There'll be a certain proportion of piracy:payers where this is no longer true. If everyone took TorrentFreak's position on piracy, Game of Thrones would make no money no matter how popular it was. If nobody pirated, Game of Thrones would be less popular. So it sits nicely at the current position.
But this does not help if you don't have the 'cultural buzz' working in your favor, or if there are too many pirates. It's a mistake to think people adapting to the economic field means the economic field is good. DRM platforms like Steam are adaptations that do not please the sort of people who read TorrentFreak, but are necessary because of the extraordinary piracy rate of video games (famously, over 90% for World of Goo).
There does not exist a single peer-reviewed study that shows a correlation between increased sales and DRM systems.
World of Goo was one of the first indy games to reach large reception of users. Sadly, it takes time before people are willing to spend money on new concepts. Same effect can be seen in cult movies. Most cult movies do not earn a bunch of money. They barely even get copied at first. Blade Runner did not have an issue with piracy, and they still got crap in revenues. I would not be surprised if 90% of the people who have seen Blade Runner did not do so at a cinema. I would guess most people has seen it on a copied tape, copied by someone who thought "Ooo, what is this? this is nice. Let me share that with a friend".
Had World of Goo been released today, they would had much better sale numbers together with current piracy numbers. World of Goo of the past has shown that indy games a worth the risk of buying a copy and testing it out (if one would ignore the paradox).
It should also be mentioned that creator of Psychonauts got more (or close to it) money from kickstarter, than from initial sales. Ie, people were more willing to bet money on something for little or no return, than they were willing to bet money on the original game itself before it was known to be good. Do anyone actually think that DRM would have made the original Psychonauts a massive revenue source?
I'm not aware of a peer-reviewed study saying the other way, either. This is such a weird thing to say. Do you only believe information that comes from peer-reviewed studies?
Many indie developers who might be sympathetic to the anti-DRM cause still choose DRM platforms, because they perceive it makes money for them. Or maybe they choose to make webapp type software, which conveniently avoids the issue while being the most unfree method of all.
Since they are closest to the market, they posses what economists call 'local knowledge'. Some have released numbers to back up their claims, which is more than you've done. (Also, how many people do you think had a VHS copier when Blade Runner came out? 0% of people I knew growing up could copy VHS tapes.) Anyway, I think it is correct to look at market behavior if you want to talk about market behavior, not what bloggers say when they aim to maximize pageviews.
This present a sort of problem in that there is still a need for computers which can run software that wasn't bought through some particular channel such as an app store, therefor there are still computers that can run pirate content.
I have a bunch of games on Steam, I have no idea which ones use DRM but I'd wager strongly that every single one of them is available DRM-free on a torrent website.
Speaking personally the main incentive not to pirate games is the Steam sales and humble bundles which give me games so cheap that I'd really feel like a bit of an idiot jumping through whatever hoops in order to get the games for free.
DRM costs money (dev time, QA, etc.) and may hurt legit customers when done wrong (all too frequent). Rightfully, the onus should be on proving it to be worth the costs, but people add it without even testing the effects.
Why should the onus be on the party making the DRM? It is their product and their copyright, why should they have to prove it is effective?
I don't really think you want them to fail, so I can't see why you would argue that they should continue wasting money?
When people give out best practices, or gives out necessities of the market based on nothing but opinion and theory, it become pure myth and superstition. Sysadmin work which is my line of work, has a bunch of myths. Some people still making firewall rules against win95 ping of deaths, even if everyone in the company is running around with this years gadgets.
But you did ask if I have any evidence of my own, and here I relied on common sense and observations. DRM cost money, in both time, effort and support. Additional, I looked at the indy crowd of movie makes which has only has weak/no DRM, and the indy crowd of games which has all from strong to no DRM. What I can see, there are no major difference what so ever, and both groups often suffer from low revenues in products that later get critical acclaimed as a master piece.
But Im sorry, no, I do not have any research paper to support that observation. That would be the second step, through one can glimpse some truth by checking if anyone are disagreeing with it. Also, since DRM cost money, it should naturally require a higher burden of evidence to become best practice or necessity in the industry.
Minor note about Blade runner: It took several years before the movie reached a cult status. By the time it did, people started to have dual VHS players at home or could call some dude in the campus to do a copy.
Each three of those are what I call common sense, ie, we know them all to be true. Those are also the only assumptions I included in my "I relied on common sense and observations". The rest is observations, which is the first step in a honest and scientific discussion about the effect of DRM. First you do observations, second you collect evidence, third you do analysis and last you create theory. Only once you done each step and reached theory should economic decision be made in the case of including DRM to increase revenue. Before that, only the cost of DRM is know and everything else is speculations. Those speculations has both those that say its great and those that say its crap and there is nothing in the world that will convince them beyond a scientific approach.
