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Piracy: not the enemy, but the competition

We talk to an anti-piracy pro who says that content producers should stop trying to stifle piracy and concentrate on competing with it better25 Sep 2008

A text transcription follows.

This transcript is for anyone with a hearing impairment or who for any other reason cannot listen to the MP3 audio file.

The following is the text spoken by OUT-LAW journalist Matthew Magee.

Hello and welcome to OUT-LAW Radio, the weekly podcast that keeps you up to date on all the twists and turns in the world of technology law.

Every week we bring you the latest news and in depth features that help you to make sense of the ever-changing laws that govern technology today.

My name is Matthew Magee, and this week we talk to that anti-piracy industry insider who says that some studios and record labels could start winning the copyright wars by treating pirates as the competition.

But first, the news.

Publishers must vet automatic ads


City workers could sue over cut bonuses.

Publishers must take responsibility for the suitability of published adverts, even if their ads are chosen by an automated system like Google's AdSense, the advertising regulator has said.

Many online publishers use AdSense or Yahoo!'s Publisher Network to associate adverts with keywords contained in articles. Such systems can match articles and adverts in a way that readers are likely to find offensive, though. For example, an article about sexual abuse might contain words which trigger adverts for sex-related products.

The Advertising Standards Authority has told OUT-LAW.COM that a publisher bears responsibility for an ad's suitability regardless of how the ad was chosen for a particular slot.

A spokesman said:

"If ads are generated automatically there should be checks in place, people need to be responsible for the ads they show and they need to meet the requirements of the Code".

The ASA has declined to investigate an advert that appeared in The Guardian attached to a feature about the resignation of former Pakistani President Pervez Musharraf. The advert read "Pakistan Girls in Photos at Great Prices" and the reader complained that the inclusion of that ad was tasteless and inappropriate.

Bankers could sue their employers if their bonuses are cut in the aftermath of the financial meltdown of the past 10 days, according to one employment law expert who said City workers have a "significant expectation" of large bonuses.

The head of financial regulator the Financial Services Authority (FSA) has said that it could penalise banks that pay bonuses for behaviour it thinks is excessive risk taking.

Bob Mecrate-Butcher, an employment law specialist with Pinsent Masons, the law firm behind OUT-LAW, said that City workers could mount a legal challenge to bonus cuts.

He said: "There is a significant expectation built up over many years that bankers will receive a yearly bonus," it is likely that if investment banks sought to pay no bonuses, or to reduce them beyond the level justified by reduced financial performance, they would be subject to legal challenge." Though banks treat bonuses as discretionary, there are still legal limits on how severely they can chop bonuses or for what reasons.

That was this weeks OUT-LAW News.

If you are a major producer of content like films, music or computer games, what is piracy? Maybe it is the biggest ever threat to your business? May be it is evidence of the venal, low, cheap nature of humanity? Or the result of poor enforcement of existing legislation?

Well according to one anti-piracy professional who acts on behalf of content producers to identify and prevent piracy, it is something much more understandable, and therefore much more preventable. Dr David Price says that for content producers, piracy is competition.

Price is the head of Piracy Intelligence at Envisional, a company that tracks and measures online piracy for content owners, giving them an idea of what activity is happening where.

Price is not the hard liner you might imagine – he doesn't advocate pursuing individual file sharers or condemning out of hand everyone who engages in piracy. Most, he says, are just exercising normal human consumer demand. The job of content producers should be to meet it.

Price: That the attitude in the early years was, we must clamp this, we must stamp this out, we must clamp down on this immediately, and I think there is a much, much greater recognition right across the industry now that there have to be legitimate alternatives and not just that, but they have to be really good legitimate alternatives as well. They can’t just be a single store offering DRM protected downloads. You have got to offer as good a user experience legitimately as people can get through piracy. We can’s just offer something which is so restricted that people aren't going to bother. We have got to offer something that really can compete with piracy because it is a, once you get involved in downloading things illegitimately the user experience is so good it is compelling, you really get high quality content, there is so many advantages to doing it over what you can get legitimately in a very wide range of countries.

The traditional view of piracy is that it happens because people want free stuff. That accounts for some, says Price, but he takes a more sophisticated view. So what is it about pirated material that makes it attractive to otherwise law abiding citizens?

