April 29, 2011
Piracy: Turning Threats into Profit

At CinemaCon few weeks ago Chris Dodd, former US Senator and current head of the Motion Picture Association of America (MPAA), called movie theft "perhaps the single biggest threat we face as an industry." The film industry--from studio execs to ticket takers--employs millions, and their jobs are in fact dependent on people going into theaters and paying, sometimes exorbitantly, to see movies.

I love movies, and I don't want to see anyone lose a job, but I have a problem with Dodd's assertion that "movie theft" is the biggest threat to the movie industry. Perhaps the fact that people are choosing to illegally acquire and watch feature films in the comfort of their own homes is partially responsible for the decline in movie attendance, but even if it is, Dodd is missing the point. It's not movie theft that's the problem--it's the opportunities moviegoers have to watch content when, how, and where they want to. People have grown accustomed to getting all kinds of content on-demand, and they're probably not going to change their behavior on moral grounds. Instead of seeing piracy as a threat, we have to learn how to use what we know about file sharing to drive business innovation.

And this isn't just about movies. We all have heard the horror stories of how Napster and its ilk stole the profits from the recording industry. TV now is talking the same game, though with a different, ad supported business model. (See Craig Engler's excellent Boing Boing posts for an explanation of why TV isn't more available online.)

A quick trip down memory lane will remind us that pirated media content has been with us for a long time. (See: The advent of copyright laws, 8-track piracy, VHS piracy, and my personal favorite, "Don't Copy That Floppy." ). There's always been a market for pirated content because it's cheaper or more available, but pirated content hasn't thus far ruined the media industries.

So why is piracy such a big threat now? The plain fact is that digital distribution has made piracy way easier both domestically and internationally. It used to be hard to get pirated content. If you wanted a VHS bootleg of a film that was still in theaters, you'd have to work for it--you'd need to know who to ask, what to ask for, and how to ask. Now, to get a digital copy of a screener, you need only type the name of the film into Google, and figure out how to playback whatever comes up.

Piracy is a problem because it's gotten easier, but it's become very clear that suing people who share files is not the solution. It creates a lot of bad PR, and will no doubt cost more money than can be made back from settlements. Instead of hand-wringing, lawsuit filing, and Congress-baiting, media producers and distributors need to start looking at piracy as an opportunity to better understand their customers. I'm not the first to suggest that piracy indicates an unmet market need, but it bears repeating. People who illegally share and consume content are still consumers, and should be treated as such: listen to them, find out what they want, and give it to them. Who knows, maybe they'll even be willing to pay eventually.

Look for patterns in piracy, and think of it like social listening or CRM. Your customers are telling you something when they steal your content. Notably, they're telling you that they like what you're producing enough to pirate it. But they're also telling you how they like to get your content, when they want to consume it, and what format they want it in. Think about all the insights you can get about your content by getting to know your pirates. Here's how you can gain valuable business insights from people who illegally share your content:

  1. You can learn about the streaming/download preferences, and even the file types your pirates prefer by spidering and seeing what gets downloaded.
  2. Your pirates can tell you how much of your content they want. Track individual song files against entire albums. Track single TV episodes against entire series. Again, figure out what people want and why you aren't giving it to them.
  3. File sharing patterns are the first step to a good distribution window strategy. You may find people downloading your TV show every week right after it airs because it doesn't go up on Hulu for three days. Think about how grateful those people would be for a free next day stream. And think of all the money to be made running ads alongside that stream. Similarly, studios can use their "biggest threat" to get some data on how their VOD and day-and-date releases might perform, which is something studios really want to know..
  4. Tracking file sharing is also a great strategy for identifying "long tail" content. Got some old titles in your back catalog collecting dust? See if someone's digitized and shared them, and then do the same in a legitimate format with special features.

Taking on piracy as an opportunity will yield a lot of insight, but it's not going to give anyone a one-size-fits all solution. Different media content will see different patterns. In 2010, for example, Lost was the most pirated TV show even though it's available free streaming online. This could be explained by a large international fan base eager to see the final season before it airs in their home countries, or it could just be that fans of Lost wanted to keep their own high quality archives of the show. Media professor Abigail De Kosnik argues as much, asserting "Piracy is the Future of Television," because fans want high quality digital copies of the TV shows they love, and are only able to get those copies through torrent sites. Even when DVDs are released, they aren't in an easily archival or portable format.

Paying attention to pirates can give the media industries a wealth of rich, actionable data. Using this data, however, is going to require a shift in priorities from litigation to innovation. Treat this data as data rather than evidence, and use it to your advantage instead of tilting at windmills with lawsuits and moral entreaties. Business models need to reorient and focus on the consumer again if we ever hope to tackle the threat of piracy.


On May 31, 2011 at 11:42 AM, Tone said:

Couldn't agree more.

The consumer is never wrong, it's just that distributors have been faced with a challenge so they're whining about having to come up with a solution.
Here's an idea: why not find a way of getting an income from the consumer that utilizes piracy? It's the fastest, cheapest way of getting HQ content directly to the audience, it's a blessing that's been lynched.