Thursday, 17 January 2013

Does Piracy hurt digital content sales?

Or 'Does rain affect the amount of sunshine in a country?'

I am a bit surprised about this piece on piracy published today by Digital Book World.

Michael D. Smith, professor of information technology and marketing at Carnegie Mellon University, speaking at the Digital Book World Conference + Expo said that 'piracy hurts digital content sales'. This is like saying that 'every day that rains reduces the amount of yearly sunshine in a country'.  Even if only one copy of an ebook is pirated by someone who would have bought it under different circumstances it will clearly reduce the sales of ebooks (by one)!

While it's eminently clear that piracy hurts digital sales I would have framed the problem in a different way.

People who consume digital content fall broadly into 3 categories.

  1. Hard-core pirates: these guys won't pay for anything. Ever. Full stop. They think content should be free, they will go the extra mile to strip any DRM off and they will happily help pirated content proliferate as they think it's a human right to have access to content for free. These guys are not lost customers as they would have never spent even 1 cent on digital content. Thus, I think it's wrong to class the content consumed by these guys as 'lost revenue'.
  2. Circumstantial pirates: these are the people who pirate a movie/ebook/etc mostly because of 'external reasons'. These reasons are generally linked to either lack of availability or price. Classic examples are popular series going on air but not being available digitally, hardbacks not having an ebook counterpart at the time of publishing or the ebook version costing $25. This is the kind of piracy that hurts sales but it is mostly self-inflicted by content owners and publishers because of their own decisions around marketing, pricing, windowing, etc.
  3. Honest folks: there are the guys who pay for their content and don't fall in the previous category because they don't even know how and where to go to get pirated content. These people are the ones that publishers and content owners should not worry about but guess what? These very customers are the ones plagued by DRM and other cumbersome, user-experience-destroying ideas which cost the industry money ($0.12 per ebook was the price for the DRM the last time I checked). DRM not only negatively affects the honest users but also helps incumbents like Amazon keeping customers in their silo using it as an excuse (for which they can happily blame the publishers). In the case of digital music, thankfully this is now history.
Any conversation about piracy should focus on pushing the content owners to be more flexible and open about the way they market their content. Removing DRM, making the content available in more formats and countries at the same time and sensible pricing will do more against piracy than anything else.