Just What Should Be Done With Online Piracy?

Mark Mulligan[Posted by Mark Mulligan]

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The UK
creative industries have pulled together to lobby the government on the issue
of online piracy
  A coalition of TV
bosses and senior music and movie executives are pushing for tighter
enforcement of illegal downloading and for the creation of a body that would
oversee enforcement, owned by the creative industries but overseen by the
regulator Ofcom.  The coalition comprises
heavyweights such as Universal Music and Sony Pictures and  UK broadcasters Channel 4 and
Virgin Media.


Unsurprisingly the proposals have been subject to a fair
amount of flak in the tech press. but there are some ideas worthy of serious
consideration.  Regular readers will know
that my position on digital piracy encompasses the perspectives on both sides
of the argument.  This doesn’t mean that
I sit in the middle, indeed I am in the often uncomfortable position of being
able to annoy both sides!  But that
caveat aside, here are what I think are the four key dynamics that underpin
this issue:


  1. Illegal
    downloading of content is a bigger problem now than it ever was.  We’re nearly ten years after the launch
    of Napster.  That decade has seen
    tens of millions spent globally on legal action, enforcement and
    lobbying.  But more  consumers are downloading more content
    across more platforms and applications than ever before. Current
    enforcement may be restricting the size of the growth but it’s not doing
  2. The
    first generation of file sharers (Digital Natives if you like) are hitting
    the age at which they stop being time rich / cash poor and become cash
    rich / time poor.  This is the stage
    at which they should start becoming core media buyers.  Nothing suggests this is about to
    happen.  Their ‘free’ habits are too
    deeply ingrained.
  3. Most
    legal paid services online and on mobile are niche at best (e.g. iTunes)
    and failures in the main. 
  4. Physical
    media sales are declining in many sectors in may regions.  Piracy is far from the only contributing
    factor but it is a key one.


So doing nothing simply isn’t an option, even if most media
execs recognize that enforcement in itself will not eliminate digital
piracy.  Indeed it will never disappear
entirely but a realistic aim is to push it to the margins in the same way that
shoplifting is in the high street equation.  
High profile industry led action, coupled with robust legislation and
effective partnerships between content owners and telcos are all key
ingredients that will help combat the problem effectively. 

But the secret
is a comprehensive landscape of compelling legal alternatives that
cater for all consumer segments.  This
inherently means fighting free with free itself in order to engage younger,
typically file sharing, consumers.  The
music industry is already on this path (cf Spotify, We7) as are TV broadcasters
(cf Hulu, iPlayer) and so too many games providers.  But there is a lot more to be done, not least
in ensuring that the business models are sustainable, particularly during the
economic downturn.


The bottom line is that it doesn’t matter how big your stick
is unless you’ve got a nice fat juicy carrot dangling in front of the horse’s


re: Just What Should Be Done With Online Piracy?

Not a realistic aim at all and it's not fair to charge consumers for the costs of an industry having trouble keeping up with technological developments.The only way that's fair for all parties involved is collective licensing.

re: Just What Should Be Done With Online Piracy?

