Why Piracy Is Not Actually A Problem For The Music Industry

from the look-around dept

TorrentFreak is running a great guest post from someone responding to the IFPI's laughable claim that unauthorized file sharing is the root cause of the recording industry's problems these days. That's simply not true. The post does a good job laying out the details on eight other reasons why the recording industry is in trouble that have nothing to do with unauthorized file sharing. Basically, there's competition from other forms of media (video games, the internet) and there are more efficient markets and technologies that have siphoned off some of the excess profits the industry used to enjoy. It's a great list, but what it leaves out is the next step: what does that actually mean for the industry. And, the answer is that if they are willing to change their business model to adapt to this changing market, they can do amazingly well. That's because many of the inefficiencies that have been taken out of the market were costly to the record labels. By embracing what the new market allows, they can decrease their own costs, while creating an even larger market for themselves. The fact that they have chosen not to do so has nothing to do with "piracy." It has to do with their own unwillingness to change.

Filed Under: business models, copyright, music, piracy

U2 Album Leaks... Despite Ridiculous Attempts To Block It

from the lotta-good-that-did dept

At some point, folks in the music industry are going to (finally) recognize a rather simple fact: it just takes one digital copy of a song/movie/whatever to get out there, and it's everywhere. You can't stop it. No matter how annoying it is. No matter what laws it violates. It will happen. Taking precautions against it may seem smart, but it will always just be a waste, because as soon as a single copy gets out, it's game over. However, it appears that plenty in the industry still haven't figured this out -- and it's no surprise that U2 is among them, given what Paul McGuinness, the band's manager, has said in the past.

It appears that the band went to great lengths to avoid having its latest album leaked. The band refused to send out any review copies to journalists, instead organizing special "listening parties" where all attendees had to surrender any electronic device (including phones) before entering. So what happened? Well, the album has leaked anyway and thousands of people are downloading it.

So, for all that trouble, the band spent a bunch of extra money on these "listening parties," annoyed and inconvenienced a bunch of journalists/reviewers who were unable to listen to the music as they normally do, greatly limited the ability of reviewers to hear the album (meaning fewer reviewers than normal probably heard it)... and the album still leaked. So they got all of the (supposed) "negatives" and none of the (supposed) "benefits." Great strategy there, Paul.

Filed Under: leaks, music, paul mcguinness, piracy, u2

Valve Exec Explains How To Compete With Piracy

from the service,-value,-pricing dept

Last month, an exec at Valve Software noted that "Pirates are underserved customers" and said when someone realizes that, they also discover: "I can do some interesting things and make some interesting money off of it." It looks like the company is sharing some data to back that up now as well. A whole bunch of you have been sending in reports from Gabe Newell's keynote speech at DICE. Newell is the founder and managing director of Valve, and he provided plenty of reasons that show that "piracy" is not the issue at all: service, value and pricing can easily trump piracy.

He started out by pointing out something that we've discussed in the past: digital content is best viewed as a service, not a product. As a service, you focus on providing continual value -- and people are paying for that future value (which is a scarce good prior to delivery), rather than an infinite good already created. There's value in paying for that future (scarce) service, and it trumps paying for an abundantly available good.

From there, he noted that the reason "piracy" is doing so well is that the "pirates are ahead not just on price, but on service." In fact, he noted that since DRM decreases the service value for customers, it also tends to increase piracy, rather than decrease it.

Then, he showed how that combination of service and smarter pricing allowed the company to run experiments and make a lot more money -- competing quite successfully against piracy. The most stunning example: last weekend, the company ran an experiment with the game Left 4 Dead. It heavily discounted the price, and sales shot up 3,000%. And this wasn't just a case of building off a small base. The sales over the weekend were more than when the game launched.

