How Piracy Benefits Companies, Even If They Don't Admit It

How Piracy Benefits Companies, Even If They Don't Admit it

We've talked about the legality of piracy, yet you're probably breaking the law everyday anyway. However, piracy can sometimes have its benefits. Even to the companies who own the copyrights.

Pictures: Adrian Martin, makelessnoise, Gary Denham, Dinosaur Comics

Generally speaking, it's assumed there isn't a lot of moral ground for pirates of any type to stand on. It's breaking the law, and it steals from content producers, right? Well, the story may be a bit more complex than that. Let's start by taking a look at one of the biggest examples.

Sometimes Creators Don't Care As Much As We Think

How Piracy Benefits Companies, Even If They Don't Admit it

We assume that content producers have an obsessive grasp over their intellectual property. After all, some IP owners have helped that perception along. However, not everyone who produces content or software is waging a war against pirates. Speaking to a group of investors on an earnings call, the CEO of Time Warner Jeff Bewkes said this in 2013:

Yes, in response to a question about whether the network kinda-sorta regards the extensive theft of HBO's flagship show, Game of Thrones, as a compliment, Bewkes said, "I have to admit it, I think you're right." The much-discussed fantasy series is HBO's most popular, and "if you go to people who are watching it without subs, it's a tremendous word-of-mouth thing," the exec told investors. "We've been dealing with this for 20, 30 years -- people sharing subs, running wires down the backs of apartment buildings. Our experience is that it leads to more paying subs. I think you're right that Game of Thrones is the most pirated show in the world," he said. "That's better than an Emmy." (Emphasis added.)

Let's set aside for just a moment that these words came out of the mouth of the CEO of Time Warner and were directed to investors. The implication here is pretty clear: piracy is not a universally bad thing and (some) content producers know it.

It's what could perhaps be called The Adobe Problem with piracy. Adobe makes expensive software products like Photoshop that are simply outside the range of most people. However, they're also supremely useful. "Photoshop" is on that rare level of ubiquity alongside "Google", "Taser" and "Super Glue" where the product becomes synonymous with the act itself. How exactly does a product with a historically expensive price tag become so incredibly common, not just in language, but in usage? How does Photoshop become the standard even with so many cheaper alternatives out there?

The answer is, in part, piracy.

Adobe touched on this when it launched the Creative Cloud subscription model. Adobe executive David Wadhwani explained that the reason people pirated their software wasn't out of malicious intent, but what we all knew already: they wanted to use high-quality software, but couldn't afford it:

I do not think people who pirate our software do it because they are bad people, or because they like to steal things. I just think that they decided that they can not afford it. And now, with the switch to subscriptions and with the ability to offer software at a cheaper price, we see that the situation is beginning to change and we're excited.

Take it with the grain of salt appropriate for a company man promoting a company product. Plus, we're not exactly thrilled with the creative cloud solution in its current implementation. However, Adobe has also thrown would-be pirates a bone here and there by occasionally resetting the free trial period. It's an uneasy truce but it speaks to a larger truth that both sides are aware of: no one is going to pirate something they don't want to use.

Even Warner Bros is on board with this concept, using piracy numbers as a surrogate for demand. The studio's Chief of Anti-Piracy Operations said as much in June 2013:

Generally speaking, we view piracy as a proxy of consumer demand...Accordingly, enforcement related efforts are balanced with looking at ways to adjust or develop business models to take advantage of that demand by offering fans what they are looking for when they are looking for it.

The unwritten rule is getting written a lot more these days. Piracy may not be preferable to people who make content, but they're also beginning to realise that it's not a pure negative on the balance sheet. Piracy is more complex than that. Sure, every person who pirates Game of Thrones didn't pay money to HBO... but they probably told their friends. Money lost in subscriptions but saved in advertising.

It Can Help to "Keep Circulating the Tapes"

How Piracy Benefits Companies, Even If They Don't Admit it

Another common argument against piracy is that it stifles creativity. After all, one would argue, how can you hope to encourage artists to create things if you take away their revenue stream? If you can't make a living creating, you might stop creating.

