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Anime Site Treats Piracy as Market Failure (arstechnica.com)
106 points by jcr on Apr 27, 2011 | hide | past | web | favorite | 39 comments

I get really angry with this site. I signed up and paid for a premium membership to watch a TV series the same day it aired in Japan each week. When the series finished I cancelled my membership. Ever since then, I get almost twice daily "private messages" from fake people, which generate e-mails to me asking me to log in and read them. When I log in and open the PM, it's an ad from Crunchyroll offering me a discount on upgrading my account again.

I e-mailed customer service to let them know I was unhappy with the constant and deceptive advertising through PMs from fake personas and they essentially told me to bugger off. "Minor things like this" (being upset over deceptive emails) are just "an excuse to validate pirating anime"... they write this to someone who's never pirated anime and has paid them to watch it legally.

Personally, I would post the entire conversation between you and them somewhere (pastebin, blog, etc) and try and point a lot of publicity towards it. Especially now that they are getting some good press from Arstechnica, you could reach critical mass with disseminating that information. Perhaps you could even point the author of that article at your information, which may even get an update to that article.

I often wonder to what extent these kind of sites understand that there are many people who will see this behaviour and think "Well, if that's what happens when I pay, I might as well just pirate".

It's undeniable that there are plenty of people who pirate because it's free, and because they can. But if legal, practical alternatives are to survive, even if it's only as they begin, the key shouldn't be profitability, it should be making sure customers enjoy the experience.

Of course, that then leads to Hulu's problem - trying to introduce a paid structure too much too soon.

I found that I had the same problem. My solution was quite simple; Crunchyroll has the distinct honor of being the second domain to be wildcard forwarded straight to the trash folder.

Hm, mine were all from one person (the admin)

Certainly annoying and spammy to send 10 over the course of 10 days before I was motivated enough to click unsubscribe.

Strange, I did the same and didn't get these messages.

I feel obliged to say that I've not had spammy emails from crunchyroll, either. Their "notifications" are quite spammy, however.

That article skips over some of the actual details of the way the site was founded, like how the founders uploaded US DVD rips/pirated content to the site themselves, or the way they started charging for accounts _before_ removing that content, or the way all the site announcements were written in textspeak to make them look like teenagers.

I guess that's called bootstrapping.

Beyond pirating the content, they also went out of their way to steal fan translations. They eventually hired their own translators, but not before making boatloads of money off selling other peoples' work.

I don't see selling pirated works as any worse than creating the pirated work. There is no honor among thieves.

It's legally dubious as to whether or not translating someone else's text is piracy.

But that's irrelevant: this is supposed to be a legitimate business. Legitimate businesses aren't supposed to build a business model around selling others' works without permission.

Unless you're claiming that Crunchy are just as equally "thieves" as the pirates they supposedly work against, in which case I agree.

Under US law copyright owners are given the exclusive right to create derivative works[1] and translations are one of the things explicitly defined as a derivative work[2].

The Berne Convention also guarantees that authors have the exclusive right to make translations. [3]

Dubious indeed.

[1] http://www.copyright.gov/title17/92chap1.html#106

[2] http://www.copyright.gov/title17/92chap1.html#derivative

[3] http://www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html#...

and translations are one of the things explicitly defined as a derivative work

If this was true, Google Translate's "translate a website" feature would have been sued into nonexistence years ago. In fact, it probably would have never been created: its predecessors, like Babelfish, would have died first.

Translation is format-shifting. It is no more illegal for me to translate a movie from German to English than it is to convert it from a DOC to a PDF.

What would be illegal is if I paid for the movie, translated it, and then distributed it for free. The mere fact that it's a derivative work does not make it any more "mine" than the original, and thus it's just as much piracy as me distributing the original, untranslated version. Similarly, converting the movie from an iTunes MP4 to an MKV will not make it any more or less legal for me to redistribute it.

The legally dubious part is distributing just the translated script (i.e. subtitles), but not the movie itself. A reasonable fair use case could be made for this, though whether it would hold up in court likely depends on how much money each side spends on lawyers. Most likely, nobody will ever even bring such a thing to court, as there's no profit motive for doing so.

I'd argue it's ethically worse

On one hand, you have someone who loves the content (but who would not buy it) and so pirates it - this is "unrealized" revenue for content owners.

On the other hand, you have a company that makes money and pays no royalties - this is outright theft from the content owners.

Curiously, mostly fan-subbers are very ethical about that.

