Thursday, 9 June 2011

Piracy - it's not about persuasion

I recently read an article in the Guardian by the always entertaining Charlie Brooker looking at the recent fuss over the move by Spotify to limit free access to its service. He believes that people are wrong for objecting when things on the internets that were free stop being that way.

He has a point, and it's a good one. Spotify ran a free service for years. I used it. I loved it. All that music, free of charge, with just the odd advert for blood donations. I went for the paid service for a while, mostly so I could use it on my phone. I even looked into donating blood. However, during that time, it never made any money. They eventually had to limit access to new subscribers to cut costs and they've now decided to drastically cut back on how much music non-paying users can listen to.

The people who run Spotify aren't idiots, and they must have known that this would lose them a huge number of listeners. But clearly they had realised that they couldn't make money from the free model and probably had little choice but to force a small proportion to step up to a paid membership, while cutting costs by shedding non-paid listeners. This makes sense. If I don't want to pay I can go somewhere else.

But Mr Brooker is peeing against the wind. It's not possible to persuade any real number of people to stick to offical services, nor is it possible to put the file-sharing genie back in the bottle. If none of the official services, paid or otherwise, provide anything more than you can get from torrent filesharing then torrent filesharing will always win. It's free. Free always wins. Attempting to turn back the tide by technological means will always fail because the fast moving torrent community will always find ways to circumvent them. Likewise litigation can only scrape the very edges. Most people reason, correctly, that the odds are with them. Even if you live in a country where rights holders can actively pursue filesharers the sheer number of people doing it means that the chance of being the unlucky one is very very slim. If Freenet ever takes off then there'd be no possibility of tracking anyone at all.

However, fairly enough, the industry will point to the amount of stuff being pirated and claim that this means money is disappearing from their pockets and destroying their businesses. This does miss the point that most of the stuff pirated wouldn't have been bought if it wasn't available free. Some teenager in their bedroom might download 1000 albums a week but it's fairly safe to say that he wouldn't have bought that much if he'd had had to pay for it.

But, let's take it at face value for a moment and think about the what the long term consequences if piracy really does take the funding out of the creative industries.

With music, people will always make it. It doesn't require much investment, there's little cost in distributing it and, if it's good, some artists can still make lots of money from gigs and live performances. The rest will probably keep making it, but with a day job. Less people will make a living from it and it might be harder to find the good stuff, but at least we'll see the end of manufactured acts, and that would be a blessing.

But film is different. If I want to make a film, it costs money. A lot of money. I can't make Avatar in my basement with a bunch of teenage friends. And if I've spent money then I have to make that back, or I won't be making any more. So, the more film gets pirated, the less money gets spent and less good films will be made. Studios will end up focusing all their money on the big blockbusters that "have" to be seen in the cinema and we all lose out on the indie stuff.

You can see this today with tv. The proliferation of channels and fragmentation of tv audiences has meant that less people watch any individual program, so advertising revenue has dropped. Less is spent and quality drops. Just look at 5, 5* and suchlike. The only channels making good tv are ones like HBO, such as with Boardwalk Empire which cost $50 million for the pilot. Now, to get HBO you pay for it separately to any other fee. It's the only way they can get enough money to pay for all the money they need to spend to make the good tv. The good tv attracts lots of viewers, who are the right kind of viewers from an advertising perspective, so advertising increases. Good reviews mean yet more people take up the paid service, and you have even more money to make even better programs. It's a virtuous circle. The rest of the channels? Repeats and crappy dramas. Because that's all they can afford. Even the BBC, publically funded and better than most, has channels full of repeats.

But this identifies a potential solution. People are prepared to pay extra for these channels because it's the only way they can watch these programs. By making very high quality programming available behind an effective paywall HBO has found a way to make the money they need to fund these new productions. Granted these programs may end up online pretty soon but, for people who want to watch them as soon as possible, on their tv, in high quality, this works for them. The same situation is happening with 3D films. I don't have a 3D tv so, if I want to watch a film in 3D, I've got to go to the cinema.

So content producers, both of music and film, have to innovate if they want to survive. They need to come up with a way of being better than filesharing, while still collecting revenue.

I don't know how they do this. My bet is that, eventually, all content on the internet will be paid for by a standard fee, similar to Spotify. You pay, say, £50 a month on top of your ISP fees. Then your ISP records everything you look at and splits that money between those content producers. If I watch 100 films a month then each one gets £0.50p. And, if someone else listens to just one album, then that one gets all £50. Granted it would require a lot of organisation, probably a big jump in tech and would be pretty harsh on those people who just use the web for email. But, given that you'd need to pay the fee to get online, it couldn't be avoided. Then, once you're on, everything is free at point of use so there is no incentive to pirate, but content is still monetised for the producers. Everyone wins. It might not work, but some solution needs to be found,

Either way, the message to content providers is simple. Either they innovate and provide something better than free or they die. But if they chose the latter then, in the long run, we all lose.

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