The same game released with and without DRM? Different games with and without DRM?
Then I would collect data on piracy rate vs initial buy rate vs long tail and find product types that share those. Then, with all that data, one can start looking into DRM and individual products from groups with shared economic traits but which differ primarily on the DRM question. With a decent sample size, some kind of answer should pop out.
That would be my guess of a simplified study. Statisticians and economics has surely more to say on this and where the corner cases are. There might also be smaller studies to do if one accept some early assumptions.
How do you tell whether the sales delta is driven by DRM or a much, much higher quality artist?
If someone is out there on HN with some ideas, I'd love to hear them, not for this problem (I don't really care), but for other problems that may be difficult to solve later on.
>How do you tell whether the sales delta is driven by DRM or a much, much higher quality artist?
I'm not going to weigh in on DRM vs. non DRM, but you'd get around that problem by explicit randomization. If you have enough observations then differences in quality, etc., literally average out. If you have more information up front you can randomize conditional on the observed characteristics, which reduces the number of observations you need.
Although I'm no statistician either, so whatever.
I agree that the existing data aren't much like the random experiment I was talking about.
There are really just massive statistical hurdles to overcome with this type of analysis.
You could prove that indie games with strict DRM will perform differently than indie games without strict DRM, but extrapolating that to feature, blockbuster games is problematic.
One year later I bought two licenses in Steam.
I also have heard lots of similar anecdotes, I would be very interested in an study about this phenomena.
With music, discovery is a major problem, and pirating allows for music to be heard by a larger audience. Some of those people become fans and ultimately buy tickets to concerts (artists accrete more money this way, incidentally)
If you have 200 game developers slaving away to push out a to push out a 50-EUR game, pirating and then a year later buying it at a 10-EUR sale will not do them as much good.
Buzz is important, and products like games are heavily buzz-dependent. Piracy exposes more people to your product and generates that buzz.
However, while hardware manufacturers give out latest hardware to reviewers in order to generate buzz, they don't just hand out alienware laptops in the local mall. I think piracy needs to be tedious, unreliable and a compromise to the genuine game for it to be effective.
Indie game devs have an advantage here. Indies can release honest demos of their games because they're not necessarily concerned with polishing the turd for E3 or a console release - they're much more interested in polishing the final result and having people buy their game because it is good. Indie game devs can also go back to the shareware model (not that they have to, but they can) which no modern game studio would touch. Indies have that flexibility because they're indie.
I would gladly pay for my favorite shows, but I'm not allowed to. And when they finally do make it to my artificially enforced zone of the world, it'll be 1 or 2 years later, and chances are I'll be forced to watch them with the atrocious dubbing that is mandatory in my corner of the world, and the only option would be to stream the files packed to the max full of DRM.
So, yeah, I'm looking forward to the day when torrenting becomes obsolete but as long as the content industry has their heads in their asses that won't happen. They simply prefer to lose money. I have my wallet right here, waving bank notes around, but they won't take them. From this one can only deduce that they're either pathologically stupid or that power is much more important to them than money.
For the owners and shareholders of TV networks, solutions tend to fall in one of two mutally exclusive groups:
Option #1: Take advantage of all these people who say they'll pay. In the short term, you'll probably lose a lot of money as you cannibalise your existing business model. But it does give you a moderate chance of long term survival.
Option #2: Keep the status quo. In the short term, you'll continue to be mildly profitable, though your long term survival is unlikely.
Since markets reward short-term behaviour, the first option is career suicide for any CEO. While the second won't mark them out as a visionary, it will guarantee them a large salary. What would you choose?
Currently, TV Company X makes a bunch of shows and airs them in the US. Some of them make huge amounts of money, some fail miserably, most are somewhere inbetween. You make money in the US either by selling your content to networks, or putting it on your own network. The networks make money out of selling subscriptions (B2C) and advertising (B2B).
Internationally, you sell your content to networks in other countries. These will be whole bundles of content - let's say 5 shows, each with 3 series. This is a purely B2B business model, with guaranteed future income. Once the local networks have licensed the content from the producer, they promote it and sell their own advertising and subscriptions.
It seems that you're suggesting they replace that international model with one where they sell content online direct to consumers. The producer now has to take over all the marketing of the show, and sell its own advertising. They will also come up against local competition who are now making their own shows. And they've got to build websites with payment systems, and offer customer service. Oh, and deal with local regulators.