Those subbers only translate and distribute stuff that isn't licensed outside of Japan, so the "would not buy it" is, in fact, "can't buy it because it's not for sale and even if it were it would be in a foreign language".

I recall watching some fansubs a while back, and seeing the disclaimer say something like:

"Not for sale or rent. Especially not to be used to raise a lot of venture capital to stream online to try to make boatloads of money."

Crunchyroll has gone a long way towards providing a legitimate avenue for fans to get access to anime and I hope things can only get better with time.

That's not to say there aren't any problems that need to be ironed out though. Off of the top of my head, my two biggest complaints with CR stem from the consistency of their subtitles, which can range from decent to atrocious, and the lack of availability of titles that I had been looking forward to watching. Obviously, they won't be able to get their hands on every show that's out there since they're competing with the likes of Funimation, but it'd be nice if they could wrap their arms around a greater percentage of titles each season.

It'd also help too if the Japanese studios would try to embrace the internet rather than constantly resisting against it. Sometimes, I get the feeling that they're so stuck in the PPV television rut and aren't confident enough to start releasing episodes online.

> Piracy may never go away, but Crunchyroll is out to prove that "competing with free" is possible by treating piracy like a business problem.

> the site has grown into profitability, trying to take away every advantage that piracy has—including price.

I think the above two lines are very telling. It's very interesting and very encouraging to see how they are competing against a business problem like infringing sharing by providing free versions supported by advertisements as well as paid versions without advertising. It's essentially similar to many of the freemium models being used but is being applied to media. I wonder if something like this would work with books?

Amazon is trying this (poorly IMO) with the Kindle by offering a slightly subsidized model that will show ads at certain points. I say poorly though, because the subsidized price isn't much lees than the normal price, at least making it seem pointless to me to trade $30 now for ads for the rest of the life of the device...

Nice to see a concrete example of someone treating piracy as a market failure. The Michael Geist article [1] about it was very informative but light on actual examples.

[1] http://www.thestar.com/business/article/956637--geist-canadi...

Actually, it doesn't quite treat it as a 'market failure'. It does indeed take it seriously and beat it at part of its own game (releasing shows when people want them) but it still can't compete on price.

And I think that doesn't matter. Give people easy, legal access to the shows at a decent price and they'll pay. (Well, some won't, but some never will.) That's the best you can hope for.

I've always said this regarding piracy - the reason many people pirate is that it is faster, easier and cheaper than paying for content. There is no system by which I can pay money to watch TV shows as soon as they are done airing in the USA, I either have to wait for the DVDs, hope the show airs here too, or pirate it. To regurgitate a popular TV quote: Shut up and take my money!

Those services that do exist are all inferior to piracy. LoveFilm streaming does not work well on my PC, and has a poor selection on the PS3 (not to mention that if any torrent website was down as long as PSN has been, someone would have created a new one by now).

Hopefully one day systems will exist whereby I can play any song and watch any film or tv episode from my home via the internet in exchange for cash. I'd probably pay £100 a month for that (Spotify is a bargain at £10 a month) - but I can't. On the TV side of things, there is no existing service that even comes close to piracy + XBMC.

Hopefully one day systems will exist whereby I can play any song and watch any film or tv episode from my home via the internet in exchange for cash.

I hope so, too, and I'm in the US.

I'd probably pay £100 a month for that

That's a bit steeper than I'd pay, but I'm not not a heavy consumer of content (and, basically, never consume individual[1] songs). I might still pay that if it were for my entire household and not per device, since I could offer it to renters as a benefit.

I would even go so far as to pay à la carte for the content, but only if it were a reasonable "rental" price. The current Amazon prices are too steep, especially since the selection is so limited and the interface is separate from Netflix's service. I'm not, however, willing to "buy" a permanent license, especially to a TV show.

[1] As opposed to radio-style where someone else picks which songs are played.

"I've always said this regarding piracy - the reason many people pirate is that it is faster, easier and cheaper than paying for content."

It's the beginning of the entitlement generation. People aren't getting what they want, so they take it. Unless the content is $0 and you can get it whenever you want, the vast majority of people pirating will not stop.

I've haven't seen the end of the excuses. There are plenty of legal services for music (trying for free and buying for cheap). Yet, piracy is stronger than ever. What makes you think it will be any different for movies?

I also think about piracy when I start a new business idea. I no longer release any commercial apps..only commercial services.

