Tuesday, May 8, 2012

Going To the Movies Costs $250

The various lobbying groups frequently throw out statistics showing the financial harm piracy causes their industries. These numbers are usually taken at face value and reported as fact by the anti-piracy critics and the media. Every time, these inflated numbers are debunked by those with the patience to comb through the details of the reports.

Admittedly, I don't read every piracy study that gets released into the wild. I kind of randomly read a few when one specific detail perks my interest. But one thing I have observed is that people critical of file-sharing never read these reports, all they do it trump the end-result numbers. I find this very frustrating because if people on both sides of this debate were more educated on the topic, we could stop splitting hairs over fictional losses and get to the meat of these debates.

So with that, I want show you a glimpse of how many anti-piracy studies get their numbers. And we're going to do it by taking a trip to the movies.

Out in my part of town, movie tickets are $11 a pop. So when me and my guilty-by-associated-ip-address dirty pirate wife go see a movie, you might think it costs us $22. You would be wrong.

Sure the tickets cost $22, but when we see a movie we always get dinner at a nearby restaurant. I added up our last two months worth of grocery bills and they averaged $108 a week. At three meals a day, our average meal is $5.14. I also averaged our last 10 dining out meals and they averaged $47.84 per meal. So by going to the movies, we spend an extra $42.70.

  • Tickets: $22.00
  • Food Upgrade: $42.70


But let's not forget that I've actually got to get us to the movie theater, and that takes gas. The theater we go to most often is 6 miles away. So at $4.22 per gallon in my 17 miles per gallon truck, a round trip sets me back $2.98.

Well, we also have to take into account that driving those extra miles lowers the resale value of my truck. A Kelly Blue Book comparison of my vehicle at 1,000 miles and 100,000 miles shows a loss of $0.08 for every mile driven. There's also car insurance that runs me $0.06 per mile and oil changes, wiper blades, tires, battery, brake pads and general maintenance that sets me back another $0.11 per mile.

And if we're at dinner and a movie, we're certainly not working. Combined, my wife and I make about $61 an hour. A dinner and movie takes about 3 hours so this is costing us $183. And during dinner, we use my cell phone to decide on a movie and watch trailers. Using the phone runs about $0.002 per minute and we use it for around 20 minutes. And let's not forget that we're going to want something to drink and a snack while inside the theater.

  • Tickets: $22.00
  • Food Upgrade: $42.70
  • Gas: $2.98
  • Vehicle Depreciation: $0.96
  • Vehicle Insurance: $0.72
  • Vehicle Maintenance: $1.32
  • Missed Labor: $183.00
  • Cell Phone: $0.04
  • Snacks: $15.00
  • Total: $268.72

Over $260 to see one stupid movie? That's outrageous! Is there any question as to why I pirate movies? The only people able to afford to see movies on a regular basis are the 1%'ers. Good thing we don't have kids or else we'd have to consider the babysitter's labor rate and all of her vehicle and food expenses as well!

If you think I'm being unreasonable, then you obviously haven't read any of the piracy reports the industry has put out. This is the exact same methodology they use to generate their lost sales data.

Next post: Why I Share

Sunday, April 29, 2012

My favorite critics

Once Techdirt featured my Step2 open letter, several discussions ensued. A lot of it pointed out how much of an entitled asshole I am, but several people had what I thought were some though-provoking comments. None of these comments will change my behavior, but I do feel they deserve to be highlighted. No commentary from me, I want these comments to stand on their own.

My absolute favorite comment was this animated gif posted by BewbzAndV8Splash at Day One Patch.

puttputter at Techdirt had a good point:
"If you go to an apple orchard and pick a bunch of apples, there are bound to be some rotten ones in the batch. Consuming content is the same thing. Not everyone is going to love every song on an album. Some apples are better used to making pies instead of eating and some content is better suited to unique musical or artistic tastes. We still need to respect the integrity of the content produced and compensate both the artist and producers. There are discerning ways to consume content and still get what we want."

I'll take this comment as a compliment:
"Piece of shit with charismatic writing; Go fuck yourself."

By doctorfrog at Donation Coder:
"I once felt this way myself, but I kinda grew up. This is extremely immature, but it's also the attitude of someone (again I was like this myself) who probably wasn't going to part with a buck to support your work anyway. I jumped in and out of hoops downloading the stuff I wanted, went to the trouble of archiving and hiding it just in case. I felt completely justified and it was actually pretty fun getting stuff "my way."

A lot of what changed my attitude, though, was just basic patience. Just about every game, movie, TV series, or piece of music I ever coveted, and then some, eventually has taken one of two paths:

1) It will arrive on a delivery platform that works for me, and requires an absolute minimum of cost and hassle.

2) It won't, and I will live just fine without it."

From Aslan at USDN:
"The basic flaw in his logic is that he seems to think the record companies and film companies care what anyone thinks."

From Anonymous Coward at Techdirt:
"When you buy a Movie - you are paying for intellectual stimulation that the movie provides - laughter, sadness, adrenalin, etc. *That* is what you are paying for, and *that* is what is being stolen - period. You can degenerate the movie, say it was mediocre, and not worth paying for - but the fact of the matter is - it was good enough for you to download and watch - so all that is irrelevant.
The *only* proper response to not agreeing with the movie industries pricing and release practices is to:
1) NOT infringe on their content
2) NOT purchase their content
3) send them letters as to why you are not consuming their content."

CMerriman at Day One Patch:
"My guess... he's probably pushing 350, covered in cheetos, and has binary written all over his wall. "

Anonmyous Coward at Techdirt:
"But the theme throughout was feed me content for free to wet my appetite and then I'll become a paying customer. He says that he downloads to avoid getting burned by bad content. But then he unapologetically admits that he only paid for 1 out of 4 albums from an artist he liked. He justifies it as the first three he found made him like the guy so that's why he bought the 4th, and the artist should not lament the 3 lost sales because if not for the downloads he would not have bought the one he did. If he did not have a sense of entitlement then he would have found a way to go back a buy the 3 albums he liked, or paid for the 4th one 4 times to fairly compensate someone for 4 products he enjoyed."


Next post: The problem with piracy statistics.

Wednesday, April 18, 2012

The Theatrical Movie Business Perished


Last post I showed you that the most pirated movies of all-time were highly profitable. I also showed you that of the 50 most pirated movies of the last five years, 49 of them made money. To me, I think those numbers speak loud and clear. But ok, you're not convinced yet. Fair enough, let's go bigger.

Since the end of April 2011, TorrentFreak has published the top 10 pirated movies of the week. That's a years worth of monitoring the top 10 downloaded movies each week. I went through each movie on every list and collected as much data that was available. Here's what I came up with:

Raw CSV data.  

Over the last year, 135 movies have appeared on those weekly lists, however not all of them are relevant to our discussion. Two movies haven't been released theatrically yet and 10 movies went straight to video. There were also 6 movies where I couldn't find any budget information. If we exclude those 18 movies, we have 117 left.

Now, there were 5 movies where I found a budget but there was no ticket sales data at Box Office Mojo, IMDB or Wikipedia. However, instead of using that as an excuse to exclude those movies, I'm going to leave them in and say that they all had $0 in ticket sales and therefore lost all their money. I'm also going to restrain myself from cherry-picking individual movies to exclude. For example, I could have excluded Red State because the box office data shows it lost over $2 million but Kevin Smith said the movie was profitable before its theatrical release.

I could have also excluded 5 Days of War because it only played in 6 theaters and I could have excluded Shaolin for only playing in 11 theaters. I could have also excluded 4.3.2.1. and The Awakening because they didn't play anywhere in the United States. But I didn't exclude any of those films. It's not fair to try and have an honest discussion while at the same time manipulating the data prove your point. So those movies stay.

So we've got 117 movies and 92 of them (78%) made a profit. Let that sink in:

Of the 117 most pirated movies in the last year, 78% of them made money.

And 72 of the films (61%) had profits that were equal to or larger than the budget. Just like before, we're not dealing any special type of movie either. Jack and Jill got a 3 from Rotten Tomatoes and profited $70 million. Insidious had a $1.5 million budget and grossed $97 million. Rockstar played in 112 theaters and made $10 million in profits. Explain to me why we needed SOPA again?

For me, the most amazing number is that the median profit to budget ratio for these 117 movies was 144%. I had to check my numbers to make sure I didn't have any glaring typos. The lobbying groups are trying to pass insane laws to combat online piracy and yet half of the most pirated movies had ticket sales that were at least 2.4 times larger than their budgets. In a recession no less! Impressive. For anyone interested, combined these 117 movies grossed $21.3 billion with a budget of $6.8 billion. That's a profit of $14.4 billion.

So it comes down to this: either my data is wrong, or the conventional anti-piracy logic is wrong. Pick one.

Some people are going to question the accuracy of my numbers. They're going to say that the profits in my charts are too high because budget numbers are often under-reported and the longer a movie stays in theaters, the less the studios get. To which I will counter that my numbers don't include licensing deals, DVD sales, rentals, product placements, pay-per-view, tax breaks and Hollywood Accounting.

And let me be perfectly clear, I am not insinuating that online piracy helped these movies be profitable.  I am also not saying piracy is ok because the most pirated movies make money. The only thing I am saying is that online piracy is not harming the theatrical movie business.

