and when they don't, for the purpose of trying to optimize policy as well as an individual copyright holder's response to piracy. That is, they do find some conditions under which the traditional "common sense" view holds, but it seems relatively rare. In fact, one part of the study models whether or not there are "ethical" consumers who don't infringe for ethical reasons -- and finds that in such a world, there tends to be even fewer reasons for increasing enforcement.

Of course, when you think about much of this, it makes sense. We've argued from the beginning that there are tons of ways to "compete" with unauthorized access, and providing quality is definitely one such way. It's nice to see this bit of research adding deeply to this debate, both with real world examples of this happening today and a detailed economic model that explains the behavior.

And yet... our policy makers continue to think that the best answer is simply to keep on ratcheting up enforcement.

Filed Under: competition, content, copyright, infringement, piracy, policy, quality

Industry Suppressed Report Showing Users Of Shuttered 'Pirate' Site Probably Helped Movie Industry...

from the well,-look-at-that dept

We've seen study after study after study after study after study showing, contrary to the claim of the industry and certain politicians that users of file sharing sites are pure "freeloaders" who are "leeching," that the users tend to be larger spenders on media and ancillary products. So it's really not a huge surprise that a new study would come out saying the same thing...

But, in this case, the history of the report, which has not actually been released, is a lot more interesting. As you may recall, in June, law enforcement across Europe arrested a bunch of people for apparently running Kino.to -- a site that had been listed by US entertainment lobbyists as one of the worst of the worst "pirate sites," out there. So, it sure would be interesting to find out that, before all of this happened, some entertainment industry lobbyists had commissioned research into the type of folks who used Kino.to and their media consumption habits.

Indeed, as TorrentFreak found out, it appears that just such a report was commissioned and created... and the results matched all those other studies we've seen:

The study, which was carried out by Society for Consumer Research (GfK), found that users of pirate sites including Kino.to did not fit the copyright lobby-painted stereotype of parasites who take and never give back.

In fact, the study also found that Internet users treat these services as a preview, a kind of “try before you buy.”

This, the survey claims, leads pirate site users to buy more DVDs, visit the cinema more often and on average spend more than their ‘honest’ counterparts at the box office.

“The users often buy a ticket to the expensive weekend-days,” the report notes.

Of course, this report never saw the light of day. The only reason it appears to be getting out is what appears to be disgruntled researchers on the report who are upset it was spiked by whoever commissioned it... though the firm does have a history of working with organizations within the movie industry.

Of course, all of this raises some questions. Considering all of this research -- including some that appears to have been sponsored by the industry itself... why does the industry continue to lie and insist that people who use these sites are pure freeloaders? Do they not believe their own studies? Or do they simply fear the loss of control such a reality would really mean? Either way, it seems that those politicians, law enforcement officials and press who continue to parrot the industry's claims about those who use these services might want to reconsider how they portray these sites.

Filed Under: europe, file sharing, movies, piracy, studies
Companies: kino.to

Marketing Music Through Non-Linear Communication: Accepting The Full Reality Of The Digital Age

from the i-just-can't-hide-it dept

I'm so excited to finally present the public version of my thesis, which investigates the problem of record labels' adjustment to the digital age and provides a solution. One of the key inspirations while composing the thesis was Mike's Trent Reznor Speech at MIDEM. Throughout the two years I spent composing my thesis, some of the thesis' content was already posted to Techdirt. There was the Shpongle case-study, in which a band went from yelling at fans to embracing them in a remarkable way. Then there was an analysis of the unique way in which deadmau5 connects with fans. Most recently, I posted a case-study of Fulkultur's The Ugly Dance, which is really a genius way to get your music discovered. Oh, and there was a white paper with music business model case-studies, but it was not directly related to my thesis. Thank you, Mike!

Today however, I can finally launch the entire thesis! It is free, it should be shared and I would love for folks to remix it!

Go for it.

Personally, I have some favorite findings that I will further explain here on Techdirt.

The "Pirates-Buy-More-Music" Chart



This chart seems to indicate that there are different groups within pirates. As is obvious from the chart, the group on the left side is more likely to have bought music recently than 'non-pirates' (people who engage in filesharing less than once a month or never). I thought this was an interesting result from the survey, especially since some people are generally too quick to disqualify pirates as economically interesting music consumers.

One size price fits does not fit all

I asked surveyees to respond to the statement "One US dollar ($1.-) is not too much to ask for a song." This resulted in two groups that were almost evenly split. Around half of the respondents agreed, and the other half disagreed. This indicates that prices of music should perhaps be much more variable than they are today and real attention needs to be paid to one's target group when trying to sell copies.

Instead of inventing numbers to argue how things should be - as a marketeer, I'm much more interested at looking at the reality and using that reality to maximize the potential. So what do you do when your business model (that relies on control) gets disrupted through peer-to-peer filesharing and other types of non-linear communication? You adjust to the new reality and make use of that non-linear communication.

The solution that originates from this non-linear communication is 'the ecosystem' and this excerpt from my thesis probably describes it best:

The ecosystem is an active fanbase which is interconnected through non-linear communication. This means producing a story worth telling to turn the internet's non-linear communication and loss of control over distribution into an opportunity to get discovered. The second step is retaining the attention by connecting with listeners and connecting them to each other like the host of a party would with guests. Turning the ecosystem into a fun party helps energize the fanbase and amplifies the aforementioned "story that's worth telling". Marketing opportunities come from listening to the ecosystem and releasing the products they want, as opposed to the classic approach of pushing the product that you want them to buy. Internet-enabled concepts such as pre-ordering and digital releases allow labels to offer their ecosystem abundant choice to play into all the different expectations regarding price and product characteristics. This most likely will involve a mix of (feels like) free and publishing products or services that are better than free.