It will take a very long time to set up that new business model, and while they're doing it, they've lost all the guaranteed income of just licensing it to local networks. Their share price tanks as a result, and they have to deal with Carl Icahn launching a takeover bid.
Then there's the evidence that the number of people who will pay to consume large amounts of content online, while still accepting advertising, is still relatively small internationally, because not everyone has the technical capability or inclination to do it.
That is why it loses a huge amount of money in the short term. TV producers can't say 'iTunes or whatever'. They have to hire departments of people to build cashflow forecasts and business models that they can justify to shareholders. And if the CEO of TV Company X turns out to be wrong, they've lost their job with the $10M per year salary.
In the long run, it probably will be the case that TV will be distributed like you say - aired through the internet, pay-to-play. But if it's not happening quickly enough for you, then just download the torrents. It's more profitable for TV Network X to ignore the money you're offering than to change their entire business model so they can accept them.
That model has been a disaster (for music companies) as they take all the risk for the failures, while Apple gets a relatively large proportion of revenue from the winners.
I was merely trying to show how the market landscape is not the rosy "piracy is always good" situation TorrentFreak tends to suggest it is.
I don't get where this personal attack is coming from or why what I said prompts passive aggression, but I'll concede the point that I'm frustrated with an industry that prefers to whine about piracy instead of just selling stuff to people. And for what it's worth they don't make those shows, they just market them. Or, you know, fail to market them.
Now we've crossed into fantasyland, of stuff you've just made up because it flatters your viewpoint.
Film studios provide enormous amounts of resources for the making of movies. Furthermore, it's common for movies to be part-owned or whole-owned by people involved in their production. It's not like the music industry. Top producers, backed by lots of monetary and social capital, make these shows happen. Often writers and directors are also producers. Sometimes people get screwed (famously Peter Jackson) but this seems to happen to few makers with critical jobs, and you'll note he didn't get fooled again.
Of course it is not the case that assorted writers and actors and artists can get together and make a hit show with no expert knowledge. TV shows are very, very hard to make. We're not talking about an exploited proletariat of TV show makers here.
Film director here. I'd recommend spending some time Googling "Hollywood accounting".
It's EXTREMELY common for directors to get screwed out of profit deals on films - so much so that the default advice to new film directors is "assume that you'll never see any money from your points on the deal, no matter how profitable the film is."
Peter Jackson's case is not unusual because he was screwed, it's unusual because he fought so hard and so loudly.
I also dislike the implicit assumption that the category of "people who make movies and TV" is "directors". Some directors take a major role in production. Others are tools in a chain, albiet important and highly paid ones. There are lot of people who bring about movies and TV that aren't directors. Vince Gilligan rarely directs, for example.
It's also discrimination by discrimination. I'm not in the US, even with ethics and wealth I do not have the option of buying HBO to watch Game of Thrones. My "legal" options are to 1. wait a year for the DVD box sets or 2. wait two years for a shitty dub
For some reason I can't quite put my finger on, all of these options not only suck hefty amount of balls but do so even more when the communities I interact with and share an interest in watch the episodes at or around release (also note, TV series communities don't maintain "spoiler alerts" for 2+ years after episode diffusion).
that takes the cost of HBO and quadruples it if not more. I just received my legal copies of season two, it was 34.99 from Amazon. HBO could have had that money many months earlier if they would simply sell the show via iTunes or similar.
I would really quite gladly pay to get it at the same time as the US. They've lost a customer, but apparently they don't care.
Second, Steam is an example of a DRM-capable platform that gets things right. Steam reduces piracy because Valve made it so easy to part with your money. They also release their games internationally ASAP. People who object to the treatment of potential customers by media companies praise Steam.
Finally, your use of the WoG piracy rate is disingenuous; as I recall, the developers released those numbers along with the sentiment that it was nothing to worry about.
Sure? I actually did buy the books and am going to buy the DVD-collections, just because I have seen it/read it, thanks to piracy. Somehow win-win situation.
PS: sorry for the naive style, haven' t mastered the sharky way of saying things (yet)
This delay actually impacts on the UK broadcaster as they pay for the rights to show a programme but by the time it is shown many of their target audience will have downloaded the episodes. Same thing applies to movies. Works in reverse too with things like Doctor Who.
There really doesnt appear to be a good reason for these delays between national markets other than "that is how it has always been done".
If you're allowed to. Being non-US my money isn't good enough, apparently.
From a U.S. perspective (mine): Increasingly (well, it's a long-standing practice, now), film and television production companies move production abroad to take advantage of lower production costs (labor, et al.).
