Digitalwerks

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.

Both the New York Times and The Economist published articles in the last couple of days examining what is happening with online video.  Brian Stelter and Brad Stone in the NYTimes talked to the MPAA, Eric Garland of Big Champagne and the owner of the streaming site SuperNova Tube; the authors conclude that the pirates are “winning” the battle against the studios.  The Economist instead looked at Hulu and declares it the winner over YouTube and Joost, and feel that Hulu proves the superiority of the advertiser-supported in-browser streaming over download or separate application playback.

Janko at P2P-Blog has already pointed out that the NYTimes mistakenly placed TorrentFreak in Germany, not the correct Netherlands (hi Ernesto!) but applauds Stelter and Stone for high-lighting the MPAA’s admission that lawsuits are not going to be a long term answer.  And the reader comments to the article very rightly point out that the figures cited by the studios are utterly meaningless, and that TV and films should probably be analyzed separately because of the very different geographic and financial models of their distribution.  The Economist instead looks beyond piracy for the most part, but does lump it into its criticism of Y0uTube as a visually confusing and unsavory place for professional content (read ad dollars) because of all the user-generated content.

A few points occur to me in reading both these articles back-to-back.  First, the MPAA, I believe, quite deliberately elides any notion of quality in their statements about pirated content.  Yes, as the article says, The Dark Knight was available for download within a few hours of its release to theaters this summer.  However, as previously shown here, the only copies that existed for the first seven weeks of the film’s release were extremely low quality camcorder recordings (a decent copy didn’t show up on P2P networks until September 9, HD not before November 21st).  And considering that The Dark Knight is now the 2nd highest grossing film of all time, those cam copies did little to nothing to impact the film’s financial success, at least at the domestic box office.  Piracy likely does impact DVD sales and box office outside of the US, but certainly not in the widely exaggerated claims of the MPAA that considers every single download to be a loss of a sale.

As The Economist rightly points out, streaming is an entirely different beast from download, and combined with a genuinely interesting catalogue of content, Hulu has attracted a sizable audience and in a form that advertisers are relatively comfortable supporting.  The other YouTube competitors, including Veoh, Joost, Revver, Metacafe, and Stage6 all followed what they saw as the YouTube model, i.e., grow an audience through liberal upload policies for user generated content and then use that audience to attract premium content and advertising revenue.  As even the leviathan YouTube has shown, advertisers are just not interested in UGC, so it was going to take something far more managed like Hulu to achieve any kind of critical mass.  As a veteran of the Stage6 experience, I can personally attest to the difficulty in  allowing uploaded content while keeping a site free of porn and illegitimate content, not to mention while burdened by the bizarre strictures of the DMCA ruling.  Sadly, Stage6 ultimately had to close down precisely because it could not find an acceptable balance between attracting eyeballs and paying for the bandwidth those eyeballs were using, not to mention the ever present threat (and eventual reality) of lawsuits.

Of course Hulu has its problems too, particularly around the geographic limitations that rights-holders force it to respect.  And it’s not really sure that the current model for Hulu is self-sustaining, depending as it does on rather fluid advertising dollars and the continued cooperation of the participating networks, something that is far from assured as the re-launch of cbs.com may demonstrate.

Based on my experience, I believe the key dynamic that brings the two stories together to give us a deeper understanding of what is “working” on line is the geographic element.  Wide-scale video sharing took off in the wake of DVD and broadband, but it took off far more strongly in Europe than it did in North America (just look at the market penetration of DivX enabled DVD players to track that phenomenon).  The key driver was the desire to see movies and tv shows that had high consumer awareness but no distribution, that is, high profile, highly marketed films or shows that had been released in the US but were delayed in Europe, so the only avenues available were illegitimate channels.  As communications and marketing become more global, instantaneous, and community driven, they rapidly move beyond any effective notion of geographic boundaries, especially among tech-savvy online participants.  If Hulu can be said to work, it is only in the US context, just as the BBC iPlayer does in the UK, but neither really work outside of it, and in fact likely drive viewers to precisely the kinds of illegal distribution channels mentioned in the NYTimes piece.  Until the geographic restriction/opening window issues get resolved, it will be hard to say that online video “works” as well as it should, or as well as users demand.  And piracy will continue to provide an experience that meets those demands, regardless of the wishes of the content creators.