In fact, it looks like a big part of the problem facing the industry is that they charge way too much for their products. Here are the numbers Newell shared from Valve's experiments with "sale" pricing:

• 10% off = 35% increase in sales (real dollars, not units shipped)
• 25% off = 245% increase in sales
• 50% off = 320% increase in sales
• 75% off = 1470% increase in sales

Newell then says when they decrease the price by 75%, they are making 15% more than when they were charging at full price -- though, I'm not sure how that math works out from what's stated above (I've been playing around with the numbers, and something is missing...).

Between all of this, it's pretty clear, yet again, that "piracy" is hardly the issue. If you provide a valuable ongoing service at a much more reasonable price, there's no problem at all. Once again proving that the issue is a business model issue, rather than a legal issue. It's too bad so few old school content providers are willing to recognize this, and quite troubling that some folks in our government are still missing this as well. It's going to lead to bad laws and even worse enforcement of the law.

Filed Under: gabe newell, games, left 4 dead, pc games, piracy, pricing, service, software, video games
Companies: valve

Wait, Now NBC Claims Video Piracy Is Under Control?

from the wasn't-it-just-last-week? dept

It may seem like it was just a week or so ago that NBC Universal's Chief Counsel Rick Cotton was freaking out about video piracy online. That might be because it was just over a week ago when he was feeding the NY Times quotes for a story about how "pirates" were "winning the battle." But, apparently he's had a change of heart. He's now said in a speech that video sharing, "from a rights perspective, it's under control." He used NBC's online coverage of the Olympics as an example -- though, that's actually a terrible example. Plenty of people were quite annoyed by the unnecessary hoops they had to go through, and others were pissed off that it was nearly impossible to see what they wanted to see unless they went to other sites where people had uploaded the unauthorized video. Either way, we're thrilled to hear that NBC Universal now thinks video "piracy" is under control. I assume that means that they'll stop their DC lobbyists from lobbying for more draconian copyright laws now? Because, last we heard they were still pushing for changes to the law...

Filed Under: piracy, rick cotton, video
Companies: nbc universal

A Tale Of Two iPhone Apps... And An Irrational Fear Of Piracy

from the compare-and-contrast dept

Reader Terry writes in to point out a rather amusing contrast between two separate stories on a site about iPhone apps. First, there's a story about the massive success of the iPhone game iShoot (which was just profiled in Wired as well). That game, which is basically a copy of the old Scorched Earth (a personal favorite), used a free "lite" version to convince people to buy a more complete $3 version to the tune of over $600,000 in a single month. It is an example of using "free" to sell something else.

But, as Terry points out, it's rather maddening that the very next post on that same site, repeats without any hint of skepticism, the complaint of another iPhone game developer that thousands of dollars were being lost to "piracy." Of course, the article seems to have no problem assuming every single unauthorized download is a lost sale, never once questioning whether those folks would have bought the game in the first place. It also fails to mention that the only way to get the unauthorized free version is to have a jailbroken iPhone -- which is a very small percentage of iPhones out there. More importantly, though, the first story makes it quite clear that if you build a good game, give people an easy way to try it out for free, they seem more than willing to pay for the app in large quantities. The problem (once again) is not the "piracy." It's not a "loss." The problem is simply the use of a bad business model by the second developer -- and, perhaps, making the game not worth purchasing.

Filed Under: business models, iphone, iphone apps, piracy

MPAA Cheers On Totally Useless Piracy Crackdown

from the pat-yourself-on-the-backs-now dept

The MPAA (or, rather, its international arm, the MPA) is proudly cheering on the "success" of "Operation ZoomOut," a 10-week crackdown of movie piracy in Asia. The group talks about how various retail outlets were shut down, raids on counterfeiting shops seized a bunch of DVD-burners and counterfeit movies -- and that the overall number of counterfeit DVDs coming out of Asia declined. That's great. Except for a few small facts. You can bet that if the demand is out there, plenty of others will jump in and fill the gaps pretty damn quickly and (more importantly) none of this stopped the same movies from being available to download online.

