Despite years of debates over the morality, prevalence and impact of mass online copyright infringement, actual hard numbers, backed by statistically rigorous methods, are almost impossible to find.  Most of what passes as “knowledge” about piracy is based far more on pre-conceived notions and anecdotal evidence.  And that really should not surprise, since the fundamental questions about file-sharing generally have less to do with what has happened and more to do with what might have happened.  That is, what purchases did not occur because of the existence of free alternatives, what sales did not take place if the pirate networks had not made sharing so easy. Speculative counter-factuals are really all we are left with, and such questions can never be answered with any sort of definitive confidence.

The Hollywood film industry, or at least its official representatives in the MPAA, likes to talk tough about efforts to combat movie piracy on the internet.  They rabidly support DRM systems to supposedly keep their content locked-down (CSS, AACS, etc.), they push hard for new laws to control how video moves around online (like ACTA and COICA) and they will happily sue sites or individuals they feel to be contributing to mass copyright infringement (too many to name).  Nonetheless, a more objective examination of how movies get onto file-sharing networks, and then how those video files get distributed, would clearly show that the movie studios’ anti-pirate endeavors are fundamentally off-target.

Widespread DRM systems, like CSS on DVDs and AACS on Blu-Ray discs, have absolutely no bearing on how or whether movies end up online, as the primary leaks invariably come from within the production process.  DVD and Blu-Ray sourced files appear online *before* the date those discs are actually made available for sale.  And not just a few days before, but usually weeks if not months before the official DVD release to the public.  Someone in the production chain of Hollywood itself actively puts the video files online for anyone to download for free, and does so *before* any DRM protection can be applied to the film.  It strains credulity to think that the film studios that contract out these services could not increase pressure on their employees and partners to prevent this kind of leak.  Yet, in the decade or so since large-scale online copyright infringement began, they have never done so effectively.

Even more telling as a demonstration of Hollywood’s lack of seriousness about piracy, however, is the annual decision by the film studios to distribute DVD “screeners” to members of the film community in the period before and during “award season” leading up the Oscar ceremony.  Despite explicit knowledge that these critically acclaimed films will immediately be uploaded for mass distribution, and even while the movies themselves are still in theaters, and months before they are scheduled to come out on DVD, the studios continue the practice.  There have been half-hearted attempts in past years to devise a more secure system for distributing these screeners, but they proved unwieldly and ineffective.

Yet the crucial point is that according to Hollywood’s own cost-benefit analysis, the supposed lost sales from the piracy of its own best films is overwhelmingly out-weighed by just the mere opportunity of these films receiving a publicity bump from winning awards.  In their own calculations, Hollywood values the increased revenue an Oscar traditionally generates far more than they fear what a leaked copy loses them.  Such a decision is at minimum an admission by the people who should know movie finances best that what is gained by the screener policy is vastly larger than any fear of possible losses.

And just to underscore the point, I looked at a few of the highest profile films from the recent Golden Globes, that had screeners leak long before their DVD release dates.  In the case of Black Swan, a good quality version of the film from an awards screener appeared on file-sharing networks barely two weeks after the initial limited opening on December 3rd.  The film has nevertheless earned over $73 million in box office revenue and is likely to receive a great deal more publicity when Oscar nominations come out.  Another high profile film, The Fighter, had a screener copy leaked three weeks after its release on December 10th, something that the producing studio, Paramount in this case, had to know would happen if they chose to make screeners available.

The MPAA and its member studios are quick to bemoan their fate in a piracy-riddled internet, seemingly robbed of “billions” of revenue (at least according to the statistics they cite).  Yet it is hard to take their arguments seriously when they routinely chose to engage practices like sending out award screeners that has proven repeatedly to foment illegitimate distribution of high-profile films.  The possibility must exist therefore that Hollywood does in fact realize that the supposed damages from piracy are actually not as substantial as they so often claim.

A provocative headline can generate a lot of readers and a lively debate, but it can also do a poor job of indicating what an article is actually about. A recent example is Paul Boutin’s quite inflammatory article in the December edition of Wired, now available online, entitled rather ambitiously, “The Age of Music Piracy Is Officially Over.” Based on the headline alone, a reader could assume that Boutin was making an interesting but factually incorrect observation about the state of file-trading online today. A quick glance at the comment section on the Wired site would indicate many people took exactly that viewpoint to blast Boutin.

