Tim O’Reilly: Why I’m fighting SOPA
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I wish more people would have the courage and conviction to say this out loud. I notice many people speaking out against SOPA on the web or on TV, that always start with "While I do believe piracy is a serious problem,..." - even though they don't really mean it, and they are just saying it because they are afraid of being seen as "pro-piracy".
And I agree with Tim O'Reilly that the vast majority of "copies" being pirated online, would not be bought if they had no other alternative. That's just part of RIAA's and MPAA's bogus claims that every pirated copy is a lost sale. It couldn't be further from the truth.
If you want to test this just compare a Netflix' user consumption of movies or shows, or a Spotify user's consumption of songs every month, to an iTunes user's consumption who spends around $10 per month, and you'll notice that the consumption of the Netflix or Spotify user is a lot higher than that of the iTunes user.
Why is this happening? Because as more content is available to them, they will consume more content, but they are not willing to spend more money on content. Limiting availability to more content, or in this case "curbing piracy", will not result in more sales and more money, because the user will not be willing to spend more than they were already spending.
There's an interesting story here in HN that debated this conviction: http://news.ycombinator.com/item?id=2490457
Because there is no immediately lost revenue when a non-customer views premium digital content without paying (due to the free duplication) the only reason I can see for denying non-customers your content for free is because there are indirect consequences to their revenue. Such indirect consequences might be the devaluation of content due to its perceived lack of prestige and exclusivity. But the main focuses of piracy, music and films do not gain value due to exclusivity or prestige (I struggle to think of anything digital that would benefit from this). In fact one could argue that the spread of these goods creates advertisement by word of mouth and increases the potential set of customers (and non-customers).
Determining who is a valid non-customer is however nigh impossible. The only scenario I can envisage of a provable non-customer is when some-one clearly does not have the finances needed to be a customer. However this scenario falls apart because you cannot prove they would never acquire the finances and become a customer in the future. You can however obviously prove yourself a potential customer by paying for the product.
Ultimately I like to think most people would be honest enough to say whether they're a potential customer or not (and O'Reilly clearly agrees) and in an ideal world I think every-one should have access to anything (spend all your money and you're then a non-customer for other products). However it's the prerogative of any company to only sell their content to proven customers and not give it away to possible non-customers.
That might lead to greater profits if the growth in sales volume exceeds the reduction in profit margin. Or it might not. That relationship is called the price elasticity curve; every product has a different shape and optimization point. Learning the shape, and picking the optimization point, is a huge part of selling something.
But the key point is that it is the right of seller to place themselves on that curve. LogMeIn Ignition is $30 in the iOS App Store. Obviously they would sell more copies if it was 99 cents, but they've chosen their pricing strategy. Does the mere existence of greater demand make it ok for people to pirate that software instead? I don't think it does.
It's obviously true that there is not a 1:1 relationship between piracy and lost sales. But it's also not a 0:1...some pirated copies are in fact lost sales. And, what's lost in talking about this equivalence (or lack thereof) is the damage to the pricing strategy of the seller--even the copies they do sell will necessarily be lower on the price elasticity curve because piracy increases the volume.
Another thing to consider is that pirated copies can be lost sales to someone OTHER than the owner of the pirated material.
Suppose I would like a game to relax with. I'm willing to spend up to $20. I see a game that I'd like but it is $50--so I pirate it. Let's assume that if I could not have pirated it, I would not have bought. $50 is simply off the table for me.
We can't reasonably count my pirated copy as a lost sale to the maker of that $50 game.
However, if I could not have pirated it I would still want to have a game. I would have probably found an older game that I could get for $20, or perhaps picked up an indie title or two.
[1] Ok, I didn't go quite like that.
There is no excuse to destroy due process and freedom of speech on the internet. None. Not piracy. Not child porn. Not terrorism. None.
Big kudos to Mr. O'Reilly for publicly acknowledging that accessing content by any (nondestructive) means generates value for society at large - even if not immediately financial for the copyright holders. Not accessing it at all would mean zero value at all, for nobody.