Price: To some extent it's the quality to other extents it is the delivery, it is the distribution mechanism, I mean you look at iTunes for instance. iTunes has been phenomenally successful for the music industry, and I think they have hit something of a sweet spot even with the tracks that have their DRM on it, but it still causes problems to some people. But you can still get better quality through piracy if you want it, you can get higher bit rates, you can get things which are completely DRM free. Certainly if you look at something like television for instance the pirated version of television which you can download an hour after it airs legitimately on normal television networks is as good as you can get through any kind of legitimate method, and I think one of the major problems which content owners are facing at the moment is not necessarily delivering things in a quality that is good enough its delivering things in a method and in a country where people demand it.

In Price's analysis, then, content producers are in competition with pirates not principally because they provide the content for free – TV companies often do the same as it is – but because pirates provide more convenient material free of digital rights management, or DRM, Technologies, and provide it instantly, worldwide.

Price says that people who would otherwise rather use legitimate services flock to piracy because of the levels of service it provides. It is these people who should be targeted by broadcasters, film studios and record labels. They represent a winnable battle in the war against piracy. How does he know? Because he's seen it happen.

Price: A Norwegian television network called NRK, they're a bit like the BBC in Norway, they started making copies of one of their shows available on BitTorrent deliberately. They put it up themselves in good quality and they found that the pirated versions just dropped dramatically because people came to them to get it through BitTorrent. People came to their website to download the show through BitTorrent because they were assured of good transfer speeds, a high quality show and because they were coming to the network, the network’s whole traffic to their website went up. People were downloading other shows from them, people were watching other things and coming back to the network and there was a big effect from simply offering that good quality content.

That's all very well, I hear you say, but competing with pirates means giving your material away. That's hardly ideal for multi-billion pound content conglomerates.

Price says, though, that giving material away to consumer for free is already the business model being pursued in the richest TV nation in the world, the US. It can make for sustainable business, he says.

Price: It is not necessarily about paying. Something like Hulu is funded by advertising. You do not have to pay to use Hulu. Almost all the major television networks' content is available on Hulu. Or if it is not available on Hulu it is available on their own website if you are in the States. But, all of that content you do not have to pay for, it is funded by advertising. So it's not necessarily about having to get a direct revenue stream from that content, you can do it in other ways, and by doing that, you get advertising revenue, you draw people to your provision, you draw people to your website or whatever central point you're using to deliver that content. Once you have got them there, serve the adverts, serve them trailers for other television they might like. You've captured them, and you can then use that to your advantage.

Similar, though slightly less direct, revenue models exist in the music world.

Price: Certainly a lot of music piracy, I think is people tasting music. They're downloading to see what this album is like. If they like it they will go and buy or if they do not buy it they will go and see the person in concert or they will buy a t shirt or they will recommend it to a friend or they will buy CD’s for a friend.

Price readily concedes, though, that while the law abiding majority will stop using illegitimate sources of material once legitimate ones improve, there will always be a rump of committed pirates who will not switch.

He doesn't, though, recommend going after every downloader out there. Rather, he wants to see the very big groups helping people to access contents - such as pirate bay - hounded mercilessly.

Price: We've always, as a company, we've always advised against targeting individuals. I have never seen a value in going after those people. It comes off as vindictive, it comes off as mean. We've seen a big rise in this in the UK over the last few months, but on the other side, I think there is a great value in taking action against the large facilitators. When you've got a huge website which is within the top 100 websites worldwide, of any kind, when you've got websites of that level of popularity who are making hundreds of thousands of dollars of advertising revenue each month, people who are really profiting from this - those are legitimate targets for the movie industry, for the recording industry, for the television industry to go after because these are the people who are really the centre of this.

Piracy is so rife that many commentators have wondered about the viability of record companies, film studios and television networks: can they survive when so many people steal their material?

Price has shown how by learning from the success of piracy and adapting those lessons to legitimate content, all but the most hardline of users can be coaxed out of the world of piracy and back into the world of legit content controlled by its producers.

Price: There are very, very big questions about how you can best approach piracy, best approach the issue of piracy whilst still protecting all the revenue steams that are out there. But I think our key message is that the best way of doing this, the best way of stopping piracy is to be the best provider of your content.

That's all we have time for this week, thanks for listening.

Why not get in touch with OUT-LAW Radio? Do you know of a technology law story? We'd love to hear from you on Make sure you tune in next week; for now, Goodbye.