Interesting blog post here. I agree with your last paragraph, but I believe all 4 of your key dynamics are wrong. Let me explain:1. How do you substantiate that it is a bigger problem/ever increasing problem now than it ever was before? Beside the fact that you have no evidence to prove your point I think your focus is in the wrong direction. Napster wasn't not so much a problem with scofflaws trying to get free music as it was the market telling the labels what they wanted (digital a la cart music). Since then the labels have continued to sue and that is proving quite unpopular. If there is an ever growing problem it is more and more people are rejecting the litigation campaign and become advocates for change. As a result there is a growing hatred for the labels themselves and many who simply boycott their music altogether. Litigation will never be the answer.2. "Their ‘free’ habits are too deeply ingrained." nothing you suggests says that this isn't going to happen. Again you are giving me no substantial evidence to support your hypothesis. Even still I don't believe that our 'free' habits are too deeply ingrained, but, rather, it is simply the natural tendency of a digital market. In other words it isn't free because we want it to be, it is free because it is supposed to be. Again you give me no evidence to the contrary. There has been ample evidence reported that bittorrent users actually purchase more music than non-bittorent users. At the very least I think it is disingenuous to say that they don't ever purchase. If the object is of significant value to the person they will put money out.3. Again it is the market speaking here. iTunes actually does quite well, but now that they raised their prices (even though they called it a lowering of prices) sales have dropped. $.99 sounds cheap for a song, but when you figure out the true market forces for the digital bits it is far too expensive. The labels could have learned from allofmp3 about variable pricing/bit rate with multiple formats. Give me a reason to pay $.99 and I will.4. Where do you get your evidence to support that piracy is a major contributing factor to the decline of plastic disks? Have we thought that maybe the younger generation just isn't that interested in them? Why do you need physical media when you have iPods and various other digital players. Piracy has been a red herring since napster in the decline of physical media. Technology and people have evolved beyond the need. Give me real evidence that piracy directly (not indirectly or "because I want it to.") causes the decline in physical media.I also take issue with your solution to enact stricter laws. In the second to the last paragraph you defeat your own point. You say the issue will never go away, on that I totally agree with you, but you go on to say that strict enforcement and partnerships will combat the problem "effectively." Really? You don't just see encryption (vpn or tor) or maybe private bittorrent (like oneswarm) coming to play? You don't see that solution as just being an arms race? Or maybe people will resort to other ways altogether. The point is that it hasn't ever worked what makes you think that anything the legacy players will put into action will? And as I said earlier since napster now people are better informed and generally don't side with the stricter regime.However, your last paragraph is truly the only thing worth reading. Your "secret sauce" is exactly right. It is about leveraging what the market wants rather than litigating how you think the market should act. You are absolutely right. Now I personally do not use bittorrent for nefarious purposes, but I must admit that I have no reason to when it comes to tv viewing. Hulu is so easy that there is 0 need for me to wait days while a torrent seeds and downloads. If the RIAA labels had done something like this rather than acting the way they did during napster we probably wouldn't be having this conversation. Would priacy still happen? sure, but it wouldn't be a problem. It would be pushed "to the margins in the same way that shoplifting is." If the content owners woke up and started to realize what their customers want (rather than suing them or taking away what they want *ahem* boxee vs hulu) this whole conversation and all of the legislation or licensing they think they need would be moot.So I applaud you for realizing the "secret sauce." It is just quite unfortunate that it is still a secret. It doesn't need to be, and the RIAA and MPAA can still save their business by recognizing this and responding accordingly.

re: Just What Should Be Done With Online Piracy?

Thank you for your detailed and thoughtful response. As many of your points concern Forrester's research approach I wanted to provide a detailed response to explain how Forrester conducts its research and builds arguments.Forrester has been tracking file sharing and non-network piracy for many years. We have extensive data across the US and Europe that tracks the behaviour, as well as the attitudes of these consumers. We, and indeed I myself, have written many reports on the topic, using this proprietary data (my first data supported file sharing report was published in 2001).Data similarly underpins my assumptions in this post. My job as a research analyst is to build evidence supported arguments, not to indulge in unfounded conjecture. Forrester’s blog posts are a forum for communicating our thinking beyond our client base, into the broader market place. As such we typically do not present data in the manner in which we do in reports. However all of our arguments are based upon the same rigorous evidence based methodology, even if the evidence is not presented in the post.In addition to tracking file sharing, Forrester has done extensive work investigating the scale of the causal link between music piracy and the decline in recorded music revenues. We have conducted extensive empirical research utilizing a mix of supply and demand side evidence.Forrester firmly believes that file sharing is not a black and white issue and that not all file sharers are the same, nor that they should be treated the same. We have exhaustive evidence to demonstrate that many are high value music buyers, though the same data also shows that many are also freeloaders who have no willingness to pay for music, and that their attitudes to paying for music have been irrevocably shaped by file sharing.My position in this post, as I have argued in many Forrester reports, is that enforcement itself is not the solution. That the legitimate sector must fill the need vacuum, particularly because the rise of non-network sharing and anonymous networks will be nigh on impossible to police (for more details Forrester clients can see our 2007 report ‘Addressing the Non-Network Threat’)http://www.forrester.com/rb/Research/european_music_file_sharing/q/id/52057/t/2Copyright is in clear need of attention in the digital arena. Legislation drawn up in the analogue era intrinsically fails to address many of the issues that digital usage poses. But it is key that these revisions focus on providing a robust framework for supporting the creative industries’ efforts to develop vibrant digital businesses and not to simply act as a crutch for crumbling physical businesses.This is a period of rapid change and transition and mistakes will be made. But content cannot simply be free without content owners and creators getting paid. That is why it is pivotal that lessons are learned from file sharing, but that it is ultimately shunted into the periphery.If you like to learn more about Forrester’s extensive data and research on music and video piracy then please contact us via one of the methods shown here: http://www.forrester.comYou can also read more of my posts about file sharing on my other bloghttp://musicindustryblog.wordpress.com/

