Of Pirates and Market Correction

From the October Zeitgeist…

The term “Intellectual Property Rights” [IPR] is one of the most bandied‐about and misunderstood terms in the world of technology and media today. Its lack of concrete perception coincides neatly with the lack of knowledge of what piracy really means and what its roots are. Both terms are fundamentally important to those who create, produce and distribute content, which WPP companies do a fair bit of. Check out Lawrence Lessig’s “Free Culture” for more.

As The Economist notes, “Some agencies have tired of coming up with clever ideas for clients without winning a share of the resulting revenues.” Consequently, agencies have begun developing their own IP, whereby they create brands for a client and then own part or all of the idea, benefitting from any future profits that brand may reap. What insights though can we gain from those who infringe IPR?

The FT writes, “In removing the cost of distribution, the internet has proved itself a perfect piracy incubator and has made it harder for those involved to be prosecuted successfully.” The New York Times review of “Ripped” castigates indolent music industry execs who presided over their own downfall. Figures on piracy are questionable. The MPA believes piracy costs film studios around $6b p.a. No consideration is given to sampling or network effects. Its attempts to put wayward teens and twenty‐somethings off with a number of campaigns, ranging from anachronistic to awful, spawn creative parodies aplenty.

Some sort of market correction was indeed necessary in the film and music retail market. Charging £16 per CD and £20 per DVD was unsustainable, especially in a recession. Rampant downloading by millions has served to correct this inequality, as noted in an Ogilvy blog. Secondly, p2p networks – versus visiting Blockbuster to rent a movie that turns out to be sold out – brought convenience. Downloading a song in a minute and a film in an hour is a very attractive proposition; years passed before the arrival of legal alternatives – Hulu, iTunes, et al. – that are now taking off, and slowing the rate of illegal downloads.

What marketing insight does the act of piracy offer us? BBC News reported that within hours of the new Harry Potter film’s release, pirated copies were selling for £3 in car boot sales. If the insight for Napster was not just music for free but music obtained easily, might this indicate a growing desire for product availability across multiple platforms simultaneously? Disney CEO Bob Iger mooted such a move back in 2005.

Even before a spell of fining and imprisoning filesharers, it should have been obvious that punishing consumers does not work, nor heel‐dragging. Neither will endear people to a brand.