The inherent problem with this argument is that it conflates making copies with corrupting a revenue stream. One classic example is the cult classic from the late '80s and early '90s, Mystery Science Theatre 3000. This show initially aired on a small television station called KTMA with very little coverage. Despite positive early reactions, the station was forced to close down.

During that first season, however, the show's credits contained what became an iconic line: "Keep circulating the tapes." Viewers of the show would record episodes to share with friends who may not have had access at the time. This increases exposure help keep the show on the air. Furthermore, when KTMA closed down, MST3K was picked up by the Comedy Channel and ran as a signature series. The Comedy Channel would later go on to merge with competing network HA! to form the now-prolific Comedy Central.

It's an oversimplification to say that piracy is directly responsible for the existence of Comedy Central (notably, recording the shows was legal, but how far they were circulated moved into a more grey area). However, this concept of piracy as a form of preservation didn't stop in the '90s. In 2011, one Bittorrent user reclaimed 172 BBC websites that were marked for deletion due to budget cuts.

Of course, we can't assume that piracy is strictly a form of digital history preservation. That's silly. Torrent trackers and Usenet aren't the Library of Congress, nor do they pretend to be. However, we can see that piracy can not only be a valid advertising and analytics tool for big companies, it can aid in archiving and distribution for smaller ones.

Damage is Done By Piracy -- But No One Knows How Much

How Piracy Benefits Companies, Even If They Don't Admit it

Knowing there are exceptions to the rule is nice, but it doesn't really give piracy any moral ground to stand on. Sure, you could help save a show accidentally by pirating it enough to boost its perceived demand. But does that balance out with the damage caused by piracy? Surely, there is a non-zero amount of lost sales due to piracy. How much damage is actually done, then?

The simple answer is, we don't know. And neither do movie industry executives. Speaking to a federal court in California, the MPAA explained how actual damages (that is, the exact number in financial damages done to the organisation) cannot be defined:

To permit consideration of actual damages under these circumstances would be perverse -- and particularly unfair -- given that Plaintiffs elected statutory damages precisely because their actual damages are not capable of meaningful measurement.

What that means in normal terms is that the MPAA wanted the court to consider damages in terms of what would "send a message" (to use their later words) to would-be pirates and dissuade new pirate organisations from cropping up. This, the MPAA claims, is the only fair way to resolve the issue, as there's no way to calculate the exact value of lost sales or reduced revenue.

After all, as we established earlier, the issue is complex. A pirate may download a movie that they would otherwise buy because piracy is an available option. Then again, they may not be able to buy it in the first place. And what about new sales made due to increased word of mouth? These things can't adequately be calculated, at least not to enough to satisfy a court. That's why "statutory damages" are used. Statutory damages are predefined and exist partially as punishment for the offending party and deterrents for anyone else.

The use of statutory damages is why you can hear stories of someone who downloaded 30 songs and owed $US675,000 for it. The range for statutory damages under copyright law (between $US750 and $US150,000 per infringement) is sometimes ill-fitted to individual cases. Because it's not directly tied to damage done, it's also difficult to tie those numbers to how much damage is really done. To put it another way: if we knew exactly how much illegal downloads hurt the industry, that would be the figure charged to those who are sued. Unfortunately, the reality is more complex than that.

Can Piracy Have a Moral Code?