However, that is not at all what the article actually argues. According to Boutin, we all need to “Mark down the date: The age of stealing music via the Internet is officially over. It’s time for everybody to go legit. The reason: We won.” In other words, Boutin contends that if one looks back at what music file-sharers have said publicly to justify their actions, going all the way back to the Napster days of 1999/2000, such as high prices, DRM, poor audio quality, record label exploitation, lack of deep catalogues, etc., that those rationales no longer exist. iTunes and Amazon sell high-bitrate DRM-free tracks at relatively low cost, have massive catalogues, and even allow more of the purchase price to go to the artists themselves. Ultimately, Boutin wants file-sharers to just admit that they have gotten everything they claimed to have wanted, and that the only reason left for pirating music is an indefensible one, that “You’re cheap.”

While the article did generate a lot of angry comments and some more thoughtful responses, I think both Boutin and his vocal readers have missed some larger issues that go much deeper into the on-going dynamic of online music sharing, and explain why any declarations of its eminent demise are wishful thinking at best.

To start, I don’t think anyone should pay attention to what was said by Napster users, or by file-sharers in general about why they download music. Tens (maybe hundreds) of millions of people have downloaded an .mp3 at some point over the last decade, from every country on Earth with a connection to the internet. Why do they do it?  Ultimately, unless one insists on seeing the phenomenon in purely moral terms, I don’t think it really matters what people say publicly about why they refuse to purchase digital music. The fact is, millions of music fans choose to use Bittorrent, digital lockers, Usenet, etc. to get their music. And by their actions, they have created an economic dynamic that is much more important, and has far more long term implications, than endless debates about 128 kbps .mp3’s versus FLAC’s or how exploitative the recording industry is.

In the course of the post-Napster decade, we have come to recognize the profound economic implications of digital media interacting with the internet, and not just in simple notions of “digitial distribution” or the “long tail.” Instead, we now understand that because every single DRM scheme is inherently doomed to failure, and that the marginal cost of copying a digital media file is and will always be essentially zero, then we can only speak of digital media in a context of infinite supply.  I am not a trained economist, but it is patently clear that an infinite good, available to anybody with a modem, will trend very quickly to a price of zero, no matter what the proponents of strict intellectual property regimes would prefer. While there is clearly a large number of people that purchase .mp3’s (or AAC’s) from iTunes and Amazon, they remain a distinct minority in a global online world that simply does not accept the notion of exchanging money for digital music.  I would even say that iTunes customers most likely value the convenience and technical simplicity the shopping experience provided by Apple far more than any true sense of the specific “value” of the files they purchase.

In fact, it is precisely this dynamic of infinite versus scarce goods that points to the future of digital media online. As Mike Masnick of Techdirt has so powerfully demonstrated, once content creators understand the problematics of trying to charge for infinite goods, they can truly embrace the countless possibilities of creating tangible goods, that cannot be copied and can be sold for real money. It is almost a cliche now to speak of how musicians can rely on live performances to substitute for sales of recordings, but that is merely the tip of the iceberg of what content creators can do, by creating non-replicable experiences that allow their fans to connect with the art and artists in ways that are truly worth treasuring.

Streaming services like Spotify also indicate how music can remain a revenue generator in a world of infinite goods, by providing a service and convenience that is of true value even to customers not used to paying for the music they download. Just as Netflix does not have a single film or TV show that is not available online for download for free, but can still build a massive customer base by recommending and presenting video content in a manner that their users love and happily pay for.

So, music pirates are in fact “cheap” according to Boutin’s perspective, which judges music downloading as immoral because it ignores the desires of content creators to charge for digital copies of their work. But outside of this moral framework, examined from a purely economic viewpoint, music file sharers are rational actors that pay for the things they consider of tangible value (iPods, laptops, Internet access, concert tickets, band t-shirts, streaming subscriptions, etc., etc.) and do not pay for the infinitely copyable. And unless the content industries and their government representatives somehow do the impossible, and turn the Internet into something it currently is not, then the future will continue overwhelmingly in that direction.