Having access to pirated material/software in the past that I wouldn't have afforded at the time helped me develop skills that later on allowed me to afford paying for value. I'm still not 100% legit but I'm putting more money back in the system, sometimes because it's easier buying things the right channels, sometimes just because it feels better. It's true that I'm biased towards supporting smaller, independent projects but that's also because that's easier (=cheaper).
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Now that it got mentioned, a quick word on Romania. While using p2p / cracked software at home is risk-free (less some extremely rare cases where some large sharers get busted as example) businesses do need to have proper licenses. Also true, smaller businesses might pass undetected by the BSA, but it's a risk most don't care to take. Years ago, international prices compared to our per capita GDP would have made most purchases prohibitive. In a perfect world piracy wouldn't happen, but thanks to piracy at large people (me included) had chances of becoming digitally fluent and start generating value and start choosing to pay for content/services.
Funny that O'Reilly mention the Romanian readers that pirate his books and he thinks there is no problem with that.
"the vast majority of customers are willing to pay if the product is widely available and the price is fair."
"Any company that is providing great content online in a way that’s easy to use with a fair price has a booming business right now."
Well done.
The law has two choices: i)to adapt its law to the times or ii)attempt to engineer the system to make it fit into its conception.
SOPA takes the second approach, and its in the best interests of those who are not fit to adapt to support it at the price of innovation.
My biggest worry about this is the precedent it sets for less scrupulous nations to pass this law and use it to oppress their citizens. The US should be championing a free internet to circulate its democratic worldview. In a world where each nation censors its information, that advantage could be lost.
"So here we have this legislation, with all of these possible harms, to solve a problem that only exists in the minds of people who are afraid of the future."
He assertion that the problem is an illusion almost immediately follows his statement that he has no idea about how much harm piracy does to the movie industry. So he does not know how big the problem is but he knows it is an illusion?
I pirated Crossing the chasm a few days ago because the publisher thought it would be smart to make it "not available in my region" http://news.ycombinator.com/item?id=3436550.
I was willing to pay, I had paid for several kindle books. I evan bought another book after pirating the "unavailable" one.
I believe copyrights that restrict individuals are an unjustified burden on society, and so I would never support the copyright industry by paying for copyrighted content.
I generally prefer to use free software (even using pirated software contributes to its ecosystem) but if I must use non-free software, I will not pay for it anyway. Given that I would never pay for it -- whether I use it or not, using the word theft is silly: A resource isn't being moved from one place to another. A new resource is being created, in the privacy of my own environment.
I'm not against restrictions in general, I'm against draconian restrictions that do much more harm than good.
Don't make something of value to a person and then refuse to sell it to him at any price whatsoever. You can't shove a man in a box then turn around and cry foul when he finds a hole in it.
http://en.wikipedia.org/wiki/Copyright_infringement#Theft
You should also be wary of confusing legality with morality. Notice how in no part of the post you have responded to has OoTheNigerian denied committing copyright infringement. In fact, he describes his actions himself not once, but twice as piracy. He is not denying that he did it. He is however suggesting that he is a moral person, which I suspect is what you find so confusing (make no mistake about it, you are quite confused.)
Whilst I wouldn't argue that all BitTorrent traffic is pirated I wouldn't argue all HTTP traffic isn't either. Somewhere around 17% of internet traffic being used to pirate does seem a reasonable estimate though.
17% is far from being most internet traffic but is indeed a very noticeable amount, which would indeed have an affect on the experience of legitimate users. This idea that piracy is detrimental to the internet experience for other users is one I find interesting and haven't heard mentioned before.
This still does not mean that piracy is a problem.
He's not going to have big piracy problems, because he was also smart enough to turn SaaS into what is effectively "Books as a Service" (AKA safaribooksonline.com). So he turned a bunch of one time payments for books into a recurring revenue stream that he can use to keep in touch with his audience and which allows him to do things like measuring the demand for new books so he can focus on whatever is hot right now.
In short, anyone who wants to be successful would do well to take notes. He built a publishing business that beats the traditional ones in pretty much every way.