And for anyone who is critical of file-sharing, take (copy) my data and see what you can do with it. Spin the numbers in a way to prove to us that file-sharing is killing the industry. Until you do, I'm going to point to these posts every time you bring it up.

1. It's wrong to steal/copy.
2. The creator/publisher should get to control formats, price, release dates, etc.
3. Piracy is killing the movie business.

Next post: My favorite critics.

Tuesday, April 17, 2012

The Theatrical Movie Business is Dying


Let's talk movies. Specifically movies released in the theaters. Critics of file-sharing have several reasons for why online piracy is bad. Inevitably, you can trace their complaints back to one of these reasons:

1. It's wrong to steal/copy.
2. The creator/publisher should get to control formats, price, release dates, etc.
3. Piracy is killing the movie business.

I look forward to debating the first two points in the future, but right now, I want to kill off point number three once and for all. Movies are a business. Let's not try to spin a politically correct position either. The number one reason for making a movie is to profit. It doesn't matter how many tickets were sold, it doesn't matter if domestic gross is larger than foreign gross and it doesn't matter what the gross per theater is. The basic, simple answer is you want to receive more money in ticket sales than it cost to make the movie*. This isn't even a debatable point.

The logic of the anti-piracy crowd is that with all these movies available for free online, movie studios can't make any money and they will soon have to stop making movies. That's why we need new laws to punish those who copy things without paying for them. If we assume that logic to be valid, then that same logic tells us that the most heavily pirated movies should also be the biggest losers at the box office. How else can you come to the 'online piracy is killing the movie business' conclusion?

* (Yes, it's possible to have a profitable movie when ticket revenues are less than the budget, but that only helps my argument, and I wanted to keep it simple.)

What if I were to tell you that of the 50 most pirated movies over the last five years, only one of them lost money? You read that right, just one movie out of 50. Would you even believe me? Would you agree that it defies the conventional logic? With enough data, could I convince you to stop trying to argue that file-sharing is killing the movie business?

Let's start small and then work our way up to larger numbers. In October of 2011, TorrentFreak put out a list of the top10 pirated movies of all-time. Keep in mind that this list only tracks downloads through BitTorrent and does not include file-lockers, newsgroups or streaming, so the actual amount of piracy is larger than what is represented in their chart. I looked up each movie's theatrical gross and budget on Box Office Mojo and IMDB.

Each of those 10 movies made money. See for yourself:



Raw CSV data.
RT, IMDB, MC = Ratings from Rotten Tomatoes, IMDB and Meta Critic.
Profit/Loss = Total gross minus budget in millions.
P/B Ratio = Profit to budget ratio. 100% means profits were the same amount as the budget.
Margin = What percentage of the gross is profit.

The worst performing movie in straight dollars was Kick-Ass which grossed $96.1 million with a $30 million budget. But Kick-Ass was only third-worst in terms of profit to budget ratio. The Incredible Hulk could be considered the worst performer of the group because they generated profits ($113.4 million) that were only 75% of the budget ($150 million.)

Now the critics might be looking at this data and saying, "Well of course these movies made money, they are some of the most popular movies." But that doesn't make any sense, who cares how popular the movies were, these are literally the most pirated movies of all time so your anti-piracy logic tells us they should have struggled heavily to make money.

But something else the critics should be pointing out is that this is too small of a sample size to be that meaningful. I agree, so let's expand things. Each year since 2007, Torrent Freak has put out an end of year list ranking the top 10 most pirated movies on BitTorrent (2007, 2008, 2009, 2010, 2011.)

Those 50 movies include 9 from the previous list so there are 41 newcomers. Surprisingly, things still look very good for the movie business:



Raw CSV data.

These are the 50 most pirated movies over the last five years, and 49 of them (98%) turned a profit. The only movie to come up short was Green Zone which had a $100 million dollar budget but only brought in $94.8 million in tickets. Collectively, these 50 movies grossed $21.2 billion and profited $16.2 billion. 47 of them (94%) had profits that were at least 30% of their budget. Just look at all that financial harm.

And don't think these are critically acclaimed movies either. Sucker Punch got ratings of 23 and 33 yet still profited $7.7 million. Clash of the Titans was rated 28 and 39 and its profits ($368 million) were almost three times higher than its $125 million budget. Nor are all these AAA big budget movies. Juno had a $7.5 million budget and grossed $231 million. The King's Speech had a budget of $15 million and profited nearly $400 million.

Some of these movies didn't even have a wide theatrical release and made excellent returns. The Hurt Locker was the 9th most downloaded movie in 2010 and it was only released in 535 theaters. It profited $34.2 million over its $15 million budget. RocknRolla only played in 826 theaters and profited $7.7 million. But I'm not done yet...

Next post: An even wider net.

Sunday, April 8, 2012

Why Your Fans Are Disconnected

This is the last in my series of posts exploring criticisms of file-sharing. During the series, I touched on how I don't feel entitled to free content, I want to be treated fairly, I buy content that I think is overpriced and like it or not, the customer can and will control distribution. The final criticism I'm going to explore is probably one of the most common ones I see. It's also the one that shows why file-sharers don't view entertainment products in the same spectrum as physicals products.

I think something content creators should try to absorb is that file-sharers have disconnected entertainment from physical products such as shoes and cars. In our minds, we've even disconnected the song from the physical CD it comes on, to us, these are two completely different items. We wouldn't steal a CD from Best Buy, but we see no harm in downloading that same album for free. I'm hoping to explain to you why that is.

IF YOU DON'T LIKE IT, DON'T BUY IT, DON'T STEAL IT

You see this criticism listed in several different forms, often times with an example using a tangible item: “If you don't like the price of the car, you don't steal it.” Or, “If you don't like the DRM on the movie DVD, then don't buy it. You don't deserve a free copy just because you don't like DRM.” And sometimes they tie it into a customer service issue, “If you don't like the service at Home Depot, then you take your business to Lowe's, you don't just go take what you want from Home Depot.” All three of those are rather compelling arguments on the surface. If I wasn't so knee-deep in the file-sharing battlefield, I'd probably use those arguments myself.

I'll gloss over the "copying is not theft" portion of the criticism and explain why, even though it starts out fairly solid, this argument doesn't hold up well with me. My first issue is that many times, you don't know what the restrictions are until you've purchased and opened the product. And once opened, the product is mine to keep. The disconnect has started. Publishers have gotten better at printing the terms on the box, but it still has quite a ways to go. It's usually hidden in small print and can be extremely vague at times. The other issue I have with this particular criticism is that it tries to equate tangible items with entertainment.

Critics will have you believe that entertainment products are no different than a hammer. Buying a hammer and buying a movie are not even remotely in the same ballpark. Try this experiment, go down to Home Depot and buy the shittiest hammer they have. Take it home and use it. Return the hammer to Home Depot the following day and tell them, "This is the shittiest hammer I've ever used, I'd like a refund." You'll get your money back. Try taking a movie back to Best Buy the next day and tell them, "I just watched this movie and it was horrible, I'd like a refund." Let me know how that works out for you.

As a content creator, you might think your project is no different than a hammer and should be transacted in the same manner. But I've never had to gamble on buying a hammer. I've never gone to a hardware store and had to watch videos of people using various hammers before deciding which one to buy. I've never had to buy a hammer based solely off of promotional “reviews.” And I've never been stuck with my hammer purchase once I found out the hammer sucked. The disconnect has widened.

Here's a real key point in all this: entertainment products are the only type of product where the terms and conditions can change after you've paid for the product. When the DMCA passed in 1998, I became an overnight criminal. Every CD I had ripped and converted to mp3, every movie I had copied to my computer and every game I had installed on both computers I own despite the manufacturers attempts to stop me, made me a lawbreaker. No other products in the marketplace suffer from this weakness. The disconnect strengthens.

Since the critics love analogies so much, let's try one. Imagine for a second that you purchased a car in 2010. It doesn't matter what kind of car, let's just say a Ford SUV. And let's say in this car is a stereo made by Pioneer. You like this car, it's got all the features you wanted: cruise control, power windows, air conditioning, iPod port, etc. You like it so much that you even bought a service agreement that covers quarterly oil changes, weekly car washes and yearly tire rotation. Now fast forward a couple of years to March 2012. Without your input, Ford has decided that every SUV currently on the road is no longer allowed to have air conditioning. They are going to send a crew to your house to dismantle your air conditioner in such a way that you can't get it repaired. Oh, and they're not going to reimburse you for the loss of the air conditioner even though you paid for it when you originally bought the car.

Well, that sucks. So now you have a car with no air conditioner. Two days later, Pioneer announces that they are not renewing their agreement with Ford, so no more Fords will ship with Pioneer stereos. In addition, Pioneer wants all the currently installed stereos to be remotely disabled so Ford sends a signal to your stereo that makes it self destruct. This time though, Ford will give you a $49 credit on a future Ford purchase for the inconvenience. Two more days later, Ford decides the service agreement you signed up for no longer includes weekly car washes and they are keeping the monthly fee the same.

As far-fetched as what I've just described sounds, each of those scenarios has a real-world entertainment equivalent but people seem to not bat an eye because "it's on the internet." The critics response to all this is, “If you don't like it, don't buy it.” What? I've already bought it. What's my recourse now? I would never have spent $25,000 on this car in the first place if I knew all this was going to happen. They've made my car less valuable and I just have to deal with it? Disconnect complete.

As a person who buys a lot of content and also engages heavily in file-sharing, it's rather amusing to have critics try to simplify what's going on with the “If you don't like it, take your business to Lowe's” analogy. As if this was just a nonchalant issue of poor customer service, like staying away from a horrible restaurant. To us, this is much larger than a poor customer service issue. This looks and feels like a scam. After being sold something, we find out later that it's not what we bought. When we turn to the sellers begging for reform, they instead sue us and try to get laws passed to criminalize our behavior.

Customer's make very personal connections with entertainment. You only need to look at the outpouring of support and numerous memorials when an artist dies for proof. You simply expect someone to stop liking an artist and "take their business elsewhere" when they aren't happy with post-purchase changing terms and conditions. That's insane. So I guess if you're in love with Taylor Swift's music, you're supposed to just drop her and take your business elsewhere by buying Stephen King's books when Universal Music starts using retroactive play-once DRM. Shit, I hope I didn't just give the RIAA a new DRM strategy.

The entire “If you don't like it, don't buy it” criticism is based on an extremely flawed assumption. The critics assume that when I'm looking at content, that I listen to 30-second sound clips, watch movie trailers or play game demos and then go pirate what I want instead of buying it. That couldn't be any further from the truth. If I have even the slightest interest in something, my very first stop is the file-sharing sites. I don't listen to 30-second samples. I don't read preview chapters. I don't watch trailers. Like it or not, my “samples” are the full unrestricted versions of the content.

It's pretty much gotten to the point where if I can't pirate your stuff, you'll never get my attention in the first place. I'll never know about what you have to offer, I'll never know if I like your products, I'll never buy your stuff because to me you won't exist. Your only hope to get me to buy at this point is that you become so wildly popular that I have no choice but to know who you are. But if you're that wildly popular, you'll be pirated anyway.

There is a valid underlying point in the “If you don't like it, don't buy it” criticism. I actually don't buy it if I don't like it. But I think here is where the critics and I go down separate paths. The critics will say that I shouldn't pirate it either, and I say that if I don't pirate anything, I won't buy anything, including the stuff that I like. Who knows, maybe that's what you want. It won't bother me, I like your content, but I don't need your content. Before I started file-sharing, I didn't buy anything. If overnight, the critics could wave their magic wand and make file-sharing go away, I would stop buying content, simple as that.

The file-sharing community made some decisions. Yes, it sucks that you weren't at the meeting. We got kind of tired of waiting for you to show up so we moved on without you. We are done with your sleight-of-hand tricks. File-sharing unrestricted files prevents us from getting screwed. This is why we still download everything that we buy. The better you understand this, the more money you stand to make.

This post was not my attempt to explain why I'm right and you're wrong. For those who are heavily anti-piracy, everything I just said is heinously wrong on multiple levels. They think it's people like me who are killing entertainment even though I buy a ton of stuff. This post was also not me trying to defend myself, I've already told you that I'm not ashamed of my file-sharing. What I'm really trying to do is convey my thought process so you can leverage the information to make a profit. In an odd way, I do it for selfish reasons. I want to see entertainment continue to grow. I consume it on a regular basis and I can't wait to see what you guys make next.

File-sharing has allowed us to invest in your products instead of gambling on them.

Next post: How file-sharing is destroying the movie business.

Saturday, March 31, 2012

Getting paid, voting with your wallet and free samples.

This is the next post in a series exploring criticisms of file sharing (part one, two, three.) Again, this is not a rebuttal, it's how to get a pirate to buy.

EVERYONE DESERVES TO GET PAID

I agree 100%. If Chevrolet hires you to work on the assembly line, you deserve to get paid. But file-sharing critics seem to also be saying that if I make my own perfect copy of the car, Chevrolet deserves to get paid even though they didn't sell anything. I understand this particular criticism is more nuanced than the example I gave, but just because a studio makes a movie or a label makes an album, they don't deserve to get paid for sales that didn't happen. And I'm not talking about for-profit piracy here, that's a completely separate debate that we likely agree on.

If I legally record an MMA bout on my DVR and let my friend come over and watch it, does UFC deserve to get paid? If I install Fallout: New Vegas on my gaming laptop and then loan the laptop to my friend so he can play it, does Obsidian deserve to get paid? If I loan a Bruce Springsteen CD to a friend who makes a copy, does Columbia deserve to get paid? If I describe in fine detail the plot of The Lorax, does Universal deserve to get paid?

I can understand the critics point: I have (a copy of) the content and I personally didn't pay for it. But if you're going to sit here and lambast file-sharing, then you should also demand payment in every example I gave in the previous paragraph. In each of those, someone got the content without paying for it.

The internet has allowed me to quickly and efficiently make copies of the content my 10 million friends have in their possession. You may see it differently, but we see it as borrowing our friends CDs. And as long as you don't see it that way, you're going to have a hard time collecting from us.

YOU CAN GET FREE SAMPLES, THERE'S NO NEED TO PIRATE

I touched on this in my open letter and I completely disagree. The current sample market is not indicative of the purchased product. But really, that's only part of the uphill battle you're going to have as a content creator. The file-sharing community has moved beyond samples. Proclaiming there's no reason to pirate because of available samples just shows that you haven't grasped where the file-sharing mindset is yet.

We don't deal in samples anymore and we don't feel guilty about it. Just like with the VCR, the industry cried and sued to get us to stop file-sharing but we didn't feel guilty about copying those files in the 80s and 90s. Oh, you missed last weeks episode of Cheers? Here, I've got a copy of it.

Think about your favorite authors and musicians for a second. Did you fall in love with them after hearing their 30-second samples or reading their preview chapter? No, of course not, we both know that's not how it works. Entertainment is a bonding experience that happens over time. With the sheer amount of content that's available, file-sharers skip sampling and jump right to the bond-building stage with or without your cooperation.

IF YOU DON'T LIKE DRM, DON'T PIRATE AND DON'T BUY, VOTE WITH YOUR WALLET

I am voting with my wallet. Instead of giving Ubisoft any money, I'd rather invest that $60 in two or three Kickstarter games. The critics would say that I shouldn't pirate Ubisoft's game then. To me, piracy is a form of protest that I believe will be more effective than not purchasing their products.

Let's say under normal circumstances, one million hammers are sold every year and Home Depot knows they sell half of them. Now let's say that in 2012, Home Depot sells only 100,000 hammers. The first thing they're going to do is check to make sure one million hammers were still sold. Once they've confirmed that, they are going to realize they have an issue: either they have piss poor customer service or their hammers are real shitty.

Creative content doesn't work the same way. If I'm not happy with Far Cry's DRM and I decide to buy Minecraft instead, Ubisoft won't see it as a customer serivce issue, they will think they just put out a shitty game. That is not the message I'm looking to convey to Ubisoft. I'm going to buy Minecraft and I'm going to pirate Far Cry. That is my protest.

Here's where it gets tricky. If Ubisoft sees the video game industry growing while their own sales decrease and they see high piracy levels for their games, maybe they'll get it through their dumb heads what they're doing wrong. That scenario is unlikely to happen though, because I have seen time and time again, when piracy levels rise, so do sales.

Next post: How things get disconnected.

Sunday, March 25, 2012

Pirates Are Not Content Distributors

This is the next post in a series exploring criticisms of file sharing (part one, part two.) Before continuing, I need to repeat something from my last post: I'm not defending myself or trying to provide a rebuttal to the criticisms of the anti-piracy crowd. I'm giving you the information you need to bring a pirate back to the pay table.

THIS ISN'T YOUR MOVIE/ALBUM/GAME, YOU DON'T GET TO DECIDE WHO GETS A COPY

Everyone sitting here reading this knows how valuable the VCR was to both consumers and Hollywood. In retrospect, we're all amazed that the VCR battle got so intense that they actually held congressional hearings over it. It seems simple and obvious now, but 35 years ago, they had the exact same battle over the VCR piracy that we are having over internet piracy.

We've all heard about the craziest thing Jack Valenti said in front of congress in his attempt to make VCRs and home recording illegal. But when you look at everything he said, it's eerie how closely his complaints back then mimic the complaints now:

“Unless Congress recognizes the rights of creative property owners as owners of private property, it is going to be eroded in value by the use of these unlicensed machines. Nothing of value is free. The VCRs only mission is to copy copyrighted material that belongs to other people. The fifth amendment forbids the taking of private property without just compensation. The permission of the copyright owner is required for the use of their programs in all markets. We cannot live in a marketplace where this one unlicensed instrument is capable of devouring all that people had invested in and labored over, laying waste to the orderly distribution of the creative content.”
“86.8 percent of all VCR owners erase or skip commercials. If you are an advertiser it destroys the reason for free television. As one VCR owner wrote in his diary, why buy prerecorded movies? You can record the same thing from a premium pay channel much cheaper. There is also less need for VCR owners to go out to the movies. In economic terms, people are deriving value, benefit, utility from the ownership of a home taped copy of a video film production while there is currently no equivalent benefit payment for the producers in the economic exchange.”
 “If 56 of the 93 movie recordings made by 250 households are saved for the shelf and for additional playback -- then the number of movies collected in a year by the Nation's 2.4 million VCR households would be 6,537,216. At a prerecorded purchase of $50, they would have a retail value of $3.2 billion. Mr. Chairman, things like that could make grown men cry.”

