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Taking Steps to Fight Piracy in Online Video

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“The best anti-piracy measure is creating a vibrant legal marketplace that gives consumers access to music whenever and wherever they want, often for free,” says Joshua P. Friedlander, vice president of strategic data analysis for the RIAA in Washington, D.C. “Whether they’re free, ad-supported, or by subscription, the key point is that services like Spotify, YouTube, VEVO, Pandora, and Rhapsody are legal, authorized digital music sources.”

RIAA estimates that revenue from these new access models increased from about 3% to 15% in 2012 totaling more than $1 billion that year. Distributions of digital performance royalties -- paid to performers and copyright holders for music played on webcasting, satellite radio, and other noninteractive digital music services -- increased 58% to $462 million in 2012. SoundExchange in Washington, D.C., is the organization facilitating royalty payments from internet radio stations such as Pandora and iHeartRadio.

“Besides the creation of new access services, the uptick in digital revenues can also be attributed to RIAA’s anti-piracy efforts to shut-down major pirate websites like LimeWire and Kazaa,” Friedlander explained. “We’ve conducted campaigns to raise public awareness that copyright laws are broken when people illegally download or copy music. We also steer music fans to compelling legal sources for music, and all these combined efforts are helping to pull people off the pirate sites.”

According to the RIAA, legal digital access models such as Spotify, YouTube, VEVO, Pandora, and Rhapsody are offering alternatives to piracy, and the percentage of total music industry revenue they represent has grown from 3% in 2007 to 15% in 2012. (Chart courtesy RIAA)

It’s All Academic: Studies in Piracy

Many content piracy experts shy away from citing actual numbers, such as the amount of internet traffic carrying pirated content, or the impact of piracy on sales. They prefer instead to lean on data published in papers, many written by university professors. One popular factoid experts attribute to academic research is that 25% to 30% of internet bandwidth may be carrying illegally pirated copyrighted materials.

Koleman Strumpf (right) is a U.S. academic who actively publishes research papers on content piracy. As the Koch Professor in Business Economics at the University of Kansas School of Business in Lawrence, Kan.; Strumpf wrote “File-Sharing and Copyright” (co-authored with Felix Oberholzer-Gee of Harvard University) in May 2009, among other papers.

“As academic researchers, it’s difficult for us to obtain industry-sensitive sales figures, like losses from movie piracy. It’s easier to get information about illegal file sharing than legitimate sales,” Strumpf says. “Access to industry sales figures, or cooperation from entertainment companies and associations, would help us develop a seminal study of content piracy.

“Everyone’s skittish about giving actual numbers because there’ve been instances where the numbers cited were either inaccurate or based on faulty research methods and the entire piracy issue was discredited,” Strumpf says. “There’ve also been instances where research papers were dismissed simply because people didn’t like the findings.”

Strumpf says research must not be based on faulty methods or erroneous assumptions. For example, you shouldn’t extrapolate piracy theories just by studying the behavior of elite college students (or others who are not representative of people doing illegal file sharing). And it’s also unwise to survey people by asking if they do illegal file sharing because it’s an illicit activity they can be prosecuted for.

Strumpf says it’s difficult to get a handle on all aspects of this complex, dynamic economic problem at once. For example, could illegal file sharing cost physical sales but boost the box office for concerts? And, could illegal file sharing also expose people to new artists they might then pay to see or hear?

“If record sales are being crushed by file sharing, then why have people not stopped creating high-quality music?” Strumpf says. “It’s possible that illegal file sharing or streamed media might encourage people to sample a director’s entire film catalog or uncover esoteric works that in turn generate sales of complimentary products. There’s a notion that every illegal download is a lost sale and I frankly don’t see that in the findings of research that’s been done.”

It might be more worthwhile to focus research on new legitimate services that generate revenue by mimicking appealing aspects of illegal file sharing. “Legal services like Spotify, Netflix, and Hulu let users control what they want to see, like newly released or classic TV shows or movies, and watch it on demand anywhere, anytime either for free or at attractive price-points,” Strumpf says. “This might be the best way to dissuade people from illegal file sharing.”

Respecting Royalties

By 2009, more than 6 billion songs had been downloaded from iTunes since Apple launched its online music store in 2003. In addition to providing access to music tracks for about 99 cents each, iTunes has since added movies, TV shows, music videos, podcasts, and more, at affordable price points.

In wanting to access music, movies, and TV shows, “[F]ree is not always the motivator. People also want quality, immediacy, an attractive shopping environment, and the ability to be part of a community like iTunes,” says Christopher Kenneally, director of business development and author relations for Copyright Clearance Center (CCC), in Danvers, Mass.

Kenneally explained that iTunes is an example of a business to consumer (B-to-C) model, whereas CCC is an example of a business to business (B-to-B) model. CCC is a global rights broker that works with large commercial institutions such as Fortune 500 corporations; research, government, and medical institutions; universities, government agencies, and others, to simplify the process of licensing rights to the world’s most sought-after books, ebooks, trade journal and magazine articles, newspapers, and other copyrighted materials.

CCC recently announced a partnership with Motion Picture Licensing Corp. (MPLC) to facilitate licensing of motion pictures and video programs by corporate clients that want to use them in everyday business to motivate, train, and inform workers as well as encourage prospective customers. The MPLC, which represents 400-plus distributors from studios and independent producers, is the world leader in motion picture copyright compliance.

“The technology is evolving to the point where people want to use full motion video on their iPads, iPhones, laptops, and other digital devices and share the files across their networks. They don’t want to be exposed to copyright infringement so they’re looking for a secure means to obtain the rights to use it,” Kenneally says. “When people have an easy, convenient lawful way to pay for the use of copyrighted material, this discourages piracy. The fact that CCC has paid out $1.3 billion in royalties to rights holders in just the last 10 years kind of proves the case.”

This article appears in the June/July 2013 issue of Streaming Media magazine as "What Is the Cost of Free? Why It’s Difficult to Quantify and Contain Content Piracy."

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