At the same time, they insist that I not source my viewing material from abroad -- that I not take advantage of lower foreign costs for the distributed media.
Well, this is a loud and clear fail, from my perspective. What gives them the right to access such advantages while denying the same to me? And... by moving their production abroad, they reduce the work and -- supply and demand -- wage levels available in this country.
If they want to "import" cheaper labor, etc. into their production costs, I should be able to "import" the cheaper foreign distribution product.
Otherwise... I'm in the position of an increasing number in the U.S. who have simply decided, "fuck them".
It's amazing how "free traders" suddenly find all sorts of arguments to the contrary, when free trade threatens to cut into their bottom line. Mostly, they're just another set of hypocrites. Dangerous ones, from my U.S. perspective, because of the way they are increasingly screwing us over, economically.
I don't begrudge the rest of the world advancement. I begrudge the self-serving in my own society who sell out a portion of their own population for their own personal benefit. I -- and I think we all, here in the U.S. -- could do with a few less knicknacks in return for a more healthy level of social equity including particularly e.g. access to healthcare, good schools, and livable wages at reasonable quantities of work hours.
And maybe other societies could do with a bit less brain drain and a bit more balanced social development. Less of us propping up foreign dictators past their and their regimes' natural lifespans.
I guess I've gone and gotten all non-technical on HN, here. But... our technical decisions, such as production sourcing, are directly involved in this.
When companies can move their production around, but people stay stuck in place (and as often as not, under repressive regimes), you do not have "free trade".
The labor portion of the equation is not free.
P.S. Sorry, that may have ended up a bit (or more) far afield from the original discussion.
(Continuing with the perspective) Even at the "inflated" U.S. prices I see, I tend to purchase materials I find good and where I am not overly offended at the funding model (as one example, I've been a long-time supporter of O'Reilly press and have not gone out pirating books). But I'm damned well not going to be preached at by these hypocrites, any longer, nor by their hired guns who now think (I hope, still not entirely correctly) that they run this country.
I think the U.S. could do with an overall rousing, depression-lifting round of "fuck them".
I pay for my TV, but I'm a cable cutter. I pay for Netflix and Hulu Plus. I pay for particular series on iTunes that I cannot get anywhere else. I will not under any circumstances go back to cable or dish. Therefore I will not ever be paying for HBO. But I would purchase an HBO Go subscription in a heartbeat if I had the option. I have to think I represent a fairly significant number of people in the same position.
Right now they have a gigantic sales force by using the sales staff of all the cable and satellite companies, plus they get to punt on all billing and customer support to the same partner companies. If they were to start selling straight to the customer, hbo would need to staff up their own billing/support, but more importantly, they bite the hand that feeds them. Cable companies wouldn't be pushing nearly as hard to sign people up for HBO if it wasn't going to lock customers in to cable. You'd need a -lot- of sign ups to make up for cable companies switching to promoting the heck out of a different premium channel.
I think the smart move is to milk the gravy train of cable partnerships for a few more years until cable subscriptions fall off more. Then switch to dealing with customers directly. But that's a huge transition to staff up a company and start dealing with end users, and it isn't the risk-free cost-free no brainer that we assume it is when we say HBO should just take our money.
In the world where HBO can predict income, they can afford to take a leap and buy a whole season of an expensive show like Game of Thrones on a gamble (which it was). Online-only makes this comfort go away, reducing the potential quality of the product, and creating a spiral of losing subscribers.
You still have to have an existing cable television subscription for this.
I guess even with 30M paying customers they can't support even one show. HBO has more than one.
The problem with that idea is the cable companies. Back in 2012, the contract between HBO and the cable providers was up for renegotiation. HBO wanted to turn HBO Go into a standalone service; the cable companies basically said that if HBO were to do that, they would drop HBO. While I am sure that HBO would make tons of money from a web-only service, I am guessing that their cable numbers are better, for now. Whether those numbers stay the same in 2016, when the contract is up for renegotiation again, remains to be seen.
I find it doubtful that the people who subscribe to the most premium cable packages (~$150+) could not instead buy a Roku or use their existing PC /gaming console. At the very least, HBO could bundle a device with a 1 or 2 year subscription.
Personally I would always pay for content if it's available and easy to download. Unfortunately it's not. There are significant restrictions in what you can purchase online and download.
I get what you mean about convenience, I have a boxed DVD version of Game of Thrones, and I ended up using a download instead, mainly because I can't handle the hum of my DVD drive! Laughable though that is. If however it was very simple to rip the DVDS I might have gone that route.