It boggles the mind how much Valenti's comments parallel today's piracy discussions. He even pulls a bogus “lost sales” statistic out of his ass to show the economic harm VCRs cause to Hollywood. [note: Valenti's math looks wrong. Should be 65 million recorded movies, not 6.5 million] Valenti even complains that we can't live in a marketplace where the consumer can control distribution. He also complains that when people record a show at home, the creators don't get compensated. And when people have copies at home, they won't buy movie tickets or pre-recorded movies. Does any of this sound familiar? Those were incorrect arguments then, and they're incorrect arguments now.

If you read his full testimony, it's laughable to see what else he complains about. Skipping commercials, time-shifting, creating a permanent collection, etc. We can all sit here now and realize that Valenti was wrong. The VCR was not only harmless to Hollywood, but turned out to be an extremely profitable enterprise for them once they embraced it. But if you transplant yourself back to the time of those hearings, you'd be hearing the same criticism from today, “This isn't your movie, you don't get to decide who gets a copy.” And yes, I will gladly concede that the internet has made copying infinitely more easy than the VCR ever did. But the critics and I probably disagree on how relevant that point is to the discussion.

I'm not pointing all this out to say that I'm more advanced than the anti-piracy crowd. Nor am I trying to say that the critics “just don't get it.” There are a lot of smart and passionate people who think file-sharing is horrific. I just think that it's misguided to think that the internet piracy discussion today is all that different from the VCR piracy discussion over 3 decades ago. And if we can see how wrong the industry was then, we should be able to see how wrong they are now.

Next post: Samples, wallet voting and deserving to get paid.

Sunday, March 18, 2012

Pirates Pirate Because It's Too Expensive

This is the next post in a series exploring criticisms of file sharing (part one.) Before continuing, I need to repeat something from my last post: I'm not defending myself or trying to provide a rebuttal to the criticisms of the anti-piracy crowd. I'm giving you the information you need to bring a pirate back to the pay table.

IF YOU CAN'T AFFORD IT, YOU SHOULDN'T TAKE IT

This criticism amuses me. I lurked on several threads where the critics were very quick to translate my open letter into, “I pirate because I think games/albums/movies are too expensive and I can't afford them.” This translation makes it very clear that they didn't pay attention. In my letter, I gave an opinion on price points. For example, I said seasons of a TV show should be about $20. I also said in my letter that I own every season of South Park on DVD. I guess those critics aren't out there supporting the content creators like I am, because last time I checked, each season of South Park hits the streets at about $30. And I buy them when they hit the streets to show my support.

I also said $30 is the most I'm willing to spend on a physical copy of a big budget video game. Why then do I have this $40 physical copy of Skyrim on my shelf? I also said mp3 albums should be around $5 each, yet I can quickly pull up several recent albums that I bought for $9 each on Amazon. For a guy who thinks entertainment is too expensive, I sure buy a lot of products that I think are overpriced.

My price points were a suggestion and not a hard line I draw in the sand. I will gladly pay more than MSRP if I'm a big fan of the product and you're not trying to screw me. But if I'm a casual fan, my price points are usually my cutoffs. Most content for sale feels like it's priced for the superfan instead of for the general fanbase. Some critics called me out on my price points like, "Arkham City is well worth $60 to me, this guy's crazy." There's no great revelation in that statement, every single one of us has pieces of entertainment we can look at and think, "I'd pay more for that than I actually did." Pricing your content for superfans only means less people will see it, less people will use it, less people will buy it and less people will want to buy the next one. Luckily, file-sharing is there to bring me back in and make me a buyer again, without it, you've lost me forever.

Like I alluded to in the previous paragraph, there are creators in all the entertainment genres that I am a big fan of. They have so consistently produced quality work and treated me well as a fan that I will blindly buy whatever they produce next, even if it's not in their wheelhouse. If they were a rock group and put out a rap album, I'd buy it. If they normally made first person shooters and decided to make a role-playing game, I'd buy it. If they were a stand-up comic doing a serious movie, I'd. Buy. It.

You don't build that kind of connection with me by pricing your freshman album like you're Bob Dylan. You don't build that kind of connection with me by suing me for file-sharing your content. And you certainly don't build that kind of connection with me by trying to tell me how, where and when I can consume your content, especially when I've paid for it. In my open letter I gave several examples of situations where I would gladly pay more than my price point, try reading those sections again.

File-sharing is a very polarizing topic, I understand that. I'm not going to fault the critics for being reactionary and calling me names (douche was popular, I even got called a cunt!) because that's going to happen when people are passionate about something. But saying that I'm justifying my piracy because I think the products are too expensive is flat out wrong. What I'm telling creators is that I have plenty of money to spend, and if you would stop dicking me around, you'll get a piece of my pie. When the price and service is right, I practically trip over myself to buy it. I buy every Humble Bundle within the first two days. I bought Louie CK's movie within 15 minutes of hearing about it. I'm not the only one who sees it this clearly.

Consumers are looking for a better value in the content marketplace. Adding DRM, suing file-sharers and getting ISPs to be copyright cops is not providing value. If anything, it's going to reduce the amount of money we put into the market because now we need to buy VPN service. Guess who's products we can't buy?

Next post: Pirates should not be in control.

Thursday, March 15, 2012

Pirates Are Entitled Whiny Brats


This is my first in a series of posts exploring criticisms of file sharing. Before continuing, I'd like to stress something: These posts are not an attempt to defend myself or to provide a rebuttal to the criticisms of the anti-piracy crowd. What I'm attempting to do is take you through the thought process of a file-sharer. I'm hoping that with this information, you'll better understand how to bring a pirate back to the pay table.

There are several criticisms regarding file-sharing, some of which I can sympathize with. I've never made a movie, I've never written and rewritten a book, I've never recorded a song 15 times until it sounds perfect. I have no clue what it feels like to pour 2 years of challenging work into a commercial project just to have it freely available online before it's released to market. I can try to guess what it feels like, but I'm sure it wouldn't even come close. But you know what I do know? I know how to get people like me to buy it. Do you see any value in that?

Despite what the anti-piracy crowd thinks, I'm a reasonably intelligent person. You would think that someone who's not an idiot could be swayed by a compelling anti-piracy argument. What I'm hoping to show you is that the file-sharing community doesn't find these arguments as compelling as you think. It's not that we're stupid, we just disagree. For the tl;dr crowd: “We don't pirate for the lulz, we pirate because we feel taken advantage of by the content industry. Pirating is our way of leveling the playing field. Your criticisms of file-sharing, no matter how 'right' you think they are, are not compelling enough to make change happen.” Let's get started.

ENTITLEMENT

The most common criticism I hear is one of entitlement. Critics believe I feel I'm somehow entitled to all this content for free. I actually couldn't give you a valid argument for why I deserve anything for free, mainly because I don't feel I deserve anything for free. I do, however, feel entitled to be treated fairly, something content publishers have collectively failed at in recent times. Creators and publishers have been lacking the ability to extract money from me under their old methods, so I've embraced a way that works for me, by using piracy. The end result is basically the same, I buy what I like. The only real difference is I get to try out a lot of stuff before deciding what to buy. You might not like it, but it's reality.

Undoubtedly, some critics will read that previous paragraph and translate it to “the ends justify the means.” They will probably even come up with a few offline examples to prove how dumb it sounds. Heck, I'll even throw one out there: “We want a population of healthy people to reduce health care costs. We should kill any newborn child who doesn't weigh between X and Y pounds. It's ok because the ends justify the means.” The critics should now give me props for equating file-sharing with murdering children as this can only help their cause. SOCMA – Stop Online Child Murdering Act.

Critics, let me ask you this: If I felt entitled to free content, why do I go to the movies twice a month? Why do I buy every Humble Bundle? Why do I pay for cable TV and satellite radio? Why do I subscribe to a newspaper and several magazines? Why have I bought over 400 music CDs? Why did I donate to Pioneer One? Why do I own every season of Entourage on DVD? Why do I buy apps for my phone? Why did I buy Louis CK's movie? Why do I own two video games that I haven't even opened yet? Every single one of those things can be pirated on the internet, for free. I probably spend more on entertainment every year than most of the critics do. Forget being entitled, I feel damn near generous.

Next post: Ferrari too expensive? Steal it.

Tuesday, March 13, 2012

Suggestions for Walking Corpse Syndrome


In my last post, I started looking into Walking Corpse Syndrome, an independent gothic metal band from Missoula, Montana. From a potential customer's viewpoint, I noted what I liked and didn't like about their sales approach. I also explained how I would personally use file-sharing in this situation and how file-sharing could lead someone into becoming a fan and then a buyer.

Everyone reading this already knows that I'm going to recommend that they should pirate their music. That will certainly be on the suggestion list, but it's a little more complex than that. If the only thing they did was put their music on the file-sharing sites, they're not going to see any benefits. Selling music to the file-sharing community is a multi-prong attack. Before I offer my suggestions, I'd like bring up something that I feel is a vital component in getting me to buy.

Taking a step back and looking at this from the consumer side of the transaction, most independent musicians give me two choices. Some artists want me to buy what they've already completed. So maybe they'll give me just enough to tickle my balls in the hopes that it'll be enough to get me to buy that 3 year old CD that they overvalue. This cycle will repeat itself as they release new albums. Even if I like their previous releases, I'm constantly struggling with the gamble of buying their products.

The other artists want me to buy what they haven't done yet. They shower me with affection, they take me on a date and pay for dinner, they give me gifts, they never tell me no. They give me the equivalent of a consumer blowjob. They make me feel guilty for all the attention because it's so one-sided. Is there any doubt in your mind who's products I'm going to buy? By this point, I want to buy their next project because of how well I've been treated.

Getting back to Walking Corpse Syndrome, here are some recommendations that would potentially get a listener to open their wallet. It will sound like I'm talking directly to Matthew, but I'm really talking to all the independent artists who create and sell music:

1. Fix the homepage graphic to reflect the $5 mp3 album. I still think $5 is too high for your albums. It has nothing to do with your talents and I'm not trying to diminish your accomplishments. It has more to do with who you are and where you are in your career. In my original open letter I noted that digital albums should always be cheaper than physical CDs. I also recommended a $3-$5 price point for an mp3 album. You guys are an independent band still in the process of building a following. If I was borderline on buying your music, getting albums for $2-$3 each would push me over the edge and turn me into a customer.

2. Get some new music out there. The first album came out in 2008 and the second (and most recent) album came out in 2010. Like it or not, customers always want fresh content. Especially paying customers. You think World of Warcraft would be as big as they are if they never expanded their game? Put a new song as a free mp3 download on the site. Build some buzz. Is your next album taking too long to finish? Then put yet another free song on the site. Fans talk to other people and you need to give them a reason to talk about you.

3. Coordinate your social media. Although I gave you props last post for dipping your finger everywhere, I did notice the lack of consistency. While your Facebook profile looks healthy and active, you only have 8 tweets in 2012. At a bare minimum everything you do on Facebook should get a tweet. There also appears to be inconsistencies on the sites where I can hear your music. Pure Volume has only 2 of your songs. Reverb Nation has 8 songs. Last.fm has one album, Amazon has two albums. Rhapsody has 8 songs, Jango has 5 songs. Don't half-ass it. You have no idea where a potential customer might find your music. What if your album had 10 songs I loved but none of them were the two on Pure Volume? Next band please.

4. Give away the first album for free. If you can't stomach that and your conscious insists on $5 mp3 albums, maybe offer a two album mp3 package deal for like $7. Entice me. You have a 4 year old album and a 2 year old album. You are not The Beatles. You do not yet have a valuable back catalog. All this is doing is putting up a wedge between me and your music. I understand you have fees and other considerations when using CD Baby, iTunes, etc. But as an up-and-coming band, you can't let pricing alienate your potential fan base. Maybe you have to suck it up and sell your stuff at a break even point for a while. Or maybe what you need to do is pull the first album from the market and offer it up as a free download if you buy the second album at $5. I'll buy when the price is right for me, not when the price is right for you.

5. Put the other album up on your site as a full stream like you did for your current album. Don't make a customer leave your site to sample your works. All of those social music services are designed to get people to sample music that isn't yours. If you drive me to Reverb Nation, another artist is going to catch my eye and you could lose my attention.

6. Maybe you're already doing this next one and I just can't see it on your website, but you should try to get creative about getting your music in the hands of fans. Here are a couple of examples: If you're playing a show where the tickets have unique identifiers (serial numbers, barcodes) then offer your fans your first album in mp3 format for free if they tweet/email/post a photo of their ticket. I see that some of your shows have the same bands playing. Join forces with the other bands. Get 4 bands to each offer up an mp3 album and sell the package for $10. If you're playing at a no-charge venue that has distinct sections, offer up the section nearest the stage for anyone who buys your CD. The possibilities are endless.

7. Pirate both of your albums. I understand this one may be the steepest hill to climb. Regardless of how good your music is, I don't believe a band in your position is served well by putting a paywall up in front of your customers. Obscurity is your number one enemy at this point. And just because you are pirating your album doesn't mean you have to advertise it. You can continue with your current business model and let those who engage in file-sharing find you on their own. If they're interested, they'll find it.

Now of course, none of what I recommended is going to magically double your sales overnight. This is more about building your future, a future that includes me, the guy with the money.


Next post: Criticisms of my behavior.

Monday, March 12, 2012

A Pirate's Review of One Business Model


There were a handful of comments posted after I put up my original open letter on Step2. Nearly all of them were positive remarks and several others added good information that I overlooked. Once Techdirt featured my letter on March 8th, things got a tad more hectic. On Techdirt and elsewhere, people critical of my file-sharing started voicing their opinions, it was pretty entertaining to watch. But it also appeared to me that the critics either didn't understand my intent or didn't read the entire letter. Or maybe they did understand, but they despise me nonetheless.

My point was: here is why I pirate and here is why I buy. I wasn't trying to justify file-sharing or explain why I'm entitled to free stuff. The critics were so focused on the fact that I was getting free copies, that they appeared to ignore that I was basically giving a blueprint to creators on how to monetize my behavior. I was giving creators step-by-step instructions on how to convert a pirate who doesn't (or won't) buy your stuff into a pirate that will buy your stuff.

One of the creators who seemed to notice what I was doing was Matthew Bile of the band Walking Corpse Syndrome:

"... On our Facebook page, I recently did a poll where I asked people how much they thought digital albums should cost. I was of the mindset that if an album cost $1.99, I'd be buying a lot more albums again. Most people voted for $5.99, so I put our albums for sale at $4.99. I haven't seen any increase in sales, nor do I really expect to."

I like Matthew's idea of investigating a digital album price point. I don't think Facebook is the best place to get the information though. Pretty much the only people who would answer a Facebook poll are friends and fans. Friends likely won't tell you they'd only pay $1, they're probably going to inflate their number. And fans who follow you on Facebook and participate in your polls are not casual fans, they are they type of fan who will usually pay more than others, so I don't think the $6 result is all that accurate. I'm always down for checking out new music, so I looked into Matthew's band.

From a consumer standpoint, Matthew's doing several things that I like a lot. They have an actual website with real information and not just a dormant MySpace page. They have poked their finger into all the major social media sites so I can follow them however I like. Facebook, Twitter, Reverb Nation, Amazon, YouTube, it's all there. I can easily get tour dates (with times, maps and phone numbers no less!) They've got photos, videos, lyrics and a store all right there. I can stream what appears to be full length versions of every song on their most recent album. Kudos Matthew.

However, there are some things that turn me off. When you hit their homepage, you are greeted with "New Album Available Now!" and right below that it says, "Available on CD or as mp3 Digital Download. 11 Tracks - $10.00." Wait a second. $10 for an mp3 album? In Matthew's response to my open letter, he said:

"It's insulting to see digital albums for sale at $10."

And yet he's doing the same thing. Didn't he say he reduced the digital album to $5 based on the Facebook poll? What gives? Clicking on the advertisement takes you into their store where you can only buy the physical CD for $10. However, if you click through to Amazon you get $9 mp3 albums. It's not until you get to CD Baby that you finally find $5 mp3 albums. If you're paying attention, you'll realize I only found the $5 albums because I knew the whole story and dug around until I found them. Way more effort than I normally would put into it.

But now let's pretend I didn't know the back story and I just stumbled across Matthew's band as a casual visitor. I would immediately be turned off by the impression of a $10 mp3 album. These guys expect me to pay $10 for a local band of (to me) unproven talent when I can get the newest release of a band I know I like for less money? Seriously? I feel you're trying to screw me and I haven't heard a single note of your music. At this point, I might listen to the streams to see if I like it. If I like what I heard, I'll try to pirate it. If I can pirate it, and it's good, I'm becoming a fan and I'll be looking for your next album to come out. If I can't pirate it, you've lost me forever. Your price point is too high for me to care.

Let's go back and pretend it's my first visit to Matthew's site. And let's also pretend the graphic correctly depicts a $5 mp3 album option. I'll listen to the streams to see if I like the music. From here, I go down one of four paths.

Path 1: I didn't like what I heard. Can I think of anyone I know who might like this? Yes = email them the link. No = move on.

Path 2: I kind of like what I heard. It's not worth $5 to me yet, I'm not really sure if it's worth anything to me yet. I really need to listen to this stuff some more to see if I actually like it or not. But I also have other stuff to do. I'd like to listen to it while I drive to work next week. I can't sit here all day clicking the play button. Let's check the file-sharing sites.

-- Path 2a: Nope, they're not on the file-sharing sites. Oh, well, let's hope I remember (or care) enough to check them out again later. At this point, you may have lost me forever.

-- Path 2b: Sweet, just grabbed both of their albums from The Pirate Bay. After listening to it again, it didn't move me. Can I think of anyone who might like this? Yes = send them the files. No = delete files. But if I did like the music after extended listening, I'm back at your site seeing what else you've got. I'm now a fan. I will buy your next album. Will I absolutely buy the two albums I just downloaded? I don't know. Maybe, maybe not. It depends on if you've made it easy for me. If the only option is iTunes, then no, I'm not buying either of them. But Matthew has given me several options to buy the album so I can pick my favorite one. I would probably buy one of the albums and would consider buying both. If only there were a discount for buying both albums.

Path 3: This stuff is pretty sweet. I want to support these guys. I'll buy both albums. Hmm, do I want the physical CD or the mp3? Good thing Matthew gave me a choice.

Path 4: Holy shit! This is the greatest music I've ever heard. Thank god they offer physical CDs. I need to rip this things to flac, mp3 just ain't gonna cut it. When's the next album coming out?

Keep in mind, these paths are only traveled if I can easily hear the music. If you make me jump through hoops to hear the music or if you only offer 30-second samples, I've already moved on to another band. I have never emailed a friend a link to Amazon and said, "Hey, check these guys out." But I have emailed someone several mp3 files and said, "Hey, check these guys out."

Next post: Recommendations for Matthew.

Saturday, March 10, 2012

Why I Pirate - An Open Letter To Content Creators

Note: The following is a copy of my open letter that I originally posted on Step 2. This is part 3 of 3.

CHAPTER 6

Movies, TV and video. Pretty much any movie I can think of is at my fingertips, and in the unrestricted formats I like. Hulu and Netflix can't even come close to matching what the pirates have accomplished. Why subscribe to Netflix when some other movie studio can decide to not renew their agreement and 25% of my available viewing material disappears overnight?

Get your movies and shows on the file-sharing sites. If it's good, word of mouth will get me to watch it which is always the first needed step. Just like the other media I described, I probably won't rush out and buy it if I liked it, but I will be checking up on you to see what you're up to next so have a website.

Every DVD I have ever purchased I have also pirated. The pirated files are compressed so they take up less computer space than just copying the DVD files. You can fit 3-6 digital movies in the same amount of space that one DVD uses. I can also easily convert these digital files to other formats when needed. Just like with music, I will not tolerate you making me jump through hoops to watch your movies. I will not use special hardware or install special software. I already have everything I need to play videos. If you can't give me what I want, I will download it instead, which means I may or may not buy it.

If Hollywood would offer up a service that had the same breadth of content the pirates offer, and it was reasonably priced, I'd be a subscriber. The problem is that every legitimate service was never 'complete' and those that were trying to do so are becoming fractured as the content owners decide that they can do better.

If you want me to buy your physical DVD, there needs to be no copy protection and no licensing restrictions for personal use. It should also include a digital copy that is available in multiple formats. Yes, I have a DVD player, but I also have a home theater PC and it's way better than a DVD player. I can keep my entire archive of movies and TV shows on there for immediate viewing. You know what you can't immediately view? A store-bought DVD. After you put it in the DVD player, you sit through the FBI warning, possibly another anti-copying message, then some promotional stills of the studios involved in the movie, then some trailers for other movies and then you finally get to the main menu. If you're watching a TV show DVD, you still have to cycle through the menus to find the episode you want. With digital files, it's instant playback.

If you're selling digital videos, they need to be DRM-free with no licensing restrictions for personal use. They need to be available in different formats and bitrates, or at least a high-quality bitrate so I can do my own transcoding. Years ago, I made a mistake and purchased a digital movie that had DRM. After downloading it, I found out I couldn't move it to another computer which meant I couldn't watch it on my home theater PC. No big deal. I used a program called Fairuse4WM to remove the DRM and was able to copy it over. The experience annoyed me enough that when a friend with a similar setup mentioned he was going to buy that same movie, I told him not to bother because it had DRM and I gave him a copy of the one I had. There's your definition of a lost sale.

$20 is the most I'm willing to pay for a physical DVD, whether it be a movie or a season of a TV show. They really should be in the $10-$15 range. If I buy your DVD, you should give me digital copies for free. I know it's wishful thinking, but can you remove all the FBI/preview crap from the beginning of your DVDs so we can get right to video? If you're selling digital videos, they need to be cheaper. If you want me to buy your digital movie, it needs to be around $5, same for a season of a TV show. A single episode of a TV show should be around $1.

I'm not even going to entertain 'renting' video anymore. This is a concept that for me has outlived its usefulness. I might still rent a physical DVD in a special circumstance but it won't be too long before every media player I come in contact with will play digital video files out of the box. I will never rent digital video files, mainly because I think those, "You have 48-hours to watch this rental" restrictions are stupid. Instead of going through that song and dance, I'm just going to download it and watch it anywhere and any hour that I want.

Even with all this downloading, I still go to the theaters twice a month. Why? It's not for the movie itself. I can always wait for a movie to hit the file-sharing sites if I really wanted to. I go to the movies because I enjoy going to the movies. I enjoy sitting in nice dark theater in front of a huge screen being entertained with my friends. And even though I have downloaded every episode of South Park, I still own every season on DVD because I want them to keep making it.

You know which movie I'll never buy? Hurt Locker. Voltage Pictures may know how to make a good movie, but they don't know squat about customer satisfaction. Once I heard they were going after file-sharers, I specifically downloaded the movie just to spite them.

CHAPTER 7

Techdirt stresses that content creators need to connect with fans in order to get them to buy. When I first started hearing that, I thought it was off-base. I could see anecdotal evidence showing it worked but my brain was telling me just because a content creator shows me their creative process or does a Q&A doesn't mean I'm more inclined to purchase their products. But the more I thought about it, the more I realized Techdirt is absolutely correct. The reason I buy the products I buy is because I am connecting with you, in my own way. I want my content creators to not be like Scott Ian and Lars Ulrich. I want my content creators to understand where technology is taking us. The South Park guys have every episode of their show available for online viewing free of charge. And I just so happen to own every set of their DVDs. The Humble Bundle guys know I just want to play my games with as little hassle as possible. And I just so happen to own every Humble Bundle. When I look at the software I have purchased, it's the ones with the unrestrictive EULAs. The kind of agreements where I can install the software on any computer I own, not just on this computer.

Do I feel bad for file-sharing? No, not in the least. True, it's technically illegal, but so is rolling through a stop sign and jaywalking. Yet everyone reading this has committed both of those crimes. The main reason I don't feel bad is because, like I detailed above, I know I'm buying content. Another important reason I don't feel bad is because I'm not profiting. I'm not taking your content and trying to resell it as though I'm a legitimate vendor. Physical piracy is a genuine problem and even the file-sharing community supports laws against it.

Being an active file-sharer means I have a clearer picture than you do of what's really happening. I know when I download something that it's not a lost sale and it's not theft. The fact that you can't see that is not my issue. I'm not going to let you stop me from sailing the world just because you think the Earth is flat.

I have no desire to support the RIAA and the MPAA. The unfortunate part is that I know they represent artists who are not fond of the tactics being used. I'm not going to refuse to buy your product, but I will take a long hard look before I buy. I would hate to be judged by the politicians who represent me, so I won't judge you by the sue-happy trade groups that represent you.

Lastly, I don't have to be your friend or share your same political views to like and purchase your products. You can make mistakes or hold a viewpoint I don't agree with, but if you're a horrible person, you can be certain I'm downloading everything you produce for free. Roman Polanski and Chris Brown are assholes. Don't expect me to buy their content. If you decide to work with them, I will not buy your products either, but I will enjoy them.

IN CLOSING

This section is for the people who can't be swayed from the 'online piracy is damaging' viewpoint. You likely didn't read my post, but I assure you there was no hyperbole. I didn't try to convince you copying is not theft, I didn't try to convince you I'm too poor to buy products and I didn't try to convince you file-sharing is akin to advertising. I just tried to tell it like it is.

Selling music, movies, books and video games is a business, big business. There is a lot of money generated by big entertainment and there are shareholders who won't stand for nonsense. For the last 10 years, I've been told the music, movie and game industries have been losing money, lots of money. Year after year I'm told online file-sharing is decimating sales, everyone is losing money, we have to do something to stop it. I'm not going to try and convince you you're wrong, but I do have a question:

If you were selling hotdogs and you started losing money, would you continue selling hotdogs at a loss for 10 straight years? The reason I ask is because I looked at some of the industries own numbers and it baffles me. If online file-sharing is killing these industries, why would they keep producing more content? And I'm sure someone is going to pull out a study showing trends in per-capita spending adjusted for inflation versus discretionary income per single-family residence that shows the entertainment industry is in a bleak position, but that's not what I'm after. If nobody is buying buggy-whips, you don't increase production year after year. Yet over the last 10 years:

The number of movies released is up 23% - [1]
The number of books published is up 47% - [2]
The number of albums released is up 25% - [3]
The video games industry is up 23% - [4]

When I look at those numbers, I have a hard time believing what Chris Dodd, Hilary Rosen and Stanislas Mettra have to say. Didn't Warner Bros. just set a company record for quarterly profits? I'm confused. My guess is that these industries really aren't losing money, but they are losing control. And maybe to them, control is more valuable than profits? I don't know, that's why I'm asking.


References:

[1] - http://bit.ly/rj5mRT
MPAA industry report page 13.
454 movies released in 2001.
560 movies released in 2010.

[2] - http://bit.ly/uRb4KC
R.R Bowker output report, 2002 thru 2010.
215,138 books published in 2002.
316,480 books published in 2010.

[3] - http://bit.ly/tneVtC
90,324 music items for 2001.
113,080 music items for 2010.
Unfortunately, I could not find any release statistics on the RIAA website. Instead, I used Discogs browse by year feature and noted the number of items listed at the bottom of the page. This wasn't ideal so I'm hoping someone out there can dig up a relevant report.

[4] - http://bit.ly/kLHJ2Q
ESA industry report page 10.
208.7 million units sold 2001.
257.2 million units sold 2010.
I was unable to find any information regarding the number of releases per year. I used the number of units sold per year instead. Admittedly, the last two years have shown decreases of 7% and 8% but it should be noted that the chart in question is for "sales of new physical content at retail exclusively." So if you didn't buy at a retail chain or if you legally downloaded your purchase, it's not included in this chart. Page 11 of the same report states 24% of content was digital in 2010. I know it's not a perfect methodology but if we increase 2010's units sold by 24% we would get 318.9 million units which would be a 52% increase over 2001. I believe the 23% increase stated above is lower than the actual number, but I also thought it was important to use the numbers supplied by the industry.

