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Piracy and the Future of Content

I love reading. Good books, great storytelling.

Movies. Movies too. From heart wrenching Sophie’s Choice to "must see again" Divine Secrets of the Ya-Ya Sisterhood.

Oh and music! Let’s not forget about music. Sure, you might want to after you see me do a silly high-hat groove-that-bass move in the kitchen – but music sure does add that *snap*, doesn’t it? Right on…

And have you seen some of these articles? Some issues of the New York Times read like a monthly magazine – only it comes out daily! Hellooo!

All this stuff, all this content comes from somewhere; it’s made by people who need to earn a solid, reliable long-term living. Just like you.

For us to keep on having these "I just love…" conversations, making content needs to be a viable living option.

Now, making a living making content isn’t so much about selling content itself.

Selling content is what Van Gogh did. Make a painting. Sell it. Do it again.

But most of a creator’s income comes from selling content carriers, not content; a book, a DVD, a CD, a newspaper, a magazine.

Avatar

Content itself is often prohibitively expensive. To make the content that is the movie Avatar costs 237 million dollar. The book Gone With The Wind was written over roughly 7 years: what would that set you back?

Content carriers on the other hand are insanely cheap. Once a copy of the creator’s content is added, their price is mainly augmented by value add (e.g., jacket design), necessity (e.g., distribution) and of course simply making a buck or two.

When physical content carriers were the only thing around things were pretty simple.

Physical items carry physical costs so every piece of content was charged for even if only to cover the cost of the content carrier.

If conflicted about the price you wouldn’t buy it. Most of us refrained from physically removing the item from a store without paying for it. That would have been theft and theft is not cool.

Digital content carriers changed every step of that process.

They don’t carry any real cost and if they do, they’re not perceivable to normal people like you and me.

Because digital content carriers don’t cost anything, a lot of content is made available free to us too.

A lot of content still costs money, even when the content carrier is an almost intangible digital download.

But when conflicted about the price you can easily obtain an exact copy of the digital content carrier at no cost at all.

cheap thrills

This two-pillar model of free content and free piracy provides tremendous, frugal value.

It’s also unsustainable; the model destroys itself.

For us to continue enjoying new content we have to ensure content creators can keep on making a living; can earn money.

If not, if we fail, we’re doomed to consume what already existed and no more. Or what existed and what a lone lunatic will make. Or wait for the odd, driven artist who we’ll then rob blind.

Arguments for Piracy

As is the case with other faceless theft, such as insurance fraud, piracy has arguments in favor or in defense of the act.

These arguments are aimed at nullifying the result (theft of someone’s income somewhere somehow) of the action (piracy).

Although many and varied, in essence they cover two broad subjects as well as their intersections: marketing and economics.

MARKETING

The notion that digital theft somehow helps to promote a product by making it more commonly known and available.

Do you notice how we don’t apply this argument to, say, shop lifting? And that whilst the popularity of Rolex would certainly be increased once more people had (free!) access to it.

We recognize that the motive of a shoplifter isn’t to help promote a new line of computer devices ("but the iPad will be so much more popular!") but to reap some sort of personal gain from it.

Yes, popularity can be built through increased availability but this type of argument has several flaws. The goal isn’t popularity: content creators seek income before popularity. The choice isn’t ours: content creators decide what to give away, when. And taken through its logical next steps the argument results in a pyramid scheme without any monetary transaction at any level: that’s insane.

ECONOMICS: SOCIAL-ECONOMICAL JUSTICE

lenin (Custom) Artists don’t get any/enough of the sales price anyway.

Again, we don’t apply this argument to any physical product. Despite the fact that the people who invested most of the creativity in designing the iPad will make the least amount of money of it, we don’t steal iPad’s. We don’t encourage it either and when someone is caught doing it and claims to do it to redistribute wealth in a more just way we thumb our nose and say "yeah, right!"

Whether or not artists get enough of what rightfully is theirs – I don’t know; it’s beside the point.

What I do know is that a guy like me is sweeping the floors in an office, a woman like my wife is overseeing distribution somewhere, and that not paying for the product their company is involved with amounts to theft from them too.

