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Game of Downloads: HBO’s Bad Spin on Media Piracy

Does stealing premium TV inspire people to buy it eventually?

by
Susan L.M. Goldberg

Bio

August 14, 2013 - 11:00 am
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Brace Yourself

According to Time Warner CEO Alan Bewkes,

…if you go to people who are watching it without [subscriptions], it’s a tremendous word-of-mouth thing. …We’ve been dealing with this for 20, 30 years—people sharing  [subscriptions], running wires down the backs of apartment buildings. Our experience is that it leads to more paying  [subscriptions]. I think you’re right that Game of Thrones is the most pirated show in the world. That’s better than an Emmy.

Bewkes’s comment took the media world by surprise. A corporate CEO actually cheering on illegal downloading? Where’s Napster when you need it?

Bewkes isn’t the only exec praising media piracy:

In April, HBO programming chief Michael Lombardo said that “piracy” should be taken as a compliment. “I probably shouldn’t be saying this, but it is a compliment of sorts. The demand is there. And it certainly didn’t negatively impact the DVD sales. [Piracy is] something that comes along with having a wildly successful show on a subscription network.”

A compliment? Possibly. But piracy isn’t exactly the economic boon these execs would lead you to believe. According to the Record Industry Association of America:

One credible analysis by the Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers’ earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes.

Comments are closed.

Top Rated Comments   
Citing the RIAA is not the way to win arguments. They're a pack of lying thugs.
36 weeks ago
36 weeks ago Link To Comment
Quoting the RIAA about piracy is like quoting the Mexican Cartel on the dangers of drug legalization. The dubious study RIAA cites assumes that all piracy are lost sales, for which there is simply no evidence.

And there is a lot to the concept that pirated copies lead to sales of legitimate copies and related merchandize. Certainly, there are studies that show that free downloads and DRM free products lead to more sales such as this one:
http://www.sciencedaily.com/releases/2011/10/111007113944.htm


But mostly I don't think you understand fully understand the tradeoffs, excessive zeal to stop piracy can annoy one's legitimate customers.
36 weeks ago
36 weeks ago Link To Comment
All Comments   (9)
All Comments   (9)
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I work in the cable industry, and while I don't think theft leads to sales (if you can get it free, you will) we have stopped treating people who steal cable like criminals and more like potential customers. Our auditing group doesn't just disconnect an "Unauthorized Viewer" or UV (our new label for them BTW-- much softer than "illegal viewer")-- they knock on the door and attempt to make a sale. It's surprisingly effective.
36 weeks ago
36 weeks ago Link To Comment
What an asinine article.

Personally I haven't had cable t.v. in ~ 10 years. I stream EVERYTHING. Why? For I've embraced technology though more importantly I can't STAND the infinite-like commercials, the laugh track-laden unfunny sitcoms, the Illiberal ahem, 'news networks' etc.,

There are so many virus-free streaming sites it's futile and quite frankly big brother-like to attempt in doing so.

Lastly using RIAA 'data' is a joke, right?
36 weeks ago
36 weeks ago Link To Comment
Citing the RIAA is not the way to win arguments. They're a pack of lying thugs.
36 weeks ago
36 weeks ago Link To Comment
In my experience piracy never replaced sales, but it may have replaced renting... maybe Netflix should be up-in-arms over piracy. I have seen piracy directly lead to legitimate sales too, especially after iTunes popularized the buy-individual-songs model replacing the album. It's a win for me, I get only the songs I want for less - and a win for them, they sold more than otherwise. Ah progress!

I don't think you can be taken seriously anymore quoting "lost jobs" figures without serious justification - it has become a dubious populist economic measure for demagogues.

"..excessive zeal to stop piracy can annoy one's legitimate customers." Haha - yes, thank you Robin!!
36 weeks ago
36 weeks ago Link To Comment
I have a feeling (though no concrete knowledge) that those "loss" numbers are a little disingenuous in the sense that they count every person who has unauthorized copy/access in terms of list price. This isn't quite realistic because full retail price is rarely the price paid, but more importantly it assumes that each of these people would instead purchase these items if they didn't access the content illegally.

The "loss" is not so cut and dried for the simple reasons illuded in the first quote: Most of that lost revinue wouldn't appear even in the absence of illegality. And therefore there is a dynamic where, through piracy, the value placed on the items increases to many people in the market. For example by pirating a show one has passing interest in one may become engaged to the point of being willing to pay for access (a season on DVD, previous seasons, subscription for future seasons).

It doesn't make piracy right, but it is an illegal version of the HBO free weekend. Free samples work, apparently even if they are stolen. It sounds like a chapter for Freakonomics.
36 weeks ago
36 weeks ago Link To Comment
Quoting the RIAA about piracy is like quoting the Mexican Cartel on the dangers of drug legalization. The dubious study RIAA cites assumes that all piracy are lost sales, for which there is simply no evidence.

And there is a lot to the concept that pirated copies lead to sales of legitimate copies and related merchandize. Certainly, there are studies that show that free downloads and DRM free products lead to more sales such as this one:
http://www.sciencedaily.com/releases/2011/10/111007113944.htm


But mostly I don't think you understand fully understand the tradeoffs, excessive zeal to stop piracy can annoy one's legitimate customers.
36 weeks ago
36 weeks ago Link To Comment
I wonder if another study can be done with "free samples" leading to sales. For example, for a period of time, the first 3 of the 4 seasons of "Justified" were free to stream for Amazon Prime customers. How many viewed those three seasons, then continued to purchase the 4th season?

Using subscription services as a data set (since it's easier than determining where all the illegal copies are) you could get a picture as to how many subscribers then went on to purchase either additional episodes, movies, media, etc. from the series or artist. Compare that to subscribers who didn't view the free stuff and their purchases.

Frankly I'd be surprised if this hasn't been done several times already. It's the whole point behind the streaming model. Make it easy to get (both in cost and effort) to do the future sale.
36 weeks ago
36 weeks ago Link To Comment
At least some of the book series from Baen work that way. Get the first 1-2 free, and if they're any good, end up buying the rest.
36 weeks ago
36 weeks ago Link To Comment
"I wonder if another study can be done with "free samples" leading to sales."

Sure. Ghirardelli Chocolates.
36 weeks ago
36 weeks ago Link To Comment
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