Kcb102 week 10

Everybody knows that piracy is killing the

music and film industriesStephen Harrington

Today

•A rational/critical approach to piracy

•Critically examining the industry hyperbole

•Looking at the reality of content monetisation

•Focussing particularly on the music industry

Time to get honest...

Are YOU a pirate?

Are YOU a pirate?

•Chances are, you are, or have been at some point

•The vast majority of people in your age group download content illegally on a regular basis

•Don’t judge, or feel bad!

EVERYONE does it...

•In 2006: 35 million U.S. adults were engaged in online music sharing – PEW Research Centre

•The Pirate Bay attracts more daily internet users than the website for the New York Times. #96 in global Internet site rankings.

•53% respondents in one study said they downloaded TV shows on “a regular basis”

What the industry says:

•Piracy steals money directly from artists

•MPAA: lost revenue claims ranging from 6 to 21 Billion US$

•ACIG: costing (Australia) $900 million a year, 8000 jobs

•IFPI: for every music track sold legally online (e.g. via iTunes store), 20 are obtained illegally

"Piracy hurts economies everywhere movies are sold, displayed or broadcast. The worldwide motion picture industry, including foreign and domestic producers, distributors, theaters, video stores and pay-per-view operators lost $18.2 billion in 2005 as a result of piracy.

Film theft has an enormous impact on filmmakers everywhere from New Zealand to South Africa jeopardizing the creative process and robbing local economies of the benefits derived from having a healthy film industry."  - MPAA

What the industry says:

Industry campaigns

•“It’s a crime”!

•Piracy helps to fund terrorism

•Placing the industry in jeopardy

But...

Should we believe this?

Should we believe what vested interests tell us?

Reliability of claims:

• Industry statistics are unverified and unreliable

•Methodologically very weak

•"The $8 Billion iPod"

•Generated and promoted primarily for lobbying purposes

•“Self-serving hyperbole” (‘Piracy Stats Don’t Add Up’ – The Australian, 7/11/2006

•Figures actually based mostly on assumptions, guesswork and extrapolation…

Guesswork:

Assumptions

1 Downloaded Film = 1 lost box office ticket sale

1 Downloaded album = 1 lost album sale

Etc….

‘Cost’ (therefore ‘bad-ness’) of piracy based on this assumption.

Beyond assumptions

•It’s far more complicated than that.

•The relationship between downloading and purchasing behaviour is not yet clear, and cannot be explained through simple mathematics

•So, we should instead be looking to high quality, independent research…

What does (good) research tell us?

•That download stats are indeed faulty

•Piracy may have positive effects for other industry revenue streams

•That people still value the physical item of content (DVD/CD collection)

•That ‘pirates’ are not evil terrorists

What does (good) research tell us?

•Pirates are ‘ordinary’ people...

•Cuts against the image of pirate as “Folk Devil” (i.e. the moral panic (?) of downloader as terrorist)

• ...Who see it as very ‘soft’ crime

•Downloading did not simply ‘replace’ content purchasing

•Downloading often used as a ‘sampling’ tool, often leading to paid purchases

•Typically made people more focussed in their entertainment spending

What does (good) research tell us?

•People are already very ‘conscious’ of the illegality of their actions

•Many people downloaded things they already had purchased legally, mainly for convenience’s sake

•They will often have self-imposed limits on their downloading

•The "self-conscious criminal"...

What does (good) research tell us?

•That the music industry has an image problem

•Not a ‘big’ deal

•People generally think artists are doing OK

•Don’t mind if these people miss out on their cash…

What does (good) research tell us?

•People know there is a big different between a car and an electronic music file (rival vs. non-rival goods)

Conclusion:

What would a ‘healthy’ music industry look like?

The production and distribution of existing and new content tightly controlled by a few powerful media companies. Less recorded music, less consumption. Fewer artists, making more money?

Or…

A far more open (disintermediated) system, where new artists can more quickly and more directly connect with their audience. More recorded music, with a more enthusiastic listening culture. More artists, sharing a similar sized ‘pot’ of money?

•Piracy has reduced the volume/value of recorded music sales.

•However, have seen simultaneous explosion of live music over the last 10 years.

•Festivals

•Tours

•E.g. Madonna, Live Nation

• Is this a sign of a more ‘healthy’ music culture?

Conclusion:

Disintermediation:

•Who is losing out in this process?

•“Big Music” (i.e. the rich, and the powerful)

•What usually happens when the rich and the powerful start to lose money, power, and control?

Conclusion:

I am NOT saying piracy is OK.

I AM saying that we need to think more rationally about the impact of piracy...

… and take the industry’s ambit claims with a grain of salt

Conclusion: