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Marketing: Why Internet Piracy Isn’t a Bad Thing

28 Jul

In studies ranging from large scale to personal marketing attempts, piracy has lead to an increase in sales. It’s a touchy subject where some people think of the idea as theft while others view it as free marketing. Is either right?

 

First, let’s define “Internet Piracy”. This is the uploading of digital media like music, movies, television, books, videogames, applications, etc, to other people online. That’s it. If you download a song off of youtube or torrent a movie, it’s not illegal, even if comcast or copyright protection agencies come after you (They’d have no legs). Actually, you’re legally allowed to produce a single copy of any media you purchase, and torrents count as a legal copy. Anyway as long as you’re not uploading a file you’re not doing anything illegally however torrents generally require (or automatically) uploading as you’re downloading.

Now, what’s a torrent? A torrent is a peer to peer filesharing service. Basically, let’s say someone on the internet has a movie. He then links that file to another file called a .torrent, and then gives you or me that .torrent file. With the proper software to read .torrent files, I begin to download that movie from him. Now let’s say ten other people get the same .torrent file and jump on the bandwagon, with a .torrent file I’ll now be uploading this same movie to everyone else who jumps on. Torrents are a free way to share a file online with minimal cost to bandwidth and a lot of businesses actually use it regularly. The vast majority of pirating also comes from torrents.

Skepticism

“Piracy is theft” is what most people will tell you. Let’s go over why they say this. For reference I’ll quote a videogame called Starcraft 2 by Blizzard Entertainment, a sequel to a wildly successful and popular game called Starcraft. If media comes out, and you don’t buy it but you download it online, isn’t that theft? When Starcraft 2 came out millions of fans of the original game downloaded it on the internet, for free, without giving any money to the developer who made the game. Ask yourself, is that theft? Sure seems like it. Blizzard spent millions of dollars making a game that people just downloaded for free. These “people” where mostly fans of the original. I can imagine that this seems like a massive slap to the face if you where the developer for this game.

But let’s turn this into science and dive a little deeper. Ask the question, why would someone pirate a game? Well, Starcraft was a very old-school game and the developer was incredibly focused on quality of work and customer service. When Starcraft 2 came out, Blizzard was very modern and focuses more on profits than quality of product. Not long after Starcraft 2 was revealed the game was essentially announced to be tripled in price. From here we can determine two reasons why people pirate, which I believe are the two fundamental reasons why anyone pirate. First, they doubt the quality of the product. Second, they are unsure if the products value is worth the price. Two issues, price and quality.

If a customer is considering the purchase of a product, they attach their own value to that product (almost always subconsciously). In most cases you’re either going to reluctantly buy something, feeling ripped off but usually agreeing that the value is worth the price, or you’re going to buy it and be happy. If you feel that the value is not worth the price by a long shot, you’re not going to buy it. The difference now is with Digital Media, like movies and games and music, you can go online and download it for free. The value now meets the price ($0). This is not morally justified.

Thinking Inside The Box

What do most digital distributors do, when they want to prevent piracy of their product? Look at iTunes, look at most videogames etc. In order to prevent piracy, iTunes restricts you from installing your files on too many computers and you need to have internet access to validate your files (Something I really hate when I’m trying to chill out and get work done on my computer). This restriction is called DRM, or digital-rights management. DRM is essentially software that exists to restrict your media from being shared, usually resulting in great inconvenience to YOU, the honest customer who bought the stuff in the first place. Tons of videogames like Bioshock had massively intrusive DRM which required you to be online to even play the game, and went as far as to only letting you install the game twice. More instances of even more intrusive DRM exist, just give it a quick google.

This hurts the value of your product. A lot of companies spend million on DRM only to see their products pirated even more than their last. This is because DRM makes your product worse, plain and simple. A CD key for a videogame isn’t very inconvenient, but what if my computer crashes a few times and I have to re-install my game or music more than a few times? Are you telling me I just lost all my rights to owning that product? Give me a break.

Think Outside The Box

So now you know what piracy is, how it’s done, why it’s wrong, and why people do it. Piracy is an evil demon that we need to destroy, right? Wrong. Piracy means two significant things. First, it indicates a massive decline in a developer/producer’s quality of work, and second it can mean a massive and free marketing movement.

Multiple videogame developers, writers, artists and more have gone on record that piracy is an effect due to a decrease in quality of established producers, developers, artists and others. Basically saying that a company abandons its customers in order to seek other customers. As a result the customers that have been loyal fans of this company are now doubting the quality of their work, or the value isn’t worth the price. This is extremely common in the videogame and film industries where sequels to popular past titles are being made with the intent of targeting every single human being on Earth as their “target customer”, and ruining the name of the original work. If you’re making something and it’s extremely different from past things you’ve made, expect your loyal fans to be a little concerned and they’ll probably pirate if they can. I suggest keeping a target customer instead of abandoning them once you reach a certain point of popularity.. Just my two cents.

A business can effectively use piracy as free marketing. Imagine giving a free demo to everyone. If you’re product is good, they might buy it, they’ll sure as hell pay attention to your products in the future, and might spread the good word about your products and services. Actually, a writer had an issue with piracy that I’ll write about in a quoted section below, and instead of thinking about people stealing his book he turned it into marketing and saw a massive influx of sales. A study by the Swiss, on a more massive scale, essentially followed around pirates and determined that pirates in general spend much more money on the media they pirate than a normal customer. Nine Inch Nails, a successful music band, had released an entire album for free on their website and even used Torrents to reduce the cost of sharing the files.

Neil Gaiman was a writer who had piracy issues. He had noticed his book was being pirated, and thought he was losing sales and profit. In Russia, he had massive piracy of people downloading his books and translating it. He was insulted by piracy, but later took a new look upon it. He noticed sales increase after this piracy and began to embrace it, improving sales even further. He goes even further than that to determine why piracy was such a good method of marketing. This stands true for all producers of digital media, and they should give his own video in the sources below a look over.

To put it in a more direct way, let me phrase it like this. When you decide to purchase a product, you’re putting out your hard earned money toward something and this becomes a risk in your mind. You weigh if you have the funds. Then you try to figure out if there’s something else you’d want to buy (Like if you’d rather put that money toward a new TV or computer parts or whatever). Then you try to determine if the product is going to be bad or not. Long story short? Buying anything imposes a risk. For some people (more than others) they’re more likely to just play it safe and not purchase the product. But what if you could use the product for free, as long as you wanted, with no obligation? All risk is instantly removed. So this person pirates the game, which was a risky purchase choice for him or her, and one of two things happen. Either they hate the game and uninstall it (You never had a sale, anyway), or they love it. What happens when they love it? Chances are they won’t buy it. Some will. But the real benefit? The risk, in their mind, for purchasing the next product you release is going to be far lowered. Potentially you could create very loyal customers.

For example, a friend of mine had heard a song called “Du Hast” by Rammstein on some movie a few years back. He fell in love with the song and wanted to hear more, but do you think he’d go and buy a CD just because he heard about 5-10 seconds of one of their songs in the background of a movie? Absolutely not. So he pirated it. Not just the song, not just the album, but the entire discography to date. He fell in love, and I remember going to Best Buy with him and he picked up every album on the shelves (And has currently purchased all of the albums he downloaded, and all of the released ones since).

A personal example. I heard (On a popular imageboard for videogames) about a game called STALKER. It got all kinds of praise because it was a survival horror game (One of my favorite genre’s, as a hardcore PC gamer) that had all kinds of innovations. It was a first person shooter, AND a role playing game, all rolled into one (Never really done before). It was made by some unknown Ukrainian developer, and the game had hundreds of terrible bugs and glitches. After I heard that, I wasn’t willing to toss a single dollar at the game. A Ukrainian game that doesn’t work? I was going to forget about it, but the imageboard just kept talking about it. So, I pirated it. Once I got it up and running, I instantly fell in love with the game. The Atmosphere, the unique style, the hardcore baddass Russian culture. So I went out and bought a copy of it. Later, I bought a second copy on the digital retailer Steam. When the Prequel was announced I bought another two copies. When the sequel was announced I bought two copies of that as well. All in all I’ve bought each game twice. I beat the first game on every difficulty, with a ton of mods, for about a total of 7 or 8 playthroughs. The prequel I got three playthroughs with, and the sequel gave me five total playthroughs. Basically, I pirated the game and now I’m completely hooked. Unfortunately the anticipated sequel STALKER 2 is going to try to essentially kill its own life-support system that gave it life to begin with (Not just my own opinion, the game became infamous over the internet and spread like wildfire through torrents/pirating, which lead to a massive underground movement that treats the game almost like a bible, and others just heavily modify the game so they can keep having fun). Basically, they’re thinking about having horrendous DRM attached to their game that will seriously inhibit the honest customers but won’t really affect pirates at all. It’s very unfortunate, and the way that they’ve shunned the method that gave them life is sort of sickening.

My Personal View

Piracy isn’t justified, but it isn’t bad. It needs a new outlook. Developers and producers of media need to embrace online peer to peer filesharing and use it as both a method of research and marketing. Research piracy to see if customers are having doubt about your products and then listen to them to see if you can improved your product. Use piracy like marketing. Are you a new artist? Release a whole album, that you would normally sell, for free online. Piracy will lead to popularity, and as people lose their doubts of your quality they will begin to spend money. Companies need to lose their restrictions for digital content, because this reduces the value of their game and further leads to piracy. I’m sure we can come up with a unique strategy that doesn’t give a free distribution of the full game, or one that’s severely limited (Like a glorified demo) and one that can lead to plenty of sales and satisfaction for everyone.

Sources

http://pc.ign.com/articles/118/1184546p1.html – Videogame developers are confident that piracy will always lead to sales
http://www.youtube.com/watch?v=87pevh2Q0hg – Gabe Newell of Valve Software talks about piracy and indicates how he eliminated piracy in Russia for his software
http://www.youtube.com/watch?v=0Qkyt1wXNlI – Gaiman on Piracy
I apologize, but I have lost my source for the Swiss study that showed piracy leads to profits. If you care about source that much, try looking for it yourself or just disregard it. I don’t care.

 
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Posted by on July 28, 2011 in Technology, Uncategorized

 

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