Cops and Pirates – Supply and Demand

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This week, The New York Times reported on a new case related to internet piracy. At the center is Richard O’Dywer, a college student in England, who ran a website that provided links to pirated content. US authorities are looking to have O’Dwyer extradited on criminal charges, with a possible punishment of 10 years in prison.

Media stakeholders and government agencies have typically pursued the providers of pirated contented, and the more public cases against peer-to-peer sites. What is different this time is that a middleman is being targeted. O’Dwyer’s site did not actually host any pirated content. Instead, it directed users to other sites for free media. The defense will be that it is within his first amendment writes to publish such links. Now, p2p sites don’t actually host pirated media either, but they do facilitate a large community of people to break the law. It is similar to police raiding a large illegal casino. Using the same analogy, extraditing O’Dwyer would be like arresting the guy who told you where to find the casino.

Should we be going after the middle man? Is that the most effective way to tackle this problem? Simple Google searches can also bring you to sites hosting pirated media, why not prosecute them too?

What O’Dwyer is doing with his website is certainly not ethical, but does it deserve extradition and federal prosecution? Will it deter others from sharing pirated content? When the BitTorrent file sharing community Oink was shut down several years ago, an imitation site called Waffles – started by some devoted Oink users – was up and running within months.

Let’s briefly look at a different, but related issue, the sale of illegal drugs in the US. Local law enforcement typically deal with local dealers and some of their customers. Federal authorities have tried for years to go after the source – larger suppliers in the US and Latin America. Unfortuntely, we have seen a major increase in drug related violence along the Mexican border in the last few years. And abuse of prescription drugs is on the rise among adolescents. My point is that the situation of drug abuse and illegal sales has not drastically improved, if at all. There has even been a shift toward abuse of different types of drugs. So, has the approach been effective?

Businesses are driven by demand, and illegal drugs are no different. The best way to hinder the drug trade is to reduce the demand for those substances in the US. If there are less customers there will be less “salesmen.” I am oversimplifying the issue. Curbing demand for drugs opens many more questions. How do we identify and treat those already addicted? How do we improve preventative education? How to we shift the culture away from abusive habits? This is no small task, but I aim to make a connection.

Like the war on drugs, the exchange of pirated content online is driven by demand for those products. Many people cannot afford to pay for the music, movies, and games that they want. There are also many people who turn to free downloads because they feel the prices are unreasonably high for a file download. Most of my music collection was downloaded for free. Some from friends, but most from other sources. I could never afford to buy all of the music that it takes to fuel my addiction to music. Of course, if accessing free content becomes more difficult, less people will be sharing illegally. But as the case of Oink and Waffles shows, there will be someone else there to take over the sharing.

So, how do we lower demand for pirated media? How can big media companies improve the system for purchasing? Hollywood, in particular, has been stubborn in terms of shifting with internet culture. Record labels have been adapting, with subscription services like Spotify leading the way. Spotify offers free streaming (ad-supported) on desktop and laptop computers, with premium account options if you want no ads and unlimited downloads to mobile devices. For ten dollars a month, users get complete access to all of the newest and oldest music, from biggest pop hits to the most obscure artists (I only stumped Spotify once with a local Chicago jazz-rap group, The J-Davis Trio). According to reports this week, Spotify is the second largest source of income for record labels (far behind iTunes at #1). Whether or not artists are seeing much of the money, this does signal a continuing shift. Services like Spotify offer an alternative model that clearly works for a lot of people. Since joining Spotify, I have not downloaded any free music – I haven’t needed to.

When we compare Spotify to its movie and television equivalent, Netflix, the differences are obvious. I will say, both offer excellent interfaces and mobile apps. But in terms of content, Netflix just does not stack up. New movies are not included in online streaming, only on DVD through the mail. The selection that is offered is far from unlimited. Just like cable TV, “there’s never anything to watch!” Spotify offers unlimited downloading, Netflix includes no downloading. At $7.99, Netflix monthly rates for streaming are only two dollars less than Spotify. To be fair to Netflix, this is not their fault. I started checking iTunes and the Amazon Instant Video Store. I found an almost identical selection of movies and television at almost identical prices. That means the studios are restricting access, keeping close control over how their films and shows are rented and sold online.

Why is Hollywood so resistant to offering more content at better prices? Would people be more willing to rent movies if they were $1.99? Would they be more willing to purchase a TV series if it cost 14.99 rather than over 30 dollars for HD? Would more people be willing to subscribe to Netflix if they were able to offer more movies, more new movies? I think if Hollywood follows in the tracks of the music industry, it could bring more revenue for production companies and less internet piracy.

Do you think you would be more willing to pay for your movies if they were less expensive? Would you be more willing to be a paying subscriber? Are you less likely to download free music with the availabilty of Spotify and other streaming services?

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