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

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.


In The Media Piracy Report, a 3 year study of media piracy in emerging economies published by Columbia University in 2011, researchers concluded “that the problem of piracy is better conceived as a failure of affordable access to media in legal markets. …High prices for media goods, low incomes, and cheap digital technologies are the main ingredients of global media piracy.”

Arguably you don’t need to go to as far as India or Bolivia to find the nexus of high-priced media, low incomes and cheap technology; your average college dorm will do. Perhaps that’s why Napster sucked up so much of the campus’s T3 line (I know, I’m ancient) in my college days. Researchers also concluded that:

Competition is good. The chief predictor of low prices in legal media markets is the presence of strong domestic companies that compete for local audiences and consumers. In the developing world, where global film, music, and software companies dominate the market, such conditions are largely absent.

We may have been downloading before it was illegal, but we were also buying. Our shelves were lined with DVDs, videos, and CDs, not from big box stores, but from used record stores, those “strong domestic companies that compete for local consumers,” so to speak. They’re the ones that kept the media affordable, making it more appealing to buy that TV show on DVD in the pretty box with the liner notes than to wait around for it to download and sit on a hard drive.

Unfortunately, many of those mom and pop shops, feeling the squeeze of global chains and Internet sales, have gone the way of the dinosaurs, taking that good — and necessary — competition with them. It’s a good thing that digital technology, on the other hand, has become so much cheaper and more easily accessible, isn’t it?

In the digital age where the Internet poses the greatest threat to small business it would seem wise for media execs to praise piracy as a means to an end. Downloading, much like marijuana, is a gateway drug that gets the viewers addicted and leaves them wanting more. But, at what cost? $131 million in corporate income? 71,060 American jobs lost? The proliferation of an ethically questionable cultural behavior?

What’s the value in that?