"Follow the money": sales impact stores, distributors, publishers, artists – and everything and everyone around them.

ECONOMICS: I WOULDN’T BUY IT

It’s not really theft because I wouldn’t have bought it in the first place. Sometimes applied as a "costs too much" argument (think PhotoShop).

That makes no sense. If it’s crap you wouldn’t pay for, you wouldn’t have it while if it’s worth having – why isn’t it worth paying for?

See also: we don’t apply this to any physical product in the physical world.

ECONOMICS: I CAN’T AFFORD IT

People whose discretionary income is so low for such a long time that they’re effectively cut out of the consumer economy…

At worst we say "so what? suffer". At best we say "I understand" and step on a sliding scale.

Premium Content: Value Found in Piracy

We pay for a physical medium (book, DVD, CD). When the medium is digital we’re less inclined to pay: there is nothing – and the nothing can be copied with perfection.

While the real value is in the content, we apply the price to the "thing" and not to what it contains.

That’s a pretty important point: digital products are almost worthless.

The widespread ecosystem of piracy couples four key values: low price, abundance, ease, simplicity.

For any new model to succeed it has to do the same: provide great value through easy abundance.

Because there is a willingness to pay. Make no doubt about it. People pay $10-$30 per month to premium Usenet providers to have access to thousands of illegal files.

The money is there. People are paying.

Perhaps the answer then lays in mass access to mass (subscription) libraries of content: imagine Amazon’s digital content at $30/month…

Society & Your Family

Picture yourself explaining and instructing your kids where and how to download illegal content. Does that make sense? Is that who you want to be? Is that who you want them to be?

While you may buy most of your content and piracy is just another way for you to get "stuff", an Internet generation is coming of age for whom piracy has become the default way of owning music.

MP3 players come with storage space that, when filled with bought music, would literally costs tens of thousands of dollars to fill.

The rising popularity of e-books will bring a huge increase in e-book piracy especially when coupled with publisher’s current, short-sighted price hiking.

Movies in any quality and genre can be had "for free".

"Free", my economic teacher taught me, "means somebody else pays".

Other sides & more info:

  • There’s No Such Thing As Free Content: "it feels like I’m giving money to a feed-the-children charity when I’m really just paying for something that should have never been free in the first place"
  • The iTunes Effect and the Future of Content: "[…] for every one-percent increase in users who move to online buying of music, there’s a six-percent decrease in album sales"
  • How is the Library Different from Piracy? "From what we’ve been able to piece together, the book "lending" takes place in "libraries". On entering one of these dens, patrons may view a dazzling array of books, periodicals, even CDs and DVDs, all available to anyone willing to disclose valuable personal information in exchange for a "card"."

7 Responses to “Piracy and the Future of Content”

  1. Steven Bradley Says:

    Interesting post Ruud and I do agree with you. However for fun I thought I’d point out some valid points for why people might be less inclined to pay for digital content. Not that I think it gives anyone the right to pirate that content.

    If I want to buy a book, I walk into my favorite bookstore, grab the book, sit down for a few minutes and read a little. The more expensive the book the more I’ll probably read in the store. Take a technical computer book that might run close to $50. I’ll read the introduction, skim a couple of chapters, maybe read a few pages about a specific issue I’m hoping the book will help with.

    I also know that after taking home the book, if it wasn’t what I was looking for, I can bring it back and either get a refund or exchange it for another book. All in all most of my risk is mitigated because it’s a physical product I can use prior to purchase and return if I regret that decision.

    Compare that to a digital book. I have to buy it prior to to being able to see any of the content. Perhpaps there’s an a free introduction, but most of the time there isn’t. I can’t skim a few chapters and odds are I can’t return it.

    If we’re talking a few dollars no big deal, but say the book is approaching $50 I’m going to be hesitant to buy it sight unseen. There’s a lot more risk in purchasing the digital version of the book.

    Now that doesn’t give me or anyone the right to steal a copy of that book. In my case I probably wouldn’t buy it unless I could read a chapter or at least some other writing by the same author (maybe their blog). The desire for the book hasn’t lessened though.