How Piracy Benefits Companies, Even If They Don't Admit it

All the above arguments are just one side of the issue (this is Evil Week, after all, so we're playing a bit of devil's advocate). However, it's enough to acknowledge that downloading stuff isn't always inherently evil. Or, at the very least, it occupies a moral grey area. We can use this as a framework, however, to guide moral choices. Here are some questions you can ask yourself if you're deciding whether or not to pirate something:

  • Would you pay for this if you could? Our own Thorin explained last year why he stopped pirating. The simple answer is: the legal options are good enough, and the illegal ones hard enough that it was worthwhile to pay when he could. If there are legal options available for a price you can afford, would you still pirate something?
  • Is there a way to support the creators? It's not openly acknowledged often, but watching a big-name show and then advertising it to others is helpful. Going to see bands in concert, buying merchandise and promoting the stuff you like may help balance the cosmic scales morally (if not legally).
  • Who are you hurting? Piracy takes on a different connotation morally depending on who's making stuff. Chances are Michael Bay's not going hungry if you download Transformers: Age of the Dark Side of the Fallen 12. But downloading a pirated APK of a $2 Android app from an indie developer is typically seen as a bigger sin because each download is a bigger percentage of the developer's take-home pay.

If Johnny Depp has taught us anything, it's that even pirates aren't completely devoid of a moral centre. You may not agree with the moral choices of a pirate, but to pretend there's a divide between the "good" people who pay for everything and the "bad" people who "steal" things belies the complexity of a complicated market.

It's also worth pointing out that none of this makes piracy any more legal. This is a mental exercise to understand piracy that doesn't actually have that much of an effect without changes to the law. We've talked about situations in which breaking copyright law may be illegal but still socially acceptable before (for example, ripping a DVD you own). However, it's still up to you to decide what you're going to do with this information. Feel free to discuss how you approach the morality of piracy in the comments below.

Lifehacker's Evil Week highlights the dark side of life hacking. How you use that knowledge is up to you.


Comments

    I'll see a movie at the cinema, I'll download it and then I'll buy it on Bluray. With TV shows I'll download, watch and then, once again, buy them on DVD or Bluray. I think I'm covered when it comes to my support of content producers and the local distribution model.

    Unfortunately I've done the maths and it's actually going to be cheaper for me to just stream everything (through legal overseas providers) than to keep building on my already extensive physical library. So no more torrents but also no more local sales.

    I downloaded Alien Isolation. Played for a little bit and thought "Fuck this! Cant play scary games."
    Uninstalled it. Good thing I didnt wasnt money on it.

    Downloaded Borderlands Pre-Sequel. Played for a little bit and though "This is really bland and hollow."
    Uninstalled it. Good thing I didnt waste money on it.

    Downloaded The Vanishing of Ethan Carter. Played for a little a bit and though "Wow, this is really good! I love it!"
    So I bought it last night.

    If I couldn't have pirated them I would have either wasted money on two of the games (which is what the big publishers want, regardless of if its a good game or not) or I wouldn't have spent any money on any of the games which would have been unfortunate for the Ethan Carter developers.

      Another reason they need to bring back a lot more game demos...exactly the same thing but just the legal version.

        This.

        In my opinion publishers no longer want to release demos of games anymore since they now rely heavily of the misinformed hype that social media can provide as coverage for their games, and so releasing a demo would only hinder their potential sales...
        ...Because their games aren't the same (decent) quality as they used to be. The publishers rush out cookie-cutter games every year instead of letting the developers steadily craft a game that, while not coming out as quickly, will be something that gamers will cherish and enjoy for many years after release.
        If publishers started releasing demos, the gamer public would see these throwaway games for the rubbish they are and not buy the final product.

        Which is a shame really, because not enough gamers are smart enough to know when a game is worth supporting at full price (or at any price really), and so they buy the game day one, at full price (or worse pre-order it). Which only emphasizes this problem and reinforces the idea that pirating a game is better than buying it because the gamer may waste their hard earned money.

        R.I.P. Demos, I will continue missing you. :S

        Last edited 23/10/14 3:59 pm

        Depending on who you ask, demos kill sales.

        (Personally... I think demos of shitty games kill sales of shitty games, and demos of awesome games boost sales of awesome games.)

        I've gotten to the point where I rarely even buy games any more.. If I can't find a game I like by trying it out. I won't read (play) a book by its cover.

    When it comes to shows like Game of Thrones, I flat out refuse to pay $50+ per month to Foxtel for just one show. So I acquire it elsewhere. Later, I pay the one-off $50ish for the blu-ray when it's finally available.

