The Benefits Of Piracy Aren't Always In The Expected Places

from the and-that's-not-a-bad-thing dept

One of the issues that comes up when we discuss the economics of infinite goods is people too often falsely define the product that's being sold as the market, rather than the benefit. As we mentioned the other day, that's why the builders of horse carriages reacted the wrong way to the automobile. If they had realized they were in the transportation business, the automobile would have been as an opportunity to provide a better transportation experience. One of the side effects of properly recognizing the benefit is that it often shifts around the business model of the market you're in. The money may end up coming from somewhere entirely differently than before. The music industry is discovering this today (painfully). The money isn't in the product itself (music) but in the scarcities made valuable by the product (concerts, access to the artists, creating new works, etc.).

So, for folks struggling with these issues, one of the most important things to do after figuring out what your real market is, is to then figure out where all the scarcities are that are made more valuable by freeing up the infinite goods. The trick is to then position yourself to capture money in that market. But where this gets really tricky is those products may be surprising or appear to be in a totally different space (e.g., concerts rather than selling plastic discs) and that can be scary for those who are used to the old model.

I've had a few folks submit the GameIndustry.biz interview with Todd Hollenshead, the CEO of id Games, where he talks about the "hidden benefit" of piracy... but for computer makers, not video game producers. He's correct, other than the fact that it's not that hidden. There's a very real and admitted benefit to computer manufacturers -- but that doesn't mean that there also isn't a benefit for the video game makers themselves. Basically, when you look at the video game market, one of the big scarcities that benefits from free games is the computer makers.

But rather than somehow blaming them for not fighting piracy hard enough, why not take advantage of that? Get PC makers to finance new games, pointing out that if they give out the games for free it will help drive more people to buy the next generation of high powered PCs that are needed to run the games. In that way, everyone can benefit. The PC makers (or maybe even Intel or someone) can pay for the game, and then use that to turn in more sales of high powered computers. The video game developers get paid, the computer makers get a great tool to sell more new PCs and users get a free game with their PC. Everyone comes out better off and there's no "problem" of piracy.

Filed Under: benefits, economics, piracy

It's Sad That It's Newsworthy When An Entertainment Industry Exec Decides Not To Sue Customers

from the sign-of-the-times dept

In noting that the Entertainment Software Association (the ESA) had hired the RIAA's VP in charge of its litigation strategy, we wondered if the ESA was going to ramp up lawsuits against customers. After all, over in the UK, there's been news about law firms suing hundreds for file sharing games. But, in the comments, someone pointed to an interview with the boss of EA Sports, Peter Moore, saying that he doesn't think it's a good idea to follow the RIAA's litigious path:

"I'm not a huge fan of trying to punish your consumer... I think there are better solutions than chasing people for money. I'm not sure what they are, other than to build game experiences that make it more difficult for there to be any value in pirating games."

Of course, he also does make some other comments that suggest he very much views it as an "us vs. them" sort of thing, rather than looking for potential win-win solutions:

"We absolutely should crack down on piracy. People put a lot of blood, sweat and tears into their content and deserve to get paid for it. It's absolutely wrong, it is stealing."

That's a bit of a mixed message, but at least it sounds as though EA is not anxious to sue its customers -- and, of course, EA is a major member of ESA, so hopefully it can help keep ESA away from going down this path as well. The next step would be starting to figure out ways to set up better business models that use so-called "piracy" to the company's advantage. Those will come eventually. In the meantime, though, how sad is it when it's newsworthy that an entertainment industry exec says he doesn't think suing customers is a good idea?

Filed Under: esa, peter moore, piracy, suing customers
Companies: ea, esa

Echostar Trying To Get Info On Innocent Customers Of Satellite TV Receivers

from the this-again? dept

You may recall a few years back, prior to the RIAA embracing the concept of "pre-litigation letters," that DirecTV was a huge proponent of using them. The company had sued some companies that sold smart card readers -- which could be used for a variety of purposes, only one of which was potentially unauthorized access of satellite TV signals. However, DirecTV was still given access to those company's full customer lists, and proceeded to send most of them one of those pre-litigation letters, demanding $3,500 or saying that a lawsuit would be filed. Of course, plenty of buyers had perfectly legitimate reasons for purchasing a smart card reader that had nothing at all to do with pirating satellite TV. But, no matter, pay up or go to court. And, in fact, many people just paid up.

