A different perspective on downloading?

The following piece was originally posted by Peskydang of DelphiForums here. -- GH

Right now, the RIAA and the AMPTP are engaged in enormous battles with "pirates."

The RIAA will sue a college student for a million dollars if he or she has downloaded and shared 22 songs. Not because that college student has cost them a million dollars, but because they want to terrify and intimidate other college students into not sharing files.

Does it work?

No.

It creates resentment among the biggest target audience for the music. What it creates is not less piracy, but more.

What are pirates? The RIAA would have you believe that a pirate is a loathesome villain, the scum of the Earth, plundering the wealth of those who have fairly earned it.

But the historical view of a pirate is something else entirely. Pirates were not criminal gangs as much as they were front-line fighters in an economic war against the oppressive weight of an empire. Pirates are often economic freedom-fighters. The Somali pirates aren't pirates simply because there is an opportunity there -- they are pirates because they have no government to protect their fishing rights from foreign vessels or to keep other nations from dumping toxic waste in their waters. They are an ad hoc Somali navy, providing the only influx of capital into a starving nation available to that population. To the Somalis, the pirates are heroes.

But even if pirates were everything the RIAA and the AMPTP want you to believe they are -- villainous scum of the Earth -- the weapons that these organizations are using are the wrong weapons. They are using the weapons of law to fight a battle based on economics.

Here's what I believe the RIAA and the AMPTP have failed to understand:

All that downloading demonstrates that there is a serious demand for the product.

People download books, TV shows, movies, music because they want to see the shows or listen to the music or read the book. Because they WANT the product.

Given the choice between downloading a file that's possibly infected with malware or downloading a file from a trusted and authorized source, I believe that most people would download the file from the authorized source. But if the authorized source does not make the file available or makes it unnecessarily difficult, then they hand the advantage to the pirates.

An authorized source could put a reasonable number of advertisements on their site or even embedded into the file and it would still have the advantage. All else being equal, the authorized site would have the advantage of appealing directly to the fan-base, not only for this product but for all additional related products as well.

Some copyright owners believe that they can make a profit from a pay-per-download model or a subscription model. So far, neither of those models had captured a significant consumer base, and I doubt that either will. Not in the current environment.

But let's look at some history, let's look at some examples of things that are working.

Let's start with the early days of micro-computers. Z80 chips running at 2mhz. In those days $50 was a lot to spend on software. The most pirated software was dBase II (database), WordStar (word processing), Turbo Pascal, and Lotus 1-2-3. And of course, DOS. In those days there was no such thing as copy protection, nor were there serial numbers. You bought a product, you installed it. You used it. If you had two computers, you installed it on both. If a friend needed a copy, you copied a disk for him. Or vice-versa.

Let's take the WordStar example. In the early days of the late seventies and throughout the eighties, in the world of word processing, there was WordStar and then there was everybody else.

WordStar was the most pirated software in the seventies and eighties. It was pirated because it was the best word processor available. It was ubiquitous. It came bundled on KayPro and Osborne machines, so it became the word processor for business users. It was the standard. Its format was the standard and all other word processing software had to be WordStar compatible or have conversion utilities.

The evidence suggests that WordStar's position was not simply that it was the best software of the time, but also that because it was pirated so widely it became THE STANDARD. And because it was the standard, anyone buying software -- especially any business buying software -- would buy WordStar first.

WordStar also had upgrades almost every year. Every upgrade added new features -- a spell-checker, a grammar-checker, etc. So those who had been using pirate copies, as they moved into a position where they could afford $50 for the latest version, often found it more convenient to buy the upgrade than wait to find a pirate copy. All those pirated copies not only functioned as advertising, not only fuctioned to set the standard, but they also functioned as a gateway for new users to upgrade and become paying customers.

It was try-until-you-buy software.

Today, most major software products have trial versions. You can download any Adobe product in a trial version that you can use for thirty days. And if you take a few minutes to hunt across the Internet you can find out how to crack almost any Adobe trial software into a full version that doesn't expire after thirty days. This is why today, Photoshop is the single most pirated software anywhere.

Photoshop is also THE STANDARD for photo-editing and image processing. And all those pirated copies are gateway editions for users. Those copies allow users to become proficient in a piece of software with a long steep learning curve. It takes more than thirty days to learn how to use Photoshop well. But as you approach a level of skill or even mastery with Photoshop, you are not only heavily invested in Photoshop as a primary tool, you are far more likely to buy a copy. But even if not...Adobe doesn't lose. They still have a reservoir of users that essentially serve to keep all competitors from getting any kind of a foothold in the same market. There's Photoshop and then there's everyone else.

Consider the game Sins Of The Solar Empire. It's a game that's easy to pirate. But the publisher, instead of investing tens of thousands of dollars in efforts to track down and punish pirates, or hundreds of thousands of dollars in copy-protection that only annoys and frustrates and punishes the loyal users, instead of taking that route, the publisher has said, "We are going to invest our resources in serving our customer base." ie. We know there are pirates, we're focusing our efforts on those who have paid for their copies of the game.