    Again none of the above is an excuse for pirating. I thought I’d toss out a few things though as to why people may be more willing to pay for a physical product over a digital one.

    On an unrelated note, Van Gogh might not have been the best example of someone who made a painting, sold it, made another, etc. I think Van Gogh only sold one painting in his lifetime. He was very excited as he was very poor and hungry at the time.

    On his way home from the sale he came across a woman in worse shape than he was. He gave her the the few dollars he’d made from the sale, and went home hungry before getting back to painting.

    His brother Theo pretty much supported him most of his painting life.

    I couldn’t resist the Van Gogh story for obvious reasons.. I hope you don’t mind.

  2. Ruud Says:

    Great comment, Steve. Awesome you appreciate the irony on the Van Gogh example :)

    The lack of thorough preview is a good point to make. Barnes & Nobles is certainly addressing that *if* you’re in one of their bookstores. So that sort of matches the physical experience.

    For me a big gripe with digital media, whether delivered via a physical medium or not, is that it’s often has copyright protection technology, preventing me from making (legit) backups or, once done with the item, passing it on to someone else.

    Random thought: what’s interesting is that paying for an item enhances the perceived value of that item. Expensive wines are experienced as better tasting *even* when they were, in fact, cheap wines. What that says about collecting “free” digital content is that your collection is, in your own perception, of less value, less quality.

    Take software…. I think that buying a $350 software means you’ll do your best to get value from it — whereas you would only interact fleetingly with a “free” copy before moving on to something else.

  3. Steven Bradley Says:

    I hadn’t heard that about Barnes & Noble. Are you saying that if you own a Nook and have it inside the store you can read books on it for free? That would be a great idea on their part..

    Very true about DRM. It’s another knock against purchasing digital content.

    One thing about software is that in some ways it’s flipped and there’s less risk online. In the store you don’t get to take the product out of the package and once you do you can’t return it. Online many software makers will give you a free trial or lite version of the program so you can use it before buying it.

    You’re right about the price and the perceived value. It seems counter intuitive, but when it’s free we don’t place value on it so it’s easy to dispose. If I pay $350 for software I’m going to use it more even if it’s only to justify the price to myself.

  4. Ruud Says:

    That’s the idea — but they’re still working on it. Just like you can walk into a B&N, pick up a book (any book) and read it, they want you to be able to walk in with your Nook and start reading. Right now they already have exclusive in-store content. Pretty neat ideas albeit useless for me: we don’t have a B&N here :)

    Another thing that sets the Nook apart is the Lend Me feature: you can lend an ebook to someone for up to two weeks. They can read it on their device or using software. But that’s a publisher opt-in kind of thing. When I bought Stephen King’s “Under the Dome” I still had to register my wife’s device with the account as it isn’t a books you can lend.

  5. Michael Martin Says:

    Ruud,

    Very good article and points.

    Personally, I try to adjust my consumption to my immediate needs. EG: I find “recycled” CD’s from consignment stores. I find “recycled” books from used book stores. I rent or borrow movies from others.

    In all of these situations, I still consume the content (legally) yet the artist and initial creator of the content do not get compensated. This is not an excuse to support piracy, mind you, but to help illustrate that there is more of a “ripple effect” or downstream ecoonomy of media and content than the initial purchase and distribution of that content.

    This methodology allows me to fill in my back catalog at $2-$3 / CD and if there’s something out there that I really have to have, I’ll buy it electronically with the mindset of being able to archive and retrieve later (applies both to books, CDs, DVDs, etc) — and doing such with a clean conscience.

    Do I support the consumption of pirated content that is “first release”? — no. To your point, if we expect to get more media in the future, first releases need to be financially viable. It’s what happens in the echos of the years to come of what to do with “outdated” media / content which allows for other creative ways to get / consume content.

    BTW — anyone interested in old movies on LaserDisc?

    Michael

  6. Ruud Says:

    Pretty brilliant setup. Thanks for sharing, Michael

  7. A'ishah Hils Says:

    Hi! I found your site while searching posts on Evernote, but I just wanted to drop you a note to let you know I have enjoyed reading your other posts as well. I hope you’ll continue to post and wish you all the best.

    A’ishah.

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