I have loads of DVDS that feel almost obsolete. The quality of some of them is just shocking. DVD menus, that forever loop and keep you up at night. The low resolution and sound is crappy compared with HD. And the box get's in my way. I feel a little cheated here.
I wouldn't want to go out and buy those DVDS in my collection again in a format that will be obsolete in a year or two. If I have bought the right to view them - shouldn't I be able to download improved versions?
I have a meager download allowance, and my connection speed is too slow for streaming, so sadly I loose out to some of the subscription services that would otherwise please me.
Many people come to bother me on that. But I must say:
The alternative is just not seeing them at all it is depriving myself of culture. And not by choice, it just happen that where I live those shows are not available at all even with hackery, and I doubt they will ever be, since I like sci-fi stuff, and here what sells is oversexual soapoperas.
Do like Steam! I had about 600 pirated games here, after they launched I bought the most liked ones on Steam ( and later gog.com that I prefer) and stopped pirating games.
You want less piracy? Make a effort to take your fans money, and they will happily hand it to you.
And, following the Steam example, if you have cable, HBO regularly has free weekends where they will show blocks of their programming. This is the try-before-you-buy. Again, it's yours not to buy, but they have decided how they want to make their product available.
So yes, Game of Thrones is HBO's product to sell how they want. And if they choose not to make it available in some countries, or to people without cable TV, that's their choice. But they shouldn't be offended or surprised when the people they refuse to sell to end up finding other ways to watch their content.
To his credit, David Petrarca seems to recognize that -- given that someone can't buy your content -- it's still better for everyone involved if they pirate it, discuss it with friends, and contribute to its mindshare. The alternative is that they ignore it completely, in which case HBO gets no money and no buzz.
Of course, this is an absolutely ridiculous metaphor because physical property and intellectual property are very different things. When I steal physical X, the owner doesn't have X anymore. When I pirate intellectual X, the owner still has X. There are plenty of reasonable arguments in favor of IP protection and against piracy -- and those arguments can be and have been made on HN -- but given how well-established that basic distinction is, whenever you equate piracy with stealing physical objects you're essentially giving up any pretense of discussing these issues in good faith.
Wow, I have pirated a few myself but I know what I did. HBO, Viacom or Dr Dre don't have to contribute to your cultur-isation. (is that a word?) Otherwise Bill Gates might owe me a nice car and $10k/monthly so I can drive around to get to know USA. Of course if he doesn't give it to me, I'll take it. I am not depriving myself of culture and pleasure simply because Bill Gates says "it's my money and I do with it, what I want"
Second thing: I paid once for a season of Sopranos, over $80.
I have no reason to save up to get the other seasons if they're sitting on my hardrive in blue-ray quality. So they still lose something once all is tallied
Totally irrelevant. The question is whether they lose something from piracy, not the larger question of whether piracy is wrong. It's important to stay focused.
>Second thing: I paid once for a season of Sopranos, over $80. I have no reason to save up to get the other seasons if they're sitting on my hardrive in blue-ray quality. So they still lose something once all is tallied
First thing: it's been shown that music pirates spend more on music than non pirates. Clearly, having something for free doesn't prevent people from paying for it. People like having stuff in their collection, they like extra features, and they like supporting the creators of quality stuff if they can afford it. They also like being able to watch something when it comes out rather than waiting for it to come out on a box set.
Second thing: The second season box set of GoT costs $40. Most people are simply never going to pay that price, regardless of whether piracy is an option; in that case, they simply wouldn't ever see it. If those people torrent it, there's no sale opportunity lost.
On music in general or the already pirated one?
People like having stuff in their collection, they like extra features, and they like supporting the creators of quality stuff if they can afford it.
People, most people or some people are totally different. You speak of generalities, we know know how much "people" care by seeing the donations (or largely lack of them) on open source and other worthwhile projects.
Most people are simply never going to pay that price, regardless of whether piracy is an option; in that case, they simply wouldn't ever see it. If those people torrent it, there's no sale opportunity lost.
And if those that could afford, by not buying McDonalds for a few weeks for example, torrent it, do they lose money? Sure they do. Now they have no incentive to save, mow the lawn, clean snow or whatever...they already pirated it.
This is really insulting. Do you cling to stereotypes for every group of people not like you?
They are like me, I go there. I used McDs as an example of something that can be done without for a while. What group goes to McDonalds? I've seen all kinds of people go there.
Most people are already basically at their limit for what they can earn and save. Maybe if income distribution were different, you'd have a point. But it's not, and you don't.
Now, what does HBO say? The director presumably didn't put any money to produce it.
Personally I'd pay around $1 an episode but I understand HBO's business model and what they stand to lose if they went this route too