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Entries in piracy (2)

Thursday
Nov292012

The Distribution At The End Of The Universe

Back when the original episode went out, I responded a bit to Marco Arment's position concerning piracy. Well he's mentioned it again this week, and as is my wont, I'm responding again.

At issue this week is a string of responses to responses regarding whether consumers are "forced" into piracy because distribution models are still clinging to the past. Most of the arguments arrive at the conclusion that people are NOT being forced to pirate but this I fear is based on too limited a definition of the term "force". The implication is that consumers believe that they have an insatiable desire for content and the ravenous bugblatter beast within them is literally forcing their hands. While this is indeed an over simplification, it is a manifestation of a very real phenomenon - market forces.

When Instapaper first launched, it was $9.99. Sometime later, Marco chose to lower the price to $4.99. Was he "forced" to do this? Did someone show up at his house and beat him about the head and neck until he lowered his price? Of course not. Because market forces are not (usually) violent, but they are forces none-the-less.

iTunes created a profitable sales channel that made paying for digital music more attractive than stealing it because it didn't ignore the very real market forces at work. Digital distribution (of music first, but now of video) removes one of the main market regulators effecting pricing and availability - scarcity. Scarcity is what drives the price of something like a Wii to 300% it's retail price on Ebay. Since content doesn't work by the same rules of scarcity (nor has it ever), delivery mechanism and timing became the stand-in for scarcity giving rise to release windows. 

Asking consumers to ignore the reality that there is no scarcity in content distribution is misguided because this is a situation where both the distribution and the consumption side have to deal with the new reality. This has already happened in music. Producers realized that the way to deal with the lack of scarcity was to get out in front of it and offer a better downloadable product. The market force that was driving people to download illegally was the same force the music industry turned to their advantage - convenience. 

Video content producers are trying to use their own market forces to keep consumer behavior within the old distribution model. "We want to drive sales of our monthly cable subscriptions so we artifically limit availability outside that channel." Whether you consider a downloader to be a "dirty pirate" is really a secondary issue. If people are willing to break the law rather than participate in the prefered sales channel, then there is a very real market force that is going to shape the distribution of video content, whether the producers like it or not.

Now this may very well create a market where quality programming is no longer sustainable. It may also make it harder for smaller networks to compete and lead to far less content being created. This too is a real market force. But saying people should just "be an adult and wait" is missing the point. On the face of it, what that is essentially saying is - "We have customers who want our stuff so badly that they are willing to break the law. Instead of taking their money, we would rather just lecture them."

Maybe ask Lars Ulrich how well that worked out.

Thursday
Jul122012

The Hitchhiker's Problem With "Content"

(note: I've slightly renamed this post as I've realized I have a bit more to say on the topic, so stay tuned.) 

On several recent episodes of Build and Analyze, Marco Arment spent some time chatting about "not fooling yourself" about copyright infringement. He admonished people who take the position of “I’m pirating it to try it, and if I like it, I’ll pay.” Basically, his point is that we all know that copyright is "the right thing to do" and that if you pirate something, at least admit to being a dirty pirate; don't pretend that you are doing something noble.

But this pushes me to ask the question - what exactly drives people to pirate and what is the true cost of (and payment for) intellectual property?

There is an inherent problem with "content" and more specifically, with the selling of content: It is not something you can ever return. When you buy a car, or a shirt, or a dresser, and you don't particularly like it, you can return it or resell it. For “content” like movies and video games, the same holds true if the item is defective (ie, there’s a problem with the media on which the content is stored) but heaven help you if you try to return an open video game (GameStop pre-owned trade-ins are a whole different thing and, in many ways, a direct response to the issue I’m outlining). 

I once faced this specific issue with a DVD I bought. The copy I grabbed was grouped with the “letterboxed” version in the store but was actually a rogue “full-frame” copy. I didn’t realize this till I got it home and popped it in. My attempt to return it for the letterbox version was quite an experience! As there was nothing physically wrong with the disc, my problem was with the content on the disc and that is not considered a valid reason to “return” a movie in almost any store that sells DVDs. I managed to convince the clerk to do the swap, mainly because it was a swap and not a straight return, but this example is only a stone’s throw away from the following scenario:

“Can I return this movie?”
“What’s wrong with it?”
“Well it’s just not very good and I’d rather just have my money back.”
“Uhhhhh.”

And here we come to the crux of the issue. Most people are confused about what we actually pay for with content. Do you think you are buying the movie? A copy of the movie?  The right to play the movie? The disc on which the movie is encoded? You are not actually buying, leasing or renting any of those things. What you are actually buying is the “experience” of watching the movie. Short of a head injury, there is no way to return that and this is why, in general, there is so much resistance to returning these items - you're not actually returning what you paid for: the experience.

And so we’ve now arrived at the answer to two things simultaneously:

  1. Why people are driven to pirate
  2. Why free content, driven by advertising, is so pervasive

If the “experience” of the content is the property that is changing hands, it’s only natural that the currency used to purchase it is also experiential. Advertising fills this need pretty handily. What you want is to focus your attention on the content, and advertisers want that attention focused on them. There is actual money changing hands “on the back end” between the content producer and the advertiser but from the viewer/listener’s perspective, you are earning the experience of the content by trading your attention on the advertising.

Once you open up the idea of the viewer/listener trading actual money for the experience of the content, you get into the situation I described above which, despite Marco’s admonitions, is actually quite stacked against the customer. At its most basic level, the customer is being asked to pay up front, for something they may or may not like, with no recourse if they don’t like it. We should not be surprised that this causes some cognitive dissonance among people and that some of them are driven to “pirate” the content before paying up. When someone describes the “try before I buy” scenario, what they are really saying is that they don’t like the idea of paying up front, sight unseen. How many of us would buy a car, or refrigerator, or pants without seeing them first? And why do we consider someone who feels the same about a movie to be such a “dirty pirate”? 

In this case, all that person is doing is attempting to swing the balance back in favor of the customer and, given the “experience” problem I’ve outlined above, possibly over-correcting.

The content-seller-friendly version of the transaction gets them their money up front and the customer may get screwed. The flip gets the customer their content first and the seller might get screwed. And in general, ALL of this stems from the fact that we continue to treat “intellectual property” like its actual property despite the fact that it is not. But until such time as we find a better way to equitably encourage content creation, the "content as property" model seems to be the best we've been able to find. However, evidence has been mounting for years now that a more customer centric model (which risks the creator "giving it away for free" more than they may like) can, and often does, lead to higher overall sales and revenue than the old school "gimme my money up front" model.

When it’s all said and done, this can also be taken as a pretty convincing argument for why the free-to-play model is making such waves of late, but that’s probably a whole separate post. (e.g. “Why the free-to-play model is the grand unified theory of Product = Advertising”, but that's for another day.)

Sidebar-

All that having been said, the vast majority of piracy is probably not committed by true “try before I buy” denizens. But some of it surely is. Speaking from personal experience, before I made the full switch over to AppleTV purchases, I would download episodes of pretty much every show I watch via bittorrent. I didn’t consider myself a pirate as:

  1. I also pay for DirecTV and so that content was “mine” as far as I was concerned.
  2. I would later buy Blu-Rays or DVDs of shows I planned to watch over and over (for instance, I own the first 8 seasons of scrubs, several seasons of Modern Family and full series sets of Buffy, Angel, Farscape and others.)

Am I misguided in my belief that I am an “honorable content consumer”? Maybe. But they still make lots of money off me, foibles aside.