Information Piracy and the Bottom Line

Posted on February 8, 2011 by John Bickerton

Internet piracy is a hot issue these days. As the amount of non-text media online grows, so does the amount of pirated media. But, just how much piracy is going on has largely remained a topic of speculation.

Until now.

Putting Hard Numbers to Online Piracy

A new study conducted by the British firm Envisional has shed new light on just how widespread the piracy problem is.

According to the study, in the United States alone, 17% of the content streaming, downloading, or otherwise being viewed via the internet is pirated material. That’s nearly one-fifth of all the content viewed by Americans.

To be clear, the study measured bandwidth usage. So, Envisional is not saying that 17% of the population in the United States is pirating copyrighted materials. However, it does show that a massive amount of piracy traffic is cutting into the bottom line of many companies in several industries.

The Magnitude of the Problem

If you own your own business, you can readily understand how devastating these numbers are. Imagine if, after paying for your employees’ benefits, covering workman’s comp insurance, paying business taxes, and shelling out for all the operating costs of your business, someone took 17% of your profits and walked out the door.

In fact, you don’t even have to own a business to understand how frustrating this situation is. If you’re a U.S. employee, you’re used to getting a pay check that’s missing a large chunk of the money you’ve worked hard to earn. As the old saying goes, “Who’s FICA and why is he getting all my money.”

Take another 17% off that and imagine how happy you would be.

The Good News

There is a bright side to the Envisional study. It shows a growing online market for a variety of new media. The interest is there, if we can find a way to control widespread piracy, it will open new doors for legitimate businesses to not only make money but provide additional jobs, which, in this economy, would be a welcome sight.

You can read the full Envisional report here.

Independent Filmmaker fights online piracy

Posted on December 20, 2010 by John Bickerton

I have noticed recently that, when one reads the comments from folks who participate in online piracy, their language is often filled with a kind of virtuous, take-from-the-rich Robin Hood-ism, where piracy is actually seen as the moral high-ground. Pirates are merely taking from overly rich global corporations that, in the case of music at least, are exploiting their artists anyway. The premise seems to be that piracy is good because it is fighting the good fight against fat, capitalist, power-brokers who are out there bilking the consumer.

Though this position is, I’m sure, both convenient and beneficial, it is also incorrect, as the following account of an independent filmmaker’s piracy travails will show.

Filmmaker Ellen Seidler and her partner poured $250,000 into their independent film, And Then Came Lola. The movie saw a good deal of success early on. Unfortunately, much of that success was achieved by content thieves.

Within 24 hours of the release of the DVD of “And Then Came Lola,” digital pirates had ripped the DVD and uploaded it to an internet distribution site where it was distributed for free download. Supported largely by AdSense ads, the site immediately began earning money off the movie.

Despite the fact that Google has a very strict policy against copyright infringement, they also apparently have an unwritten see no evil, hear no evil policy as Google’s AdSense ads are a recurring theme on sites that are pirating music and movies. Google claims that they cannot possibly root out every site that’s pirating copyrighted material and shut down their AdSense ads. Still, the frequency with which AdSense appears on sites completely dedicated to piracy, indicates that Google gives a cursory initial glance at a site before authorizing the site for AdSense and then never looks back.

And, Google isn’t the only advertiser that turns a blind eye to piracy issues. A number of major corporations (Walmart) continue to allow their ads to run on pirate sites.

So, Ellen decided to take matters into her own hands. She started filing take-down notices with every site she could find that was illegally distributing “And Then Came Lola.” Unfortunately, the task quickly became an overwhelming one.

Thousands of cyber lockers already offered her film for free download. Many of the sites have simply ignored her take-down requests. Several have complied with the take-down requests as they are afraid of having their entire site shut down (see End of 2010 sees crackdown on copyright infringement and online piracy), but many just don’t seem to care.

Add to this the fact that for every download link Ellen has disabled several more pop up. So, it seems that most of Ellen’s requests simply sail across the bow of pirate sites and fall harmlessly into the water.

In the end, Ellen (and all independent filmmakers) will need someone with some economic muscle to gather their navy and set sail against the digital pirates of the world. It doesn’t appear that will happen soon (read more on NPR or hear the story directly from Ellen), but independent filmmakers like Ellen Seidler have little choice other than to remain hopeful.

Goodbye Virgin Megastore – Music Industry in Crisis

Posted on April 28, 2009 by John Bickerton

Walking through the giant Virgin Mega-store on 14th St and Broadway in Manhattan today, I couldn’t help but feel sad about the rapid demise of the record industry. Unlike Walmart, which sells music essentially as a loss-leader and stocks only a very limited “hot” list, the Virgin Mega-stores, much like now-defunct Tower Records before them, stocked deep catalog with thousands of titles available in the store..

But now Virgin is closing this store as well as their flagship store in Times Square. Everything is on sale at 20% off yet I couldn’t buy anything. I don’t know if I just couldn’t get interested in music in the climate of the store or if I just became distracted. For me a trip to the record store was an experience akin to how some people experience going to church. I feel bad for music-loving kids that won’t know the experience of browsing a record store.

There is a lot of debate about what happened to the music industry. It seems pretty clear to me that file-sharing, which essentially devalued the recording into a “free” giveaway, killed the industry.

I know some would say good riddance – that labels are now justly paying for their gouging of consumers with over-priced CDs. Though I think there is some truth in this, I think the reaction, file-sharing on p2p networks, which essentially allows one to steal the product, is just as bad.

When I read posts by folks who favor or partake in file-sharing, their language often has a revolutionary tone - ”down with the oppressive corporations” – being the main rallying cry. It’s a convenient rationalization that covers the truth of what file-sharing really is.

Chris Purifoy of restoringmusic.com has posted a great article titled Defining the Music Industry Crisis that seeks to outline the problems facing the music industry and suggests some possible paths to restoring an equillibrium between the consumer’s rightful need for fair pricing and artists/labels need to work in a viable, healthy and yes, profit-making industry. Music will be better for it.

More on this subject? Read Chris Castle’s great blog Music, Technology, Policy.