On Piracy and the Need for Innovation

We are all familiar with the public appeals of the entertainment industries against piracy.  American entertainment industries often argue that they are suffering from a loss of needed revenue as a direct result of pirated content.  During the SOPA debate, for instance, the MPAA (Motion Picture Association of America) argued that “13% of American adults have watched illegal copies of movies or TV shows online, and it says the practice has cost media companies billions of dollars” (Schatz, 2012).  However, we must question whether these complaints refer to just the loss of the potential for increased profits or the loss of funding that is actually placing constraints on the creation of new productions.

To this end, HBO’s programming president Michael Lombardo has commented that he does not mind the incredibly high piracy rates of Game of Thrones episodes, and even considers it “a compliment” (Graziano, 2013).  This stance is unsurprising when one takes into account how lucrative the show still is:

In February, Game of Thrones season two was released to record-setting DVD sales, becoming the company’s biggest first-day home video release with sales of 241,000 units, an increase of 44% over season one, and sales of individual episodes reached 355,000, up 112% from season one (Graziano, 2013).

There is not much evidence supporting the view that the entertainment industry, whose key demographic is pirating the most yet still legally purchases the most content, is hurting due to piracy.  The American Assembly at Columbia University has data that “lines up with numerous other studies: The biggest music pirates are also the biggest spenders on recorded music” (karaganis, 2012).  Likewise, piracy isn’t anything new.  Michael Miller (2012), author of The Ultimate Digital Music Guide, points out that even before the advent of downloadable music, copying cassette tapes was fairly prominent.  Pirating does not constitute a new culture, nor is it a practice amongst free-riding users who will only care about content if it is free.  This is a long-standing business problem involving the target demographics that actively keep entertainment industries alive through legal consumption of their work.    

Entertainment industries must recognize how invested their target demographics are in the free culture ideas often associated with the internet.  Most importantly, these companies must realize that this does not have to be a bad thing.  To keep with Game of Thrones as an example, one of the co-creators of the show said that with even a minimal charge for each of the million-plus viewers who downloaded the recent season premiere illegally, the team behind the show could do more for the show:

In a recent interview with CNN’s Jake Tapper, ‘Game of Thrones’ co-creator David Benioff speculated about all the special effects he could buy if those who illegally pirated the show were paying 99 cents or so per download.

‘You do kind of think, God, if we just had a little bit of that, we could have had that extra scene with the dragons,’ he said (Isidore, 2013).

With this in mind, it is stunning to me that entertainment companies are so stuck on the idea of “policing” piracy instead of trying to figure out a business model that takes advantage of the mass amount of consumers who can have their content at their fingertips.  Most Game of Thrones fans would have no qualms over a fee of 99 cents per episode to have more dragon scenes.  The success of Kickstarter is also showing that online consumers are more than happy to support projects financially that directly appeal to them.

Overall, entertainment industries need to understand that there is the same potential for profit if they work with the current digital environment.  Frankly, it would almost automatically be a smarter business decision since these indistries will save a great deal of time and money that they are currently wasting trying to save an outdated revenue model.

Works Cited

Graziano, D. (2013, April 1).  HBO admits piracy is a “compliment” that doesn’t hurt sales.  Retrieved from http://bgr.com/2013/04/01/hbo-online-piracy-analysis-408449/.

Isidore, C. (2013, April 2).  Game of Thrones premiere sets piracy record.  Retrieved from http://money.cnn.com/2013/04/02/technology/game-of-thrones-piracy/index.html?hpt=hp_t2.

karaganis (2012, Oct. 15).  Where do music collections come from?  Retrieved from http://piracy.americanassembly.org/where-do-music-collections-come-from/.

Miller, M. (2012, Sept. 19).  Downloading pirated music: Pros and cons.  Retrieved from http://www.quepublishing.com/articles/article.aspx?p=1946755.  

Schatz, A. (2012, Jan. 18).  What is SOPA anyway? A guide to understanding the online piracy bill.  Retrieved from http://online.wsj.com/article/SB10001424052970203735304577167261853938938.html.

Ned Prutzer

Ned Prutzer is a former CCT Graduate Student.