Eventually, a court finally told DirecTV to knock it off.

However, it appears that DirecTV's main competitors, Echostar never got the message. The EFF is pointing out that Echostar is trying to gain access to the customer lists of a bunch of sellers of a satellite receiver even if there's no evidence that the individual buyers used the satellite receivers to pirate Echostar's DISH Network satellite TV service.

Filed Under: customers, piracy, privacy, satellite receivers, satellite tv
Companies: directv, echostar

Video Game Developer Talks To Pirates: Realizes He Can Compete With Free

from the shocking dept

Slashdot points us to an interesting story of a video game developer in the UK, Positech Games, who put up a blog post recently, asking people who "pirated" the company's software to explain why they did it. They did... in droves. Now there's a new post up discussing both the results and how the company is responding. While the guy sounds surprised about the results, they don't really seem all that shocking: people hate, hate, hate DRM of any kind (which should serve as a counter to the guy who showed up here last week insisting that DRM is here to stay). That was the thing they were most vehement about. After that, they were upset about the high price of games and the short demos that were offered that weren't representative of the game.

The good news is that the company is responding. It's swearing off DRM completely, reducing prices on some games and promising better demos. It's also exploring ways to make it more convenient to buy to avoid any "hassles" that users have in buying. It's nice to see someone realize that, rather than freaking out and trying to sue everyone, the proper response to "piracy" is to figure out how to better compete with it by decreasing inconveniences and giving people a reason to buy rather than pirate. So far, it appears that Positech is focusing mostly on that first issue (decreasing the annoyances). Hopefully it takes the second step also, giving people additional reasons to buy rather than pirate.

Filed Under: competing with free, piracy, uk, video games
Companies: positech

Nintendo Freaks Out That People Can Use Memory Card To Pirate Games

from the give-them-a-reason-to-buy dept

You would think by now that companies might start to realize that they're never going to put a damper on any kind of piracy by lawsuit -- but that they need to actually give people a reason to buy. Apparently that message has not yet gotten through to the suits at Nintendo, who are looking into lawsuits to make it difficult to buy products that let you use unauthorized versions of DS handheld console games. There's a device called the R4 Revolution, that can be used by DS owners to store all their games on a single memory card, so they don't have to carry around all those cartridges. That's a big advantage and a huge value.

Of course, it also lets owners play unauthorized games. And, that, has Nintendo execs freaked out and suing.

But considering the very real legitimate use of the device, it's hard to see what's "illegal" about the device itself. In trying to stop the sale of the device, of course, Nintendo is also providing a lot more attention for the device and the fact that it can be used for unauthorized games as well. You would think that a device that made the actual DS console more valuable would be something that Nintendo execs would get excited about rather than trying to sue it out of existence.

Filed Under: memory cards, nintendo ds, piracy, r4 revolution, video games
Companies: nintendo

Totally Misunderstanding Movie Downloading In France

from the so-many-mistakes,-so-little-time dept

A bunch of folks have sent in this report from Variety about a study talking about what a big deal unauthorized movie downloading is in France. Specifically, it points out that movie downloads are "reaching box office levels." Except... that means they're basically counting every download as a lost sale, which we (as well as those putting the study together) all know isn't true. Even worse, the folks behind the study (who go by the already biased name: Association Against Audiovisual Piracy) seem to totally miss the most obvious point from their own report: that movie piracy doesn't seem to have a major impact on movie ticket buying. After all, their own report points out that the most popular movies at the box office in France are also the most downloaded. If it were really true that movie downloads were harming the box office, then wouldn't that mean that the most downloaded movies ended up with fewer tickets sold? The fact that the two correlate suggest that (as we've seen over and over again) lots of movie downloading just shows tremendous demand for a movie, and it's likely to do quite well at the box office.

Filed Under: downloads, france, movies, piracy, statistics

If Everyone's Using Your Pirated Software, Are You Still A Monopolist?

from the questions-questions-questions dept

Apparently there's a new antitrust law in China that has local software companies scrambling to file suit against Microsoft for violating the law. However, Business Week has a rather pertinent question: if the vast majority of the Microsoft software in use in China is of the "pirated" variety, can Microsoft actually be held responsible for antitrust violations? After all, it's not directly responsible for that "monopoly" in the first place.

Filed Under: antitrust, china, piracy
Companies: microsoft

Industry Study Says Recording Industry Should Embrace Piracy... Sorta

from the not-quite dept

Slashdot points us to the news that a new study, by the MCPS-PRS Alliance, which represents music rights holders, and Big Champagne, a company that measures file sharing activity claims that the music industry should embrace piracy rather than continuing to fight it. Specifically, it points to the success of Radiohead's "name your own price" promotion, and the fact that the music was still widely available on BitTorrent, even though you could download it for free from Radiohead's own site. This, the study's authors, suggest, show that stopping piracy has little correlation to "success." That's not a surprising finding as plenty of previous reports have shown the same thing. In fact, albums that are considered a success tend to have a lot more unauthorized file sharing than those that are not. It's not hard to understand why, either: popularity is popularity.

Slashdot highlights the fact that this is a study done by the music industry itself, suggesting that maybe the industry is open to changing its strategy. But, that's not quite accurate. The "music industry" is made up of made different parts, with very different motivations. The two players who did this study are both angling for different benefits. Big Champagne has been around for years, and has established itself as the sort of "go to" player for the industry in monitoring file sharing. The more the industry embraces file sharing, the more business Big Champagne gets. As for the MCPS-PRS Alliance -- that represents songwriters, composers and publishers -- not necessarily the labels. MCPS-PRS is looking to establish a new set of draconian compulsory licensing system, where you could still make use of file sharing, but where it would (perhaps with Big Champagne's help) get paid for every download through some sort of system, whether sharing in the ad revenue or through subscription fees. This is the deal it's already worked out with Google's YouTube, even though it's unclear what legal basis there is for such an agreement.

So, this study is hardly the "music industry" embracing file sharing, but a very biased part of that industry trying to push the rest of the industry towards compulsory licenses and an effective "music tax" on file sharing.

Filed Under: embracing, piracy, recording industry, studies
Companies: big champagne, mcps-prs

MPAA Still Clueless; Claims Anti-Piracy Is Why Dark Knight Had A Huge Opening

from the are-these-people-serious? dept

Last week, we wrote about how the massively successful opening of The Dark Knight showed (once again) how little an impact "piracy" has on movies. But don't tell the movie industry that. The LA Times is running a bizarre article with movie industry folks claiming that their anti-piracy efforts are the real reason the movie was so successful in the theaters. Never mind the awesome reviews. Never mind the fact that many people wanted to see the movie in IMAX (which you can't replicate at home). Never mind the fact that going out to the movies is still a social experience. Never mind the fact that the movie was available online soon after it was released (despite what the article claims).

Instead, the movie guys rely on a single anecdote: the story about how the Hulk movie from a few summers ago leaked online, got terrible reviews and then no one went to see it. The industry uses that to claim that a leaked movie does tons of damage to box office sales, but they play down the importance of the bad reviews. If you make a bad movie, then yes, word of mouth will stop people from going. But if you make a good movie -- and most critics agree The Dark Knight is an excellent movie -- then word of mouth will make more people want to go out and experience it in the theater. About the only thing the LA Times article shows is just how much money the MPAA wasted in its efforts to keep the movie from appearing online prior to release. For that, it maybe saved them a few hours (much less than claimed in the article), which probably had almost no impact on ticket sales. Until the movie industry realizes that it's the experience they're selling, beyond just the content, it sounds like they're going to be throwing a lot more money down this anti-piracy hole than they're actually "losing" to piracy.

Filed Under: batman, dark knight, movies, piracy
Companies: mpaa

Dark Knight Proves Again: Give People A Reason To Go To The Movies And They Will

from the silly-MPAA dept

While the MPAA still wants you to believe that movie piracy is a huge problem, it's never quite able to explain how the movies that are most likely to be available for free online also happen to be the biggest box office winners. The latest example is with The Dark Knight, the latest Batman installment. It's getting tremendous reviews and had a record opening week, despite the fact that you could download it online. This isn't a surprise. Piracy has never really been a threat to the movie business -- which has always been more about selling the experience than the movie itself. And, things are even better with The Dark Knight because it's actually designed to look amazing on IMAX screens, which is an experience you just can't replicate at home. Somehow, though, we doubt the MPAA will give up its pointless claims about the "threat" of movie downloads.

Filed Under: batman, dark knight, movies, mpaa, piracy
Companies: mpaa