Source: Bigstock
The saying “information wants to be free” has a hidden meaning. It really means, “information is way super easy to copy.” When you install an app, you copy it into your hard drive or flash memory. When you launch a program, you copy it into your RAM. When you browse the Web, every word and photo is copied into your browser cache. Computers, from phones to mainframes, are basically copiers with benefits.
This basic copying function is the great strength of the digital age, but it also makes it easy for thieves to steal copyrighted content. For even a mildly sophisticated user, if you copy it, you can share it. That’s a problem for all business models based on limiting access to a program or an app or a music library or an article archive or a video series. And human nature being what it is, there will always be some people willing to go the extra mile in order to get something for free. Let’s look at the data to get a feel for the problem.
PORTRAIT OF A PIRATE
It may help to start by looking at who is actually using pirate services and tools to download or stream free content and apps. There’s some interesting data on this:
(Source: Morning Consult via Statista)
(Source: Morning Consult, via Statista)
Here’s our baseline — 11 percent of responders actually admit to piracy, and 35% see nothing wrong with it. The breakdown by age is about what you would expect:
(Source: Morning Consult, via Statista)
It is no surprise that younger people are more likely to pirate content. They tend to be less able to afford legal (ie, paid) services, and are more likely to have the tech chops needed to commit the crime.
THE TRUE COST OF PIRACY
But how are the kids these days committing their nefarious acts? In the same way that the music and film industries have moved on to streaming services, piracy has done the same:
(Source: Muso, via Statista)
Just as the large part of entertainment revenue now derives from streaming services — 65% of music revenue, according to this RIAA data — so too have pirate services followed the money. There are two major culprits. Unlicensed streaming platforms, which provide content without paying creators or rights holders, monetize free content via advertising and even by offering subscriptions. And illicit streaming devices are easy for users to load with unlicensed streaming platform software — or even come “loaded.” Examples include Kodi Boxes, Dragon Boxes, and TickBox TV.
Trade site Variety, quoting Muso data in March 2018, details the reach of the problem:
- TV accounted for more than one-third of the reported global piracy activity, with 106.9 billion visits, followed by music (73.9 billion) and film (53.2 billion). Muso also looked at piracy in publishing and software. Around 53% of total piracy occurred on unlicensed streaming platforms, and it’s much higher in the U.S. for television (94%) and movie (77%) content.
Late last month, the FCC asked Amazon and Ebay to stop allowing the sale of illicit streaming devices on their sites, especially the ones falsely claiming certification by the FCC. A TechCrunch report on the issue highlights the irony in this: Amazon offers a product that is often used as a Kodi box:
- Amazon Fire TV Stick, or “firestick” as consumers tend to refer to it, is one of the most popular devices out there today for enabling piracy. People either buy the “firestick” themselves and install Kodi and various add-ons or they buy a slightly more expensive, hacked firestick from a local reseller who’s hawking them on under-the-radar backchannels, like Facebook Groups or online message boards.
The defense most commonly used by makers of these boxes is that they are just general purpose computers, often Android devices, and they are no more liable for users installing pirate services than is Dell or Microsoft when users install BitTorrent software on their Windows PCs. The courts will eventually decide the issue, and in the meantime, pirates thrive.
But how much piratical thriving is there going on these days, really? Research released in October 2017 suggests that losses due to piracy currently top $30 billion worldwide, and that will rise to over $50 billion by 2022:
(Source: Digital TV Research, via Statista)
Well, $30 billion to $50 billion dollars is sure a lot of TV and film piracy, isn’t it? Media creators are definitely losing out on a lot of money. Well, actually, they are not. Data like that shown above is grossly inflated.
When a flea market shopper buys a $10 “Koach” knock-off handbag instead of an authentic $300 Coach handbag, that’s not $300 of lost revenue for Coach. If police could somehow stop the sale of all knock-offs, the shoppers who can’t buy them any more are certainly not going to flock to Coach stores to pay full price. Those shoppers could never afford those full price handbags in the first place. Nonetheless, when police raid those flea market vendors and confiscate 100 knockoff bags, they tell the press that they confiscated $30,000 worth of goods, not the $1,000 that the vendor would actually have accrued.
The same logic applies to Internet piracy. A minimum-wage-earning Millennial is not going to upgrade to full price HBO and several other services just because you take away his Kibo box. Nonetheless, the data above assumes that he would. That provides stronger ammunition to media creators trying to convince lawmakers to crack down on piracy. The original press release for the Digital TV Research shown above makes this agenda clear:
Simon Murray, Principal Analyst at Digital TV Research, said: “Piracy will never be eradicated. However, it is not all bad news. Piracy growth rates will decelerate as more effective government action is taken and as the benefits of legal choices become more apparent.” [Emphasis mine]
Even industry bible Variety could not quite keep a straight face when reporting this research.
- Not everyone pirating content would necessarily sign up for a legitimate service if their illegal access to content were curtailed, but the sums involved make sobering reading for SVOD and AVOD services.
If I rewrote that Variety observation, it would go something like this: “Sure, only a few users of pirate services would go legit if they had no other choice, but ignore that and pretend this imaginary data is real.”