So much of recent discussion about the tumult in the publishing world has focused on the challenge for publishers to find new business models in the face of rapidly changing technology and customer habits.  Quite a bit less attention has been devoted, however, to the effects of those trends on authors themselves, without whom the publishers would have no content to actually print.  As the industry continues to thrash around, grasping for quick solutions while also cutting costs frantically, authors less popular than Rowling or Franzen can find themselves essentially abandoned by their supposed advocates in large publishing houses.

Noted technology writer Douglas Rushkoff shares his recent experiences with publishers and how those disappointments drove him to make the radical step of leaving his publisher and embracing an entirely new model of 21st century authorship.  What could have inspired such a move?  Shouldn’t authors desperately grab for the security of a big publisher, especially in uncertain times like now?  Won’t the sheer size and expertise of the big companies provide an essential lifesaver in the rather choppy waters of the book marketplace currently?

Well, actually no, at least according to Rushkoff.  In his view, “Authors and readers no longer need Big Publishing to find and engage one another. The sooner we all realize this, the better off we’ll all be.”  Based on his experience, publishers now utterly fail at the two roles authors have traditionally relied upon them for, editing and marketing.  As just about any author can tell you, having an intelligent and engaged reader critique your work is incredibly helpful.  But editors can no longer play that role anymore, as they must now focus entirely on new content acquisition.  Even worse in Rushkoff’s view, publishers no longer provide either necessary resources or expertise in marketing.  If anything, they tend to get in the way of the authors’ own attempts to publicize their work.  The writers, after all, usually know far more about their subject matter and the likely audience for their own books, and what the best methods of outreach might be.

Absent their ability to edit and market, Rushkoff just does not see a valuable role for publishers any more, and has decided to eliminate these middlemen (and their not insubstantial costs) for his latest book.  It is a new very journey, without the usual signposts, but 21st century authorship does open up vast new potential audiences and opportunities to engage with ones readers.  As Rushkoff says, the new methods he now embraces are daunting, but writers today really have no other choice, “The good news and bad news here is that we must create new ways of doing things that meet our real needs.”

BackMyBook is excited to help authors of all kinds discover their own paths to success, that meet their own particular needs.  They won’t be the same as Douglas Rushkoff’s, nor Stephen King’s, but they will be what works for you.

(This article is also published at BackMyBook)

One of the frustrating issues for analysts of the file-sharing phenomenom is that so much of what we know, or think we know, about it rests not on any real numbers but on our beliefs and suppositions.  Statistics thrown around by the rights-holding organizations like the MPAA, the RIAA or the BSA are notoriously unreliable, while the illegal and highly fragmented nature of P2P networks themselves makes it impossible to get any dependable numbers from the sharers themselves.

Each side of the argument have their own facts and ideologies, ranging from “you can’t compete with free” or “each download is a lost sale” to “P2P users buy more than any other fans” or “file-sharing increases awareness.”  Nonetheless, it is always interesting when a situation arises that allows for some real-world testing.

On Friday October 15 the film “Red” was released, a relatively big budget action film starring Bruce Willis.  Unusually, earlier in the week a “screener” copy of the film had appeared on popular P2P networks.  Normally, the major film studios go to great lengths to prevent this kind of leak.  In their view, the availability of a film “for free” inevitably means that no one will pay to see it in theaters.  However, in this specific case, that proved incorrect, as Red did reasonably well at the box office, earning $22.5 million for the weekend, with a per-theater average of almost $7,000, coming in second to the surprisingly strong Jackass 3-D.

As we said above, there is no real way of knowing how many people downloaded the free copy of Red in the week leading up to its release.  The evidence suggests, however, that it was a large number.  According to the well-respected TorrentFreak, Red was the number one downloaded movie for the week of October 10-17on Bittorrent.  And a quick peek at the Pirate Bay shows that just one of the many competing versions of Red available currently has over 10,000 seeders right now.  So, while we may not know how many people could have seen Red for free, it is likely to in the tens of thousands at least.