Next post: Review of an independent artist's business model.

Thursday, March 8, 2012

Why I Pirate - An Open Letter To Content Creators

Note: The following is a copy of my open letter that I originally posted on Step2. This is part 2 of 3.

CHAPTER 3

Music. If you want me to buy your music, I need to be able to hear it first. Even if you're trying to sell for profit, you should find a way to get mp3 versions of your music on file-sharing sites. Now I know some of you are going to tell me that since you're selling your songs on Amazon or iTunes then I can hear 30-second preview clips and I have no reason to pirate. Nonsense.

Most music listening is not done sitting in front of the computer clicking "Play Preview," waiting 30-seconds, clicking "Play Preview," waiting 30-seconds, etc. We all listen to music while driving in the car, working out, partying or browsing the internet. I can download your entire full-length album in unrestricted mp3 format in less time than you can listen to one 30-second preview. You're not going to sell me anything by forcing me to sit on one website, going click click click and only getting small snippets of your music. What you *are* going to do is make me not care about your content.

One day I saw the name of an artist I had never heard of before. He had released three albums but hadn't made it big. I downloaded all of his albums and found out I liked a good portion of his stuff. A few months later on Amazon, I noticed he had a new digital album out. I purchased it without listening to a single preview clip. I also told several of my friends about him. I don't know if they bought anything, but that's not the point. The point is he got my money. Specifically because I was able to download his older albums and the stuff he was selling was DRM-free.

Now some of you are sitting there thinking, "Hey, you now have four albums but only paid for one. That artist lost three sales!" Obviously you aren't paying attention. Your facts are accurate but your conclusion is erroneous. No sales were lost. There were only two possible outcomes, either there would be no downloads and no sales or there would be three downloads and one sale. Which would you rather have?

Don't try to gouge me either. We customers have come to expect physical CDs to cost $10-$12. You better be in that range if you want me to buy. You've got no business selling your album for $25, you're just going to alienate me and drive me to download it instead, even if you're a big-name artist. I'm also turned off by the current mp3 market pricing of $1 per song and $9 per album. It's digital, I should be saving more money by not buying the physical product. I think $0.25-$0.50 per song and $3-$5 per mp3 album is my price range. You may think I'm insane, but luckily I'm not confined to your pricing structure, I've got other options.

Those other options also mean I'm not going to entertain your thoughts of using special playback mechanisms to enjoy your music. I will not install some special software just to play your CD. I will not install iTunes. I will not use Windows Media Player. I'm going to convert your CD to flac and mp3 and put it on any device I want. I want my music free of DRM and free of licensing restrictions for personal use. Another thing I'm not going to tolerate is when you offer special tracks through one particular retailer. Like when you make an album with 15 songs and then offer a special 16th song that is only available if you buy from Walmart. I'm definitely going to pirate that 16th song and I'm going to consider pirating the whole thing. Do you want my money or not?

You want to know who's really going to get my money? The artists who wake up and realize they can sell me their newest physical CD for $20. And by paying $20 for it, they're going to give me unrestricted digital copies of this album, and all their other albums. You know who's going to be hurt the most by that? You. Instead of me paying $10 for their CD and $10 for your CD, I'm going to give them the $20 and pirate your album. And if you are going to sell your album digitally, I would really appreciate liner notes. You can offer me a pdf file or simply link me to a webpage, but stop ignoring this valuable info. And make sure you have a website that details everything you've released and what you're working on. There's nothing more frustrating than finding a new obscure artist you like who only has a dormant Myspace music page.

Keeping your head in the sand will also drive me to download. The Beatles fiasco when they held out allowing their music to be sold digitally is a prime example. The band, the heirs and the label all had their idiotic hands in the mix jockeying for position. Since they had no respect for their customers, I decided to downloaded every album simply because I could. When they finally did release digitally, I wanted no part of it.

I have a colleague who has been working with his brother on releasing an album. They are terrified of the internet and it shows. When I first asked to hear some of their music, I was told the only way to hear anything was to come by their studio. Excuse me? Come by your studio? Are you nuts? Barring that, they told me to go see him play live. I'm not a fan of concerts so I doubt I'd go even if it was free, but they wanted me to buy my own tickets. They finally put a few tracks on YouTube but they're still nowhere near getting me to reach for my wallet.

CHAPTER 4

Books, comics and magazines. Some will say it's not a real book or comic if you can't hold it, turn the pages and smell the paper. That's just elitist nonsense. Anyone who has paid attention to the industry knows there is a demand for digital literature and as a producer, you need to give your customers what they want. There is a market for both physical and digital and you better make sure you have both available. Sure, someone huge like Ray Bradbury can hold his breath and stomp his feet and say "No ebooks!" But someone like you can't afford to ignore the market trends. And Ray Bradbury finally releasing ebooks was a non-event for us downloaders, all of his works were already available in ebook format on the pirate sites.

Just like with music, some of you will think that if you provide several preview chapters, I have no reason to pirate. And just like with music, you'd be wrong. Many times I've read sample chapters and then been disappointed by the entire book. Maybe it was your ending, or maybe it was the way you pulled something out of your ass in chapter 17 to rescue the girl. Either way, I'm not gambling anymore. Sure, some people might read those three chapters and think, "Hey, this is great, I'm going to buy this book." Me? I'll download it and read it if it's compelling. If I didn't like it, no harm, no foul. But if I did like it, one of two things are going to happen. One, I'm probably going to buy your next book so you should make sure you have a website where I can check up on what you're doing. Two, if I *really* liked this book, I'm already thinking about who else would like it. I'm going to buy the physical copy and give it to that person. I've probably purchased 10 books this year, yet I don't have a single one in my house because they've all been given away.

So if you want to generate a sale from me, you better make sure your book is available on the file-sharing sites. All of your competitors are already there so there is no reason you shouldn't be also. Additionally, if I buy your physical book, you should throw in a free digital copy. And if you offer digital copies, offer all the possible formats. If you only offer a pdf version, you aren't inconveniencing the pirate community. We can easily convert it to lit, mobi or epub. But what you are doing is potentially losing a sale to people like my mom. If she can't easily get it on her Nook, she's not going to bother with it.

I rarely buy hardcover so I'm going to skip offering a price opinion on it. As far as fiction goes, I expect to pay $6-$9 for a paperback and $3-$5 for a comic. For digital, ebooks should be $1-$3 and ecomics should be $1. Sure, I'll pay more than those prices if you're one of my favorites, but chances are you're not. Stop pricing your content like a diva.

If you've managed to coerce me to buy your current book, you're going to have to entice me if you want me to buy your older stuff (which should always be cheaper than your current stuff as a rule.) At the very least, I should get a discount on your older stuff for being a current customer. And I'm not talking a token 10% discount, make it something substantial like 50%-75% off. Or better yet, use the example I proposed in the music section. Sell me your current paperback for $12 and give me free digital copies of all five of your books. Treat me right, and I'll pay full price for whatever you put out next.

Even though I'm big on downloading, I still subscribe to four print magazines and one daily newspaper. Why would I do that when everything in those old-timey printed things is available for free online? Portability. I'm not paying for the content, I'm paying for the service of collecting all those articles in one easy to carry format and having it delivered to my porch. Now I can take this easily mobile collection with me anywhere I go, including the toilet.

CHAPTER 5

Video games. I've had a very up and down relationship with video games. The ones that I like, I like a lot. And the ones that I hate, I despise. Of all the media I come in contact with, video games have the hardest time drawing money from me and the main reason is their pricing.

Take World of Goo for instance. I first heard about them in 2008 when Techdirt featured their blog post saying they had a 90% piracy rate. The World of Goo makers weren't complaining about piracy, they were just trying to put some numbers out there for analysis. I downloaded the game to see what all the fuss was about, to see what was so great about this game to give it a 90% piracy rate. I felt it was a decent puzzle-type game, and liked the attitude the makers had about piracy, so I considered buying it. The problem was it was $20. I'm not paying $20 for a puzzle-like game that is nothing more than a bunch of similar but different levels. $5 probably, maybe $7, not even $10. I played it a couple of more times to see if it would hook me. It didn't so I deleted it.

Fast forward to 2010 when the first Humble Bundle was released. Upon hearing the details, I thought it was a fantastic concept and had already decided I was going to participate. Low and behold, World of Goo was one of the games. I paid $20 that day and got six games. I still haven't played World of Goo, but they got my money. I've purchased all 7 Humble Bundles and expect to continue doing so.

Now let's look at the big budget games, like Call of Duty, Halo and Madden. $60 for one video game? Forget that, I'm going to download it. If I spend $60 on this game, that means having to skip a future game I might like even more because there's less money in my pot. Even getting these games on sale for $40 is too steep. Right now, $30 seems to be the most I'm willing to spend on a game. And those prices are for when I buy physical copies. I expect discounts when I buy digitally. I think $20 is the max I'd pay for a digital game.

Someone out there right now is thinking, "What?! We spent $25 million making this game, there's no way we can make a profit selling it at $20." Not my problem. If you want me to buy it, you've got to get the price down. Here's an idea, don't drop $25 million making one stupid game. So while you bitch about it, I'm downloading it and playing it anyway.

