Film Piracy and Filesharing

There continues to be a lot of discussion about film piracy, with the studios keen to close down known filesharing sites, occassionally succesfully like this reported in The Guardian.  The comments section below the article is predictably entertaining and unsurprisingly generally takes a dim view of the action.

The question is, do the studios (and government for that matter) think that they will ever successfully prevent film piracy in this way?

Obviously they do, otherwise they wouldn’t be spending so much time and money on it (see here for the latest UK initiative costing £5million)  but is it merely a matter of prevention and education?

One of the major factors that is not being sufficiently addressed is that of supply and demand in the marketplace.  Arguably, one of the key conditions for the creation of a black market is for a product to be unavailable at a certain time and price, and for the public to disagree with this delay in access to and cost of the product to the point that they are willing to seek it elsewhere.

Imposing a value on a product that the general consumer disagrees with will create a black market for it.  Trying to prevent this black market will in the long run be fruitless.  New sites will spring up as soon as the law enforcers can close them down.  The studios need to find a realistic value for the products and work back from there.  It can work.  Take Lovefilm and Netflix as good examples of a modern business model creating value from the products.  I doubt that many subscription rental customers are active downloaders.

The article that prompted this blog post is here.  Note a couple of paragraphs from the bottom the line “..the venue’s success has driven DVD pirates out of business.”   They didn’t win the piracy war in this neighbourhood by prevention, it was won by offering the product at a realistic value.

In the DVD sales markets and to a certain extent the theatrical exhibition market the product has been overvalued.  The cost of the production of a DVD as a fraction of the sale price is well known, and for a while was sustainable whilst the novelty of the new technology was there.  But now new technology via the internet and filesharing has come along and the product value of a DVD has plummeted.

The value of the product has changed, whether you like it or not, and whether for good or bad.  Don’t forget, this is the product that when valued highly meant that film stars and producers earnt tens of millions of pounds per film.  The studio business models were created in a time where the value of the product was much higher, so they are trying to maintain the existing model.  And failing.  The value of the product has changed.  Just look at the music industry to understand how much.  Trying to hold on to this old business model by threatening and putting up barriers in the market won’t work.  Finding new solutions such as the one in Rio, or new models of revenue such as Netflix and Lovefilm are the way forward.

 

One further note to the debate is the actual cost of film piracy.  Ridiculous figures of the amount of revenue it is costing the film industry are regularly bandied around, but know what the most illegally downloaded film ever is?  Avatar.  Yes, that film that broke all box-office and DVD sales records and made Hollywood a whole heap of cash.  The illegal downloading didn’t seem to have much affect there then, unless they expected to make even more money…