And that, of course, is the number one problem with ridiculous and costly publicity stunts by groups like the MPA. They're useless and have no actual impact on the problem. They're trying to deal with a digital issue by using an analog solution. Once a single digital copy gets online, it really doesn't matter how many DVD-burners you seize. The movie's out there, and copies are being made at an unstoppable rate. These types of raids may make for fun headlines and gives the MPA a chance to go back to the movie studios, show them they're "doing something" and ask for more money. But it hardly does anything to deal with the new digital reality. That would require actually understanding both technology and business models -- both of which seem to be well beyond the MPA (and the MPAA's) skillset.

Filed Under: counterfeiting, crackdown, piracy
Companies: mpa, mpaa

Why The eBook Industry Needs More Piracy

from the push-the-market-forward dept

Bobbie Johnson, over at the Guardian, does an excellent job of explaining why ebooks really haven't taken off yet: there's just not enough piracy going on. With the launch of the second generation of Amazon's Kindle ebook reader, we're getting another round of stories about ebooks. They've done marginally better recently, but the Kindle is hardly making strides that match with the iPod -- a device to which it's frequently compared.

Johnson points out that (as we've seen elsewhere), piracy is often a leading indicator of what consumers are doing with new technologies. It's a great way to find out what people actually want, and then you can build around that. That's what made the iPod (and eventually iTunes) successful. But the Kindle doesn't have that going for it. Instead of trying to dive into a new market that's already happening, it's trying to drag the market along -- creating the space as it goes. That's a much more difficult sell. It doesn't mean that ebooks can't or won't become a much bigger deal. But it suggests that the market is quite different, and won't develop nearly as quickly.

Filed Under: ebooks, kindle, piracy
Companies: amazon

Is Piracy Really More Important Than The Financial Crisis And Climate Change?

from the priorities,-people dept

Reader Virginia notes that in an announcement concerning European Commission President Jose Manuel Barroso and Chinese Prime Minister Wen Jiabao meeting to talk about various issues, it seems odd that "piracy" was apparently a priority over both the financial crisis and climate change. You would think that the other issues would be much more important, but the old legacy content industry still has been able to convince politicians that piracy is some huge political problem, rather than a business model issue they could take on, if only they bothered to try.

Filed Under: china, climate change, europe, financial crisis, piracy, policy

How To Make Money From Piracy: Building Prisons

from the laugh.-it's-funny. dept

We've often discussed various ways that businesses can learn to embrace piracy for the purpose of making money, but here's a new (if farcical) idea. Hypebot points us to the Pirates Prison Project -- a tongue in cheek suggestion for a way to use piracy to build up one area of the economy: prisons. The idea is that if we just start putting all those file sharers in prison, we're going to need a lot more prisons -- and isn't that just a business opportunity?

Filed Under: piracy, prisons, satire

Will Warner Bros. Studios Go After Everyone Offering The Christian Bale Rampage For Piracy?

from the so-says-the-director dept

In case you've been living under a pop-culture rock for the past week or so, you've probably heard the recording of Christian Bale's angry, curse-filled tirade on the set of his most recent movie. Apparently the tape was leaked after film execs sent the tape to the insurance company that had insured the film should Bale have bailed out on the role. That's not all that interesting. However, in an LA Times followup, in which Christian Bale provides his expected heartfelt apologies for going too far, there's a far more interesting quote from the movie's director, McG, concerning the leak of the tape:

"It's illegal, and the anti-piracy people at the studio are going to pursue it to the full extent of the law. You have got to have actors feel safe on the set, so they can transcend the things they do in their normal lives."

First of all, it's not clear which part he's talking about is illegal -- but it's telling that he thinks the "anti-piracy people" at the studio (in this case, Warner Bros.) who are dealing with this. Will they be going after TMZ for putting the tape online? Against all the other sites that have copied it? Is it "piracy" or is it news?

Filed Under: christian bale, mcg, piracy
Companies: warner bros.