Well, take a look at some reality-based data, which considers how much people DO pay for pirate streaming. Canadian broadband management company Sandvine tracked North American pirate streaming traffic and figured out that about 6.5% of households — 7 million people paying for unlicensed streaming — are using a pirate service. As reported in Gizmodo, the math works out like this:
- It’s estimated that these seven million subscribers could IPTV providers generate around $800 million in revenue each year – assuming an average cost of $10 a month. And that’s just North America. When you take everywhere else into consideration Sandvine estimates that it’s a billion dollar industry.
So, piracy’s true dollar total: $1 billion, not $30 billion. That’s a billion dollars in real money, and a large problem, there is no question. We can dismiss the hype and the exaggeration while treating piracy as the still-significant issue that it is.
DOWNWARD TRENDLINE
So yes, piracy remains a significant problem, but on the other hand, it is a problem on the decline. The amount of piracy, as measured by visits to pirate sites, is trending flat to down. Here’s some 2016 data from Muso, the content-protection solutions provider, whose research I also cited above:
(Source: Muso 2016 Piracy Report)
Also see this 2017 report, showing continued declines:
(Source: Muso 2017 Piracy Report)
Why Muso looked at visits per month in 2016 and visits per day in 2017, I don’t know, but it is the direction of the trend line that tells the story.
The more recent, albeit inflated, Digital TV Research data quoted above also concedes that the legitimate growth in TV and film revenue is outpacing the growth in piracy revenue.
In November 2018, writing for the Columbia Science and Technology Law Review, Jake Nevola put the problem of digital piracy in perspective.
- Entertainment and software companies began to prophesize the end of their industries due to lost profits from piracy if they weren’t given the tools to fight internet piracy, leading to [failed] attempts by the federal government to pass draconian internet laws like SOPA and PIPA. … Yet, while predictions were that internet piracy would increase, over the past few years we’ve heard fewer and fewer outbursts from these production companies. As it turns out, the total amount of illegal downloading has been steadily decreasing for the past few years.
It has not been government regulation or wider adoption of DRM that is slowing piracy. What is it? Nevola has a compelling answer:
- The most popular theory is that when primary distributors make their copyrighted work as easily accessible as pirated material, people will switch back to acquiring the work through legal channels. In other words, companies have begun to embrace the convenience of the digital marketplace and are offering safer and faster services than pirates could provide, which has drawn people away from acquiring the work illegally. Pirating always contains a few risks that these services avoid. First, there is always a risk when pirating that a pirate might be caught and sued. Second, when pirating there is no guarantee that the product downloaded is what it says it is. Oftentimes, individuals will maliciously disguise malware as songs or movies and place it on pirating sites. New legal distribution systems avoid these risks while being faster (usually) than their illegal counterparts. In particular, subscription streaming services such as Netflix and Spotify have provided incredibly convenient access to television shows and films, and music, respectively, and have single-handedly had a notable effect on illegal downloads of videos and songs.
You know what pushes the trend line up instead of down? Digital rights management and other systems that make it harder for users to legitimately access the content they have purchased. DRM slows down games and increases system requirements, reports ExtremeTech — driving gamers to pirate versions for faster performance.
Then there’s the case of Denuvo, a DRM system that is actually pretty transparent and which was, for at least a good eight to nine months, unbreakable. Recently, video games including DOOM and Rise of the Tomb Raider enjoyed a launch and months of sales without any piracy at all. Eventually, these games were cracked, but only after the game had plenty of time to find its true audience and make a bundle. And as we know, piracy costs publishers tons and tons of sales, right? So in a no-piracy environment, those games brought in all the revenue that pirates would have stolen, right?
Of course, no. Here’s tech columnist, author, and webcomic creator Shamus Young explaining the issue:
- For a long time publishers hit us with dire claims about how 90% or even 99% of game copies were pirated. We were told that piracy was destroying the industry and causing a huge loss of income. Many of us were skeptical about this rhetoric, but it wasn’t the sort of thing you could disprove. But now we’ve had several AAA games arrive on the scene and remain safe from piracy for months, and it’s pretty clear that the dire claims were just as ridiculous as we suspected. Game profits have not shot up. Rise of the Tomb Raider didn’t attain 10× the typical PC sales, despite the fact that for 8 long months it was unavailable to those pirates that made up 90% of the player base. If Denuvo caused a visible spike in PC sales then they surely would have begun crowing about it by now. Piracy is no longer a handy scapegoat for publishers.
More evidence to this point continues to bubble up, despite establishment efforts to suppress it. The EU spent $430,000 in 2013 for a study on piracy. When the research showed that piracy has NO effect on legit sales, the results were suppressed. They only came to light in September 2017 after an EU parliamentarian used a freedom of information request to get a copy of the report. Check out this Engadget article: EU withheld a study that shows piracy doesn’t hurt sales.
HOW (NOT TO) FIGHT PIRATES
So if DRM does not stop piracy, and if piracy does not hurt sales (much) anyway, why inconvenience users? Why impose new regulations that will hurt users tremendously without actually solving the problem, as in the past with PIPA and SOPA, and as in the present with the proposed EU Internet regs that are currently under consideration, per a BoingBoing report?
The answer, I think, is that content creators, publishers, and rights holders mistakenly believe that piracy is a huge threat to their revenue. But the data shows that, depending on the particular media or situation, piracy is either much smaller than the fear-mongers say or not actually an issue at all.
And there is also the marketing and PR downside to fighting piracy too vigorously. Trade groups have at times created bad publicity for the industry, for example, by suing kids and grandmothers. When Weird Al Yankovic creates a satirical song about how you are persecuting innocents, you know you’ve gone too far.