The answer is the ecosystem. Note that in the below picture, both the artist/label as well as the target audience are part of the same ecosystem.

Filed Under: connecting with fans, music ecosystem, music industry, piracy

American-Statesman: Suspect Position, Bad Example, Another Bad Example, Debunked Statistics, Contradiction

from the so-much-silly dept

Most of the time the articles we take issue with at Techdirt have something in them we disagree with or find silly.  And by something, I mean to indicate that there's a singular wrong in there that we point out.  Or, at most, a couple of wrongs.  But sometimes you encounter a piece written for a supposedly reputable publication that seems so much as though it was written to be completely wrong, that I start to wonder if LulzSec has begun infiltrating the mainstream press.  Take this American-Statesman article by Gary Dinges piece by piece for an example of what I'm talking about:

"Months and months of hard work available for illegal downloading free of charge in a matter of minutes.  That's the difficulty facing authors, filmmakers and musicians across the nation, costing them untold sums of money each year."

Well, gee, Gary, that sounds positively terrifying.  It must be hard on these creators who are clearly in horrific dire straits.  Care to share an example?

"It has become rampant," said Sandra Brown, a Dallas-area author with 60 New York Times bestsellers. "I have an assistant — a real Internet guru — who spends the bulk of her time monitoring the Web."

Ah, got it....wait, what?!!?  I just want to make sure I understand this completely.  You're offering up a well-known author who is routinely on the best sellers list?  In order to demonstrate the struggle of authors with regards to internet piracy?  Maybe next you'd like to do a piece on the political glass ceiling of minorities in America and use Barack Obama as your prime example?

And here's another question: How bad has internet piracy made things for you when you have the resources to pay an assistant, a real internet guru no less, (whatever her salary is) to spend the majority of her time "monitoring the Web"?  And what the hell does that even mean?  And why are you doing it?  I for one totally envy that internet "guru" getting a fat check to play Bejewelled all week then turn in a report saying "yup, the internet still exists".

Okay...vitriol aside, how can this possibly make sense economically?  If we were able to get some concrete answer as to which ended up costing Sandra more (real, not potential) money overall, the evil and vengeful internet or the salary of her faithful assistant for "monitoring" it, which do you think it'd be?

But back to Dinges' article.  He then offers us Dano Johnson, an animator who we learn has had his own battles with internet piracy.  Apparently he animated a movie that ended up on YouTube and was viewed five thousand times or so before a DMCA takedown was issued.  Dano's response?

"'I feel like I got robbed 5,000 times,' he said."

Well golly gee willickers, friend, sometimes I feel like a character from a Mel Brooks spoof movie, but feelings don't really mean a whole lot here, do they?  The fact of the matter is that you weren't robbed five thousand times.  I wonder how many of those folks who viewed the YouTube video would have done so if it weren't there to see for free to begin with?  I wonder how many of them came across it for the first time when someone shared a link?  I wonder if YouTube felt "robbed" for five thousand instances of promoting you at no cost?  Did you pay YouTube for any of that?  Book yourself, Dano (sorry, couldn't resist).

Now, after the article then goes on to quote all the billions and trillions of sweet American dollars that are being directly removed from the economy, ostensibly never to be seen again, we get back to the best line of the piece with one final quote from Dano Johnson on what effect piracy has had on his willingness to create his art:

"Piracy isn't going to make me want to stop making films."

Oh, sweet internet Gods, thank you for this.  Piracy, while perhaps annoying, doesn't stop creation.  And if you acknowledge that copyright is supposed to be an incentive to create, we arrive at the inevitable conclusion that nuclear options like ProtectIP, which is what this article was actually all about even though they didn't name the increasingly controversial bill by name, are not the answer.

Filed Under: complaining, copyright, piracy

Ericsson Recognizes That 'Piracy' Isn't The Problem, But A Symptom Of Failed Business Models

from the good-for-them dept

Just about a week ago, I stated:

The folks in the industry (and the politicians who support them) keep thinking that the problem is "piracy." And if they just got rid of these "freeloaders," the business model solves itself. That is, they look at infringement as the problem, and business model problems as the symptoms. They've got it backwards. The problem is the business model. The infringement is the symptom -- showing that they haven't yet adapted. If you look at the history of infringement, it's the same thing every time: it's always been a leading indicator of industry not adapting fast enough.

Apparently, I'm not the only one thinking that way. Rene Summer, Director of Government and Industry Relations at Ericsson, has more or less said the same thing:

"File-sharing is a symptom of a problem, rather than a problem in itself. This problem is the inadequate availability of legal, timely, competitively priced and wide-ranging choices of affordable digital-content offerings. Consumers also expect to be able to make decisions freely regarding when and how to consume the content of their choice. By clinging to outdated business methods such as windowing and territoriality, economic-rights holders are in fact creating the consumer behavior against which they so violently protest."

Is this the point where I whine about being ripped off? I'm trying to understand how that works...

More seriously, it's good that this concept is getting some traction. Once you realize that "piracy" is a symptom of an unsatisfied consumer base, you begin to recognize that it's often the leading indicator for innovation. That's because it shows you what consumers want, and satisfying the desires of consumers is where innovation comes from.

Filed Under: business model, piracy, symptom
Companies: ericsson