And what about the pirates? They create word of mouth, they create credibility, they create a mystique about the game, they create a user base that adds gravitas to the game in the marketplace.

Okay, late last year, I needed to double-check something in a book I had already paid for three times -- but all my copies were in storage. So I went to isohunt and browsed to see what was available.

Here's what I discovered. Everything J.K. Rowling ever wrote is available. All of Tolkien. Every Dune book. Everything by Heinlein. All the best sellers in SF & Fantasy. All the best sellers.

Unfortunately, I couldn't find the Tom Disch book I was looking for. Nobody had scanned it, nobody had shared it. It was an obscure book and very few people remembered it.

Now what this suggested to me was that the best-sellers are freely available for download because they're best-sellers. It did not suggest to me that Rowling and Tolkien and Heinlein were losing sales to piracy as much as the piracy was helping to create a free online library of the work that was most popular and most in demand.

So I'm suggesting that maybe instead of thinking that downloading is costing sales, perhaps downloading is encouraging sales -- or at least creating a word-of-mouth environment that helps to create, establish, and maintain the popularity of these authors.

How many sales are lost to downloading? I don't know -- but I think that the RIAA and the AMPTP are assuming that every download is a lost sale. No, it isn't. Suppose somebody sends me a great song by Chris deBurgh that I would never have heard any other way. Do I stop there? No, I'm likely to go looking for more. I might download his "greatest hits" album, but if I'm really moved, I might go to Amazon and see what else he has, especially if I'm not happy with the miserable quality of an MP3 file.

Consider this piece of history.

Back in the twenties, when commercial radio began, the recording companies were against the idea of letting radio stations play records. Because, they reasoned, if people could hear the music for free, they wouldn't buy the records at all.

Exactly the reverse was true. People heard the music on the radio and wanted to own it so they could play it whenever they wanted to. Record sales soared. Throughout the fifties and sixties, radio airplay was so important to record sales that it fueled the entire business.

Did the industries learn from this lesson? Sure they did.

When Sony started selling Betamax units for home TV recording, Disney sued Sony. If people could record TV at home, they would steal the product and pass it around and share it and the studios would lose money. The Supreme Court said that home recording was covered by the fair use provisions of the copyright law. Disney lost, Sony won.

Within five years Betamax tape sales and VHS tape sales were such a significant part of the product chain that they helped push many movies from marginally profitable to extremely profitable. The VCR helped make niche markets profitable. Likewise the LaserDisc and the DVD and the DVR made it possible for audiences to access entertainment more conveniently. For the last ten years, DVD sales have been factored into profitability projections of all films, with DVD sales providing a hefty back-end that often outweighs the front-end theatrical release.

What all of those technologies demonstrate was that the audience WANTS the content. And they want it conveniently.

What the lawsuits demonstrate is that the studios don't understand their own audiences. They think their business is rooted in a specific distribution channel that must be protected. They do not understand that distribution channels are evolving. We've evolved from free TV to satellite/cable TV which makes it possible for the average viewer to have access to several hundred channels -- and that viewer doesn't mind paying a hundred bucks a month because that access is worth it.

I'm not certain what the next profit-model is going to be, but it's not going to involve lawsuits. I am certain that it will involve respect for the audience, convenience for the user, and I'm almost certain it will include advertising.

Once upon a time, you went to the movies, you got a newsreel, a short subject, a cartoon, previews of coming attractions, and two movies. Today, you get fifteen minutes of ads, previews of coming attractions, and one movie. The market evolved with the audience. The audience doesn't miss the second movie, the cartoon, the newsreel. The audience puts up with the commercials, enjoys the previews, and after thirty minutes, they get the movie they paid for. Once upon a time a movie theater was one auditorium. Today it's a multiplex, so you can choose between twenty movies. One candy counter (the high-profit center for the theater) serves twenty auditoriums and the multiplex is a healthy profit center as long as there are movies that people want to see. Once again, the market has evolved based on what the people are willing to show up for. The advertisements and the candy counter make the business profitable again.

Google succeeds as a free service because they have quiet unobtrusive advertisements on almost every page they serve. An advertiser's site is made available to millions of potential customers every day. He wins, the customer wins.

I think the future of internet content will be in advertising. Advertising pays for free TV, it can also pay for free internet content. Will there be subscription models? Possibly -- but at this point in time, I see serious resistance to subscription models.

Trial versions and pay-per-download seems to be a viable solution for software. We do know that pay-per-download will work for music and movies if the price is right and the content isn't copy-protected. So that might also be a viable model too.

But trying to protect the old distribution channels by threat of lawsuit is shooting your customers in the foot, then reloading and shooting them in the other foot. It ain't gonna work.

IMHO.

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