Piracy: You can compete with free, but only if you get into the game
People will pay for content — but if they can’t get it legally, they will get it illegally. Holding content back ultimately hurts sales.
That’s the takeaway from Michael D. Smith’s presentation on piracy this week at the Digital Book World conference in New York. While he was talking mostly about e-book piracy, his insights should certainly transfer to the comics industry.
Smith, a professor of information technology and marketing at Carnegie Mellon University, launched his talk with some “myths,” including the notion that publishers “can’t compete with free.” In fact, they can; it’s just a matter of marketing. But they have to be willing to sell the book to begin with. This article by Jeremy Greenfield on the Digital Book World site summarizes one publisher’s experience that mirrors what is going on in comics:
In another example, Smith cited an anonymous publisher that selectively windowed its ebook and print book titles to see if releasing the digital version after the print version would result in increased sales for the print version. Sales of print copies increased by 0.4% — but ebook sales decreased by 52% and overall sales dropped by 22%, presumably because of piracy.
In fact, studies show that piracy goes down and sales go up when IP holders provide legitimate channels for distribution. Some examples:
- Movie piracy went up 11 percent after NBC removed content from iTunes in 2007. Piracy of ABC and Fox properties went up at the same time, presumably because people figured out where and how to get pirated content. Piracy went down only slightly when NBC restored its content to iTunes.
- On the other hand, piracy of ABC content went down 37 percent when they made their shows available on Hulu.
E-book piracy went up after a number of publishers pulled their books from the Kindle store due to pricing disputes.
For more on all this, check out Smith’s very readable article in the Harvard Business Review, which gives a bit more detail and points out that piracy doesn’t hit all areas equally — those NBC pirates were more likely to be downloading comedies than dramas, for instance — and one conclusion that is key to the whole picture, that consumers choose their channel (print or digital, for instance) first and then look for the content. That means that publishers delay digital releases at their peril.
What about legal action? There’s a paper for that; Smith studied trends in the iTunes store while the French anti-piracy law, dubbed HADOPI, was being discussed. He found that sales increased about 20 percent over what could be expected, suggesting that former torrenters were going legit. And here’s the kicker: This effect occurred before the law went into effect, while it was being discussed in the media and long before anyone was actually served any papers.
All this suggests that consumer behavior can be affected by a variety of factors beyond the mere existence of illegal channels. Publishers can “compete with free,” by adding value, making their content easy to get to, and most importantly, by releasing it digitally in the first place. And anti-piracy laws do seem to have an effect, although it’s more the idea of the law than the specifics that makes the impact.