Is there anything compelling we can take from this unintended experiment with the film Red?  For one thing, it is clear that the studios are still quite capable of competing with free, as Red’s decent box office does demonstrate.  According to the LA Times analysis of Red’s opening weekend, the movie did especially well with older audiences, and the word of mouth for the film was strong, as shown by a 26% increase from Friday to Saturday sales.  Of course, we have no way of knowing what the box office might have been without the leak, but it seems that the film did about what was expected of it, irrespective of the leak’s existence.

Ultimately, even with a unique case like Red, though, what we don’t know far outnumbers what we do.  Are there people out there that might have gone to see the movie in theaters if the option of watching it at home for free did not exist?  Are there viewers who watched the free copy but enjoyed it enough to go see it in theaters anyway?  Did home viewers help to spread the good word of mouth about the film, which may have resulted in higher box office?  Is a film with an older skewing audience more immune to P2P effects?

None of these questions are easily answered, even if they seem to fit into widely-held “common sense” suppositions about file-trading, as we just don’t have the necessary hard data to clearly prove things one way or the other.  We should definitely be very wary of what data we do see, and be even more careful about any conclusions that are drawn from those numbers.

(This article is also published at Zeropaid)

I have written a couple of previous posts about my experiences using the T-Mobile HTC G1 Android Google phone, including an in-depth look at how it handles video playback.  As a way to help other G1 users get video on to their phones, I put together this step-by-step guide to using the MeGUI application to encode video into a format that the G1 can play, while retaining as much quality as possible.  Because of the relatively low resolution of G1 compatible video, I have not focused as much on making the files as small in size as possible, but once you’ve mastered the basic steps outlined here, you should not have too much trouble tweaking the process to get smaller sizes if that is of importance to you.  With microSD cards getting cheaper and cheaper, I frankly have not found much need to really optimize encoding for size, but your needs may differ.

After basic installation of MeGUI and neroaacenc.exe, you will want to update MeGUI using the built in update function.  The application actually bundles a number of other apps, all of which are updated quite frequently, so it is always worth your while to make sure everything is as current as possible.  

After updating, also check to ensure that the neroaacenc executable is properly installed.

The key items to pay attention to for Android encodes are resize and crop. Set the first number (width) of resize to 480, and then let the program automatically set the resulting width while maintaining the proper aspect ratio. Then click the “crop” button and hit auto-crop. If there are any black borders to remove (which is very important when screen real estate is at a premium as on the Android) the program will figure it out automatically.
Once finished with resize and crop settings you will click “Save” which should pop up a preview window of what the new video will look like, and take you back to the original MeGUI interface page.

Step 1: Prepping the encode
After creating your AVS script, and assuming you have the G1-Android preset properly imported, then the only setting you need to look at now is output format, which needs to be set to “MP4.” If so, hit “Enqueue.”
At this stage you can also set up the audio encoding. Choose the original souce file for input, select the Nero AAC: NDAAC-LC 96kbps preset, make sure the audio output format is MP4-AAC, select a new name for the audio output file, and hit “Enqueue.”

Step 2: Encoding
Click the Queue tab, see that your audio and video encoding jobs are lined up properly, and hit “Start.”
One progress on both audio and video is finished, open up the Muxing/Muxing MP4 tool, and queue up the process of bringing together the audio and video streams into one MP4 file.

Once that job is finished, you should be all set to transfer the completed file to your Android phone. If you have a Video Player application installed from the Android Marketplace, you should be now watching high quality video on your Android.

MPEG-2 Sources
For MPEG-2 sources, there are additional steps. The first is the DG Indexer -> D2V creator.

Run your source file through the D2V creator. (You will have to Queue the process up and run it).

Afterwards you will have an audio stream for later encoding, while for video the AVS script creator will pop up using the D2V file you’ve created. For MPEG-2 sources you will most likely want to de-interlace the video, so that will be set at this stage as well.
Go to the Filters tab of the AVS script creator and click “Analyze.”

It will take a little while for the analysis process to complete, but at the end you if you are in need of it, the “Deinterlace button” will be automatically clicked for you. At this point you can go back to the main AVS script creator page and move ahead in the encoding process normally, as described above. When it comes time to set the encoding processes from the main MeGUI interface, choose the audio stream that was established by the D2V creation process to be encoded into AAC audio.

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