    In reference to the comic, would there be any way to randomly generate a 4 million digit convert it into binary and then open it? Or are there certain patterns in a file (say mp3 codec) that would have to be contained in the binary for it to work?
    If so, my final question would be, is it possible to maintain those patterns and randomly generate everything else?

    Cause that would be cool...

    Remember when CDs were about $36.95 EACH prior to Naptser (pre 1999), then the price started to come down to more reasonable (read: less gouging) amounts. Then, once all of the CD stores closed Itunes created the model of 0.99cents a track, yet that amount has increased since and they've gone back to gouging (see: Australian market being charged more than anywhere else - with no other reason than they can). Not because of rising costs (they've gone down), but because of a lack of competition.

    Prior to internet bandwidth being capable of downloading a movie, DVDs hovered around the $30 -$40 mark and stayed there. Now, almost all DVD rental stores are out of business. Streaming is becoming more available, though once a main provider (say Itunes) gets the majority share of the industry contracts, you can bet the price of movies will rise slowly, but surely for all titles, all with little or no competition to keep the playing field even. Like a frog being boiled slowly so it doesn't notice, until its too late.

    Personally, HBO going to an internet subscription next year plus my Getflix account will see me cease pirating about 70% of what I watch. It's affordable and easy.

    I was also shocked when trying Hulu that there are ads in the TV shows anyway. It is funny that the ads during the show annoyed me, but the 3-4mins of ads before the show started didnt bother me. If only the ads at cinemas these days ran for 3-4 mins rather than 15 - 20 mins.

    The publishing industry is one of of the few that has managed to get governments to protect their outrageous profit margins. These people talk about getting ripped off yet gladly rip off the creators as par for the course.

    The technology is there for independent publishing of pretty much anything, give the big publishers a miss and do it yourself :)

    I have a foxtel subscription and get all the channels, I also torrent most things I enjoy so I have a copy of it. I know it's illegal to do but I guess I justify it because I am paying the creators through my subscription

    I used to pirate games to, but then found steam. Life is better with steam

      Your case highlights the fact that we either don't know/understand or like what we're paying for.
      When you buy a subscription to a service such as foxtel, you're buying the right to see the show when they decide to show it to you. If they decide to offer you an option to save it on to some device or stream it, then that's what you get when they decide to offer it to you. You don't have a lot of choice there. When you buy a DVD you are buying a copy in that format that you can change into another format depending on the legislation of where you live.

      But none of that is really what anyone wants or thinks they're getting. Most people want to be able to watch a program as soon as it's aired, on any device they deem fit and however many times they want to watch it, at whatever time they want to watch it and change the format of the program to suit their needs. So no options other than piracy really give you that.

      There's pros and cons to every option that is legally available so it's choosing the best of the halfass options, when there's the white elephant option, pirating, available that fulfills everyone's wants. So the real question is why can't content creators and distributors provide these options? They may not be free or cheap but at least we can then decide how we want our media sold to us. AND make sure that the options are priced reasonably and realistically. On demand download costs more than streaming which costs more than seeing it on tv at a set time which costs more than a dvd copy 6 months later.

        Yeah u r right, every different way u want to view media costs money each time. U can't buy a movie ticket, watch the thing then expect to hand your ticket stub in and get a free DVD when it comes out 6 months later. U could apply my logic to do exactly that and just torrent the movie when u get home because u paid to see it at the movies. That seems completely unfair. There r just so many ways to consume media these days, I can legally sit down in front of my TV and watch it back on IQ or illegally put the same movie on my tablet and watch it on a plane. Doing the same thing 2 different ways doesn't feel illegal but clearly it is.

    Great article! What's interesting is that different people have a variety of reasons and moral justifications as to why they pirate but it really does seem like affordability, accessibility and convenience reduce their habits. A lot of the people I have asked have nearly stopped all their pirating habits when they have access trending shows in Netflix, Spotify and Steam. Perhaps piracy is just a response to a service problem.

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