Here's a real life example of how this works. I heard from a friend that Mafia was an enjoyable game. I downloaded it, played it and enjoyed it. Did I immediately go rush out and buy it? No, of course not. But when I heard Mafia II was coming out and it was made by the same company as the first one, I pre-ordered it. During my pre-order, for $10 more, they offered a Mafia I/II bundle, so I bought the bundle. When the games arrived, I gave Mafia I to a friend.

Why did I download Mafia I instead of trying out their demo? Because video game demos are the worst kind of samples of any media out there. I played the demo of this one adventure game and the demo was nothing more than a series of well-crafted interactive cutscenes. When I bought the game, I discovered the main gameplay was horrible which explains why it wasn't present in the demo. And the cutscenes weren't interactive. I got baited and switched. I once played the demo of an RPG that lasted about 10 minutes and had you fighting through one dungeon. When I bought the game, I found out it had only one other dungeon and the total game time was about 35 minutes. It's not worth it, it's easier to just download the full game. I'm done gambling.

The interesting thing about Mafia II was that I still pirated it. When I went to install the game for the first time, they tried to force Steam down my throat. I will not install Steam or any other DRM package just to play your game. I'm starting to soften up on Steam because it looks like the guys running the show seem to understand gamers. But my biggest complaint with Steam is that I want to play my game. I don't want to wade through advertisements, memos, updates and reminders. I want to play my game. The one I bought.

One company who will never get my money until they get their act together is Ubisoft. I refuse to give them any money until they stop with this nonsense. I'll still be playing their games though, but I'm tired of having my system mucked up or made less secure because of poorly designed DRM. The farthest I'm willing to go is entering a serial number one time, during installation. Anything more complicated than that and I'll probably ignore your game completely. If there is a lot of buzz, maybe I'll download it to check it out. Many times I've had a better experience with the pirated version of a game than the retail version. If something isn't working right with a game, the pirates usually include a fix in the download package.

Ubisoft's stance on their upcoming game I Am Alive is rather amusing. Even though they later backpedaled, Ubisoft originally said there would be no PC-port because of piracy and it would initially be released on Xbox and PlayStation. What I find funny is that the people clamoring for a PC-port are the ones who would probably buy it. The rest of us will just download the iso and play it on an emulator.

If you expect to have any hope of me buying your game, you really need to work on your pricing structure. Nobody buys one game and plays is for 24 months straight and then buys another game. We are constantly bombarded with advertisements for the next new big game. And you know what? It's exciting, we like it. We want to play your games. When they're $60 a pop, it limits the number of games we can buy, but it doesn't limit the number of games we can download.

Next post: part 3 of 3.

Monday, March 5, 2012

Why I Pirate - An Open Letter To Content Creators

Note: The following is a copy of my open letter that I originally posted on Step2. This is part 1 of 3.

INTRODUCTION

I once rented a car for work and had an unpleasant experience. When I returned the car, I thought to myself, "I'm never renting from them again." After sitting on it for a day, I realized conducting my own silent protest wasn't going to help me or the rental agency. So later that day, I called their corporate headquarters and told my story to the VP of customer relations. More importantly, I told him what they did wrong and what kind of experience I expect as a customer if he wants my future business.

I would like all the content creators reading this to view this post as though you are the car rental agency. I am a dissatisfied customer who may never buy from you again unless you get your act together. I normally wouldn't waste my time explaining all this, but the content creators on Step2 certainly seem to be going in the right direction so I'm hoping this information will help.

This post isn't my attempt at a debate. You won't hear any mention of theft versus copying, exposure versus lost sales or right versus wrong. All I want to do is give you real-life insight from the file-sharing world. I want to hold your hand and show you how I decide what to buy and what my motivation is to pirate. I will use the terms pirate, download and file-sharing interchangeably throughout this post but they all mean the same thing: to download your content for free.

Some people will read this and think, "I don't care what this guy says, internet piracy is damaging." For those people, I ask you to skip the rest of this post and jump to the bottom section titled, 'In Closing.'

Some of you won't read this entire post and it won't hurt my feelings. You won't understand your customers and we won't buy your content. And don't read this hoping to find out why people download your content in the hopes that you can stop it in the future. You cannot stop file-sharing. It would be like trying to stop people from using electricity. People who have already paid for your content will also be some of the ones who download it. *And* they'll share it with others.

CHAPTER 1

I'm probably in your demographic. Male, mid-thirties, no children and living in Los Angeles. I'm also an unashamed downloader. I have many albums, many movies and many games that I share with friends and strangers. Most of which I've downloaded for free. Surprisingly, I also have many albums, many movies and many games that I have purchased, that I also share with friends and strangers. How did this happen?

When I was 16 and got my first job, I had nothing else to spend my money on but movies, music and games. I amassed a decent collection those first couple of years. As I grew older, I discovered I had purchased a lot of garbage. I was buying based on hype and I hated myself for it. By the time I was 21, I had stopped buying everything. I only played video games at my friend's houses and I only rented movies because at $1 a pop, I didn't feel ripped off if the movie sucked. I stopped buying music completely because it was hard to justify gambling $10 per CD. And trust me, that's what it all felt like, gambling.

I was in my twenties when Napster appeared and I still remember the day I heard about it. I had just started converting my CD collection over to mp3 and Napster saved me tons of time. After I downloaded the stuff I had already purchased, I began checking out new content. I quickly found several new acts that I liked and started downloading more new acts. It was addicting. When Napster was finally shut down, the file sharing industry had exploded. All these new services were catering to all types of media. Internet speeds were increasing. I had to buy larger hard drives to store everything.

I noticed something peculiar though. I was buying music CDs again. And I was going to the movies again. Same thing with video games and movie DVDs. It definitely started out slowly, but I can say with certainty, I spend significantly more now on entertainment than I ever did before I started downloading. And my story is not unique, many file-sharers will tell you the same thing.

Here's one thing a lot of content creators seem to not understand: I'm downloading your content because I'm interested in it. I'm not downloading it to try and stick it to you, I don't even know you. It's up to you to make the content compelling enough for me to buy it. I might not buy this one since I already have it, but if I become a fan, I'll likely buy the next thing you put out. Many content creators will think this is unfair. "I created the content, I get to control distribution and formats." No, you are wrong.

It used to be that way. If the record label said, "We are releasing this album in New York on the 10th and in Los Angeles on the 20th and only on cassette" then I had no option but to deal with it. Now, I don't care when, where or how you release it. If I want it, I'll get it. This is exactly what the internet did: it took control away from you and gave it to me. If you don't like it, then sit in your basement and create your content for your love of the craft instead of for profit. But if you want to sell it to me, you're doing it my way.

I will still give you my money if you make me happy. The sad part is there are still times where I would gladly pay for something but the content creator has left me no choice but to download it. Techdirt seems to post a story like that once a week. I'm not going to deny myself the enjoyment of your creation just because you haven't figured out how to collect.

How about this, I'll continue to download your stuff and have a blast. When you finally catch up, I'll buy your new stuff if the price is right. Maybe if you're lucky, I'll tell one of my non-techy friends about your movie or book and he'll buy the physical copy because he can't figure out how to download it. And I'm not going to feel bad about any of this because according to my credit card statements, I spend about $2,500 a year on entertainment. A $200 per month entertainment habit that is *unequivocally* fueled by file-sharing. Yes, I download more than $200 worth of content a month, but if you take away my file-sharing, you'll lose the money I'm putting into the market. That was definitively proven during my pre-Napster days.

CHAPTER 2

So let's approach this from a different angle. How about we take a deeper look at why I pirate your content and how you can extract money from me. But before I discuss how to get me to buy your album or book, let's go over a few things that are common to all types of media.

A. I have a lot of things competing for my entertainment dollars. You can't expect me to buy your content sight unseen when your competition has already proven to me that they have a quality product. You have to show me what you've got.

B. Get a handle on your pricing for digital media. Look, we understand why a paperback costs $7. You have to buy paper, glue and ink. It has to be written, edited, printed, shipped and stocked. And each of those people wants to cover their costs and make a profit. But when you write an ebook, and all you have to do is hit 'copy' to make another sale, you have no business charging $7 each. Remember before when I said I'm not downloading to try and stick it to you? In a situation like this, I'm downloading because you're trying to stick it to me.

C. Don't try and restrict when or how I can purchase your content. The internet has made the world a single, always-open marketplace. Either your product is for sale or it's not. Don't try and tell me I can't buy the DVD in the United States because Europe gets the exclusive rights for the first 2 months. I'm just going to download it and probably forget to buy it.

D. Stop trying to dictate how I can consume your content. This includes formats, media types and playback restrictions. I don't care if you think it's only real music if it's played on vinyl. I want it in mp3 format on my phone so I can listen to it at work. I don't care if you think a Hulu subscription is only valid for a computer. I want to watch the content on my television. I don't care if you think I should have to buy a digital copy separately from the DVD. I'm going to buy the DVD and create my own digital copy. And if you try to inject DRM to prevent me from doing what I want, you will have ruined your reputation and I will never buy from you again. Instead, I will only download your content for free. The question isn't whether I'll get your content in the format I want, the question is will you get my money in exchange for it? Your cooperation helps.

Next post: part 2 of 3.