I see two troublesome arguments here that are often used by the media industries:

1. "It's those @$#% kids!" In other words, promulgating and perpetuating an unnecessary generational divide. The "entitlement generation" will soon enough be running the show, so the incumbents are only doing humanity a disservice by taking a scorched-earth-like policy instead of figuring out how to run a sustainable business that satisfies the demands of the technology-enabled consumer.

2. "Pirates gonna pirate." There is no "pirate" demographic, no one reason why people copy instead of buying. Maybe they've watched the first season of a show on Hulu, but the later seasons are unavailable. Maybe they'll pay for content or watch ads, but not both at the same time (Hulu). Maybe they missed an episode of their favorite show and don't want to wait 30 days to a year for it to show up on Hulu/Netflix/DVD.

Assuming that all pirates are of equally dubious moral character is defeatist, elitist, and self-damaging. It's defeatist and self-damaging because it's ignoring the potential to expand one's market to reach some of the pirates. Each incremental step out of the inglorious dark ages of big media and into the digital light will capture another n% of the currently-pirate market. It's elitist because it regards having a different moral code as inferior, when in reality, it's just different.

This addresses your second-to-last paragraph. Pandora is a pain because it's deliberately crippled. If you get a mix you don't like, you can only downvote or skip a few songs before you're forced to listen to whatever they play, and that restriction applies across all of your stations. In other cases, it's a deficiency of marketing/awareness/trust, user interface, selection, ISP bandwidth/throttling, or pricing.

Finally, give it time. The typical college graduate has probably "acquired" more music over the past 7 years of their lives than they could ever have hoped to pay for. Some of those will eventually convert to paying customers as they begin earning real money, and their increased access to creative content during school may have inspired them to greater societal contributions, from which all of us can benefit.

> Unless the content is $0 and you can get it whenever you want

You're making a straw man argument, I made it very clear that I am willing to pay, and I'm not the only one.

> Yet, piracy is stronger than ever.

You know what else is stronger than ever? Online music sales, and record company profits. The easier method of iTunes is killing the old model.

> What makes you think it will be any different for movies?

7% of US citizens now subscribe to Netflix, making it bigger than any single cable company. I would say this is good evidence that people are willing to pay for legal, convenient access to content.

Competing by convenience can buy you a lot of price flexibility. The less mainstream the content, the more challenging piracy becomes. The iTunes model was built with this in mind: make it absurdly easy to buy any song, make the price reasonable enough to pay for the convenience. It's a smart way to deal with content.

Actually, they are competing on price -- they offer advertisement supported downloads for free 1 week after initial release and TV airing. This does mean they are not competing on timeliness with the free/ad version, but it's a reasonable trade-off.

Downloads, or just streams?

For a more in depth look at how piracy is a market failure, see the fantastic Media Piracy in Emerging Economies study: http://piracy.ssrc.org/

Silly that the anime studios have not learned anything from the recording industry's last 10+ years battle with internet piracy and the success of online music stores. But I suppose it is difficult to accept that your business strategy, which has worked for many years, is now no longer working.

Actually America is a secondary market for anime — it's only recently that the Japanese have started selling here directly (in fact companies like FUNi are licensing anime not producing it). Most anime is broadcast TV so they make their real money from advertising and the marketing of merchandise, it's only in America where the DVDs were a primary point of consumption. So they have different issues (and blind spots) than the recorded music biz.

This is a key point. Part of the reason they have such a piracy problem with anime is until very recently only a handful of series were released in the US. For most titles a fansub was your only option if you wanted to watch at all.

Well in the old days we traded VHS tapes that weren't even subbed! ; )

Heh. I remember watching the laserdisk version of Laputa at a friend's house circa 1990. Took me almost ten years to secure my own copy.

I don't think the studios treat piracy anything like the recording industry does. Many studios turn a blind eye to, or even openly support, fansubbing -- pirating their series with fan-written subtitles. As another commenter said, countries where they're not airing the series on TV are secondary markets, and many studios seem very aware that people in those markets getting access to their material even in illegal ways is a good way to build up enough demand to actually license the series in that country. Piracy builds demand for international anime DVD sales and those that sell well sometimes end up licensed by Cartoon Network, Hulu, etc.

The iTunes Store works the same way. In general, if you offer content on reasonable terms, people will pay for it, otherwise they will pirate it.

The other reason the iTunes Store works is ease and speed. No matter how good your connection is, it's really hard to beat a one-click preview (which torrents don't offer), one-click purchase, and having the entire album in your iTunes library in less than a minute.

I wonder if Netflix is going to buy them to create an anime division.

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