A Pirate's Tale

At the outset of this little journey I want to lay a disclaimer on you: I in no way, shape or form advocate or encourage copyright violation, illegal file-trading or the use of media in any way not authorized by the terms your license to use it allows — so don't be naughty and try any of this at home.

There's been a lot of news about torrent sites lately — their widespread use by consumers, the efforts of groups to shut them down and the impact they have on the entertainment industry — adult or otherwise. But what's the big deal?

While I'm not going to get into the technology or the software, torrents are a means by which a publisher/site owner can distribute online content without actually hosting the content files or using his or her own bandwidth.

The consumers who are downloading the material also are uploading the same material to other consumers, which often makes the consumer an accomplice to several crimes beyond the copyright violations and receiving of stolen property that typically is the result of using torrents. It's not that the technology is necessarily bad, it's that it's more often than not used for the unauthorized distribution of copyrighted materials.

And consumers can't get enough of it — but why? Here's a hypothetical scenario:

One day, a consumer decides to seek out a DVD release of one of his favorite TV shows, a Canadian comedy series. He's willing to buy it, perhaps several seasons of it (which could run well over $100 once the sale is finished), but it appears that the series hasn't been released on DVD yet, resulting in a lost sale and a disappointed customer.

Several months later, our consumer (let's call him John) hears about torrent sites, either online, through media reports or via word-of-mouth (as users are more likely to share information on their favorite file-trading sites and applications, than they are on the adult sites they visit).

John downloads and installs the well-respected file-trading application his friend recommended and begins a search through free-media nirvana, finding the latest movies, games, music, software, porn — and yes, the TV series that he couldn't find on DVD — now his for free at the mere click of a button.

A few hours later, John "owns" four seasons of the show along with a theatrical release and Christmas special based on the show. "Wow, that was easy!" John thinks to himself, wondering how he ever got along without torrent sites.

There are a few lessons here: Consumers are willing to spend money on media, but if it's not conveniently available they'll look elsewhere; file-traders have shown that media can be cost-effectively marketed and distributed; and easy access and extensive variety encourage repeat downloads — which could have translated into repeat sales if the content had been better monetized by its owners. There are more lessons, but each student will see where a missing ingredient has now fallen into place.

This story could have occurred two years ago (a long time in Internet years); but it's the recent twist that made me want to write about it all. You see, John's been working out at the gym. He rides 15 miles on an exercise bike, which takes about an hour-and-a-half, given the uphill setting his 500-calorie burning routine uses. It's a pretty long, boring workout that John often relies on his Sony PSP to get him through: playing games and watching movies (all store-bought) while pedaling his excess pounds away.

But you can't watch the same thing every day, and over and over again, so John went to Best Buy to see about some new PSP videos — maybe the "Reno 911" and "Aqua Teen Hunger Force" movies that were just released to DVD were also available for PSP.

Of course they weren't, and if they were they didn't have them at Best Buy. Sure, John could go home and hit up to see if he could order online and then wait for delivery, but why bother? John grabbed the "ATHF" DVD and said to himself "I'll buy the DVD and we can watch it on the big screen, then I'll re-encode it to watch on my PSP."

Doubtless, this re-encoding for use on a different platform isn't something the copyright owners would approve of, given their desire to squeeze every penny out of their product. Indeed the DVD's copy-protection scheme adds a certain degree of security against the casual copier, but if they don't offer it the way the consumer wants it, they shouldn't really object to the market serving itself. John paid for the DVD and is simply trying to play the movie on a different device for his own enjoyment, so what's the problem?

The problem is that John starts looking at his other media, including the TV series he downloaded a couple years earlier: "That would make great programming; let's run it through the encoder!" Before you know it, it's back to the torrents to download some new material, because it's the fastest, easiest way to get it — and it's free. Besides, he'll find already-hacked versions of his copy-protected DVDs, ready for download, saving another step in the process.

Sharing the Love
And being a nice guy, John decides to add his PSP-encoded videos to his upload folder, sharing the love with other users.

While Sony may sell a few more memory sticks to folks going this route, the bigger issue is that content that is worth paying for — but "inconveniently" distributed — will lose sales due to the convenience of torrent sites, the immediacy of instant downloads and the consumer's ability to easily transcode digital media files.

The real losers will be the folks trying to sell content that isn't worth paying for. While a certain market segment will always be willing to pay for premium content (preferring HD DVDs on a big screen to digital delivery on a computer monitor, for example), when the content is sub-premium the desire to purchase it is diminished.

There are many movies that may be worth watching but aren't worth paying to see; for example, we've all watched a movie on TV and thought, "That was OK but I'm glad I didn't bother going to the theatre to see it." That same caliber of entertainment is most vulnerable to file-sharing.

For example, John might be willing to pay for a high-quality store-bought copy of one movie, but perfectly willing to accept a mediocre rip of a different movie if it was a free download.

At the end of the day, there's been much discussion of piracy and copyright infringement within the adult entertainment industry, and the file traders are a major source of the problem.

Understanding the mentality of the consumer and the roles that publishers play in the equation is vital to developing a plan that mitigates your losses while profiting from the benefits that a savvy operator may accrue.