re: Just What Should Be Done With Online Piracy?

I do appreciate your attempt to tow the line and represent both sides. Of course I will look into Forrester's methodology in more detail when I have time.To be sure there are certainly free-loaders, but I am not entirely convinced that those free-loaders ever would have been paying customers if given no other option. I listen to quite a bit of music for free (via Myspace and other legal options). In am often free-loading, but don't always buy, in fact typically if I do buy it is because I can't live without that song. Before myspace people free-loaded via the radio or friends. The point is that free-loaders always existed and will always. I don't think they do as much harm as people want to think.I also agree that current laws cannot begin to encompass a digital age. I appreciate what you said here about what new laws should look like, "supporting the creative industries’ efforts to develop vibrant digital businesses and not to simply act as a crutch for crumbling physical businesses." May main concern is that these laws cannot forget the consumer. While I appreciate protecting creators rights, the people fighting for these laws are not the content creators (as in artists or musicians). As such they seem only concerned with their legacy, failed, business model and much to the peril of the consumer. The consumer finds rights taken away and personal well being threatened to protect said industry. New laws MUST protect the consumer and codify fair use."This is a period of rapid change and transition and mistakes will be made. But content cannot simply be free without content owners and creators getting paid. " No one says that content owners or creators won't get paid...see you are missing the point here. Free is only part of the equation. There are so many more opportunities out there to get paid rather than forcing the payment of bits and bytes. Do you know how many artists I have found because of streaming services or pandora and what not? If I had to pay for all of the "free" music I have listened to...well there would be a lot of artists without my money. The point is that as I find them and grow to like them they start to get more of my money for other reasons (like the record, can't pirate that, or this Thursday I am heading to a concert, can't pirate that). By throwing up a paywall in order to find a band creates a barrier. Indeed many bands both big and small have found great success in giving away music for free. It typically results in more fans which gets more money.Let me give you a personal example. I was not a Radiohead fan until I downloaded their latest album for free from their website. Of course you could say that I am freeloading and yes I was, but before that album I wasn't listening to them at all. I never would have been a paying customer. Now they are one of my favorite bands as a result of free. When someone talks about free it is just the beginning. No one is saying that content creators or owners aren't going to get paid. Money will be made it just won't work with the old ways.FYI I was just reading (http://arstechnica.com/tech-policy/news/2009/05/uk-isps-refuse-to-play-internet-copyright-cops.ars) There is a quote from the RIAA mentioning that P2P has flatlined in growth (basically refuting your point that it is an ever growing problem of pandemic proportions) and at the same time legal purchases are increasing.

re: Just What Should Be Done With Online Piracy?

You will never stop us.

re: Just What Should Be Done With Online Piracy?

Good blog. Nice smart arsy comments as well.