Interesting article on how piracy is devaluing digital goods

piracy is devaluing digital goodsAlthough it’s an older post, it only came across my feed recently, and I thought Baekdal had some interesting points worth sharing. He says the real problem with piracy is the devaluation of digital goods.

Here’s how he presents this:

Imagine that you have $200 left to spend, and you want to buy a new pair of shoes, a new iPad bag (because you feel your old one is looking a bit out-of-date), a couple of books, a movie, an XBOX game, a magazine subscription, and Will.I.am’s latest album.

Clearly, you can’t do that because the total sum is more than the $200 you have. So you have to make a choice. And because of piracy, this choice is suddenly very simple. You buy the physical goods, and pirate the digital ones:

The bolding was his, and I had to agree that it’s a valid point. I was recently tempted along similar lines myself. I decided last month to set a monthly entertainment budget, which includes Amazon (or iTunes) video, music and ebooks. At the end of the month, I was getting close to my budget limit, and there was a series I wanted to reread. The devil on one shoulder said, “You used to own the series in paper, so hey, you paid the author once. Why pay him again?” The angel on the other shoulder of course said, “No, no. Piracy is wrong. You sold the paper version. If you want to read it again, you need to buy it again.”

No worries. I bought the first book, read it, mostly enjoyed it but decided I didn’t enjoy it enough to buy (or pirate) the rest of the series.

Granted, I didn’t have a strict physical to digital scenario, but as soon as a budget entered the picture, piracy briefly looked like a valid option. It was tempting enough that I can absolutely see someone facing a true digital to physical budget scenario deciding to pirate the digital goods. It doesn’t make it right, but it’s certainly tempting.

He had another point, which ethically is hard to defend, but practically is also tempting. Remember that Baekdal is advocating against piracy, but he throws out this point:

I understand why people pirate a movie if the movie studio is blocking you from seeing it on Netflix. Or if they delay the release for six months in one country while all your friends can see it today in another. I fully understand that. And I do not see a problem with it.

Again, bolding is his. He uses this to draw a distinction between the “good guys” who distribute content globally and with few, if any restrictions vs. the “bad guys” who cripple content with DRM and territorial restrictions.

He closes with a compelling argument I’m not sure I’ve seen before:

Piracy is killing the wrong people, for all the wrong reasons. It’s not destroying the traditional publishers. In fact, it’s helping them by keeping us in the past. Piracy is really destroying the new world of digital creators. People who want to do it right!

His point about “keeping us in the past” is that by forcing a greater value on physical goods, pirates are stopping us from moving into a digital future with viable business models.

I mostly agree with him. I do agree that piracy can lead to a greater value on physical goods. (Cheap 3-D printers could change that model.) If you’re on a budget, piracy can look darned tempting, which is why I think subscription services, if sustainable, can alleviate some of that. I definitely agree with the good guy/bad guy model. I’m also not bothered by people pirating based on territorial or time windowing considerations. Again, I’m resisting temptation myself because another book I really want to re-read is not legally available as an ebook at all.

However, I’m still not convinced that every pirated piece of content is a lost sale, which he certainly implies in his article. Whether he’s right or wrong, however, I still think the best way to battle piracy is to put as few restrictions on digital goods as possible. If what you want is freely available, in a price you’re willing to pay, and you don’t have to struggle with what device you can view it on, the temptation to pirate goes down considerably.

8 Comments on Interesting article on how piracy is devaluing digital goods

  1. The reason that digital goods have less value is because THE COST OF DUPLICATION IS ZERO. Pretending that digital goods should work in the same manner as physical goods is inefficient and grossly unfair to the consumer.

    This article talks a lot about budgets and the truth is that people have a fixed/limited entertainment budget and its usually part of what is left over after people pay for necessities. Once someone has spent all that they would normally spend for entertainment there is no reason to give them access to everything there is because to do otherwise would represent a Pareto improvement ( https://en.wikipedia.org/wiki/Pareto_efficiency ) since that person would be made better off at nobody elses’ expense. People can’t spend money they don’t so the lack of consumption at that point does not take away from the content creator nor does it impose any additional cost upon them. Another well known notion in economics is that in an efficient market price equal marginal cost. Digital goods’ marginal cost is zero so the price should be zero.

    At least in some cases digital goods need a mechanism to encourage their production. Because of the inefficiencies that result from using the physical object model, new business models must be developed. Some of these can include the Kickstart model where works are pre-funded, the PBS model where work is paid for by continuing fan support or the BBC model where consumers pay an entertainment fee to the government which then distributes it based on popularity.

    The linking of piracy to theft is a conspiracy by Big Content to shackle the consumer to overpaying for ideas and expressions that for the vast majority of human history were considered to be the property of all. One can no more steal a digital good as one can steal the air or the rights of citizenship. If Big Content refuses to modernize then it is the duty of consumers to implode their business model as quickly as possible so that something new can be rebuilt from the ashes.

  2. I should also mention that the easiest way for a digital author to sell more stuff is to simply drop the price. With just a modicum of patience I can get just about whatever piece of media I want for free or next to nothing. If I wait long enough I can see movies on broadcast television or at a friend’s house. I can buy physical copies of just about anything used online and then resell it for almost what I paid for it (or more). I have a non-profit near me that that gives away books, as many as I can haul away in my car, FOR FREE and don’t forget I always have the option of a public library which also lend things like music and movies again FOR FREE.

    If piracy is theft then by the same logic libraries and used book stores are theft too. If that’s not the world you want to live in then (person who wrote the article) stop selling your e-books for $8 a pop and lower the price to 25 cents. Is it somehow offensive to you that people will get your books for such a small amount even if you end up making more at the end of the day? Why not get someone or some group of someones to front you the development money then make your work available to the 7 billion people on the planet?

    I tend to think it all comes down to greed. Nobody wants to take a small fixed amount of money when our current rights system offers the lottery ticket of becoming the next Harry Potter billionaire.

  3. Messerschmidt // March 10, 2014 at 2:41 pm //

    (I think I’ve discussed these things at length with Sturmovik at another site with different names.)

    Juli, you drifted away from the main idea, devaluation. Piracy is like printing money: if everyone is allowed to do it, it loses it’s value.

    Sturmovik, I’ll fly away this time.

  4. @Sturmovik, I don’t disagree with you on the point of needing a new model. You’re right. Digital and print aren’t the same, and new models are needed. It’s why I like subscription models for digital goods. Then the budget issue becomes a complete non-issue.

    The problem, however, with dropping the price drastically, is that consumers are still in a mind-set of “you get what you pay for.” Dropping a book .25 won’t necessarily bring in more income because consumers often wonder “why’s it so low” and won’t buy. There have been studies on consumer behavior at various price levels. To make it more complicated, the results vary by country.

    And I don’t know if you were speaking to me or the author of the original article, but I certainly don’t consider checking a book out of a library as theft. I’m not even particularly anti-piracy. I tend to believe that the more eyes on my books the better, even if they pirate to get them.

    @messerschmidt, fair point on my drift. I tend to do that on this subject because there are so many facets to it.

  5. @Juli Yes, I was mostly responding to the original writer, but that is where one logically ends up when one considers ideas and expressions to be equivalent to physical property.

    If one is paying to receive the idea then reading borrowed books is theft. If one of paying for the physical object then copying digital works is not theft. Since I know very few content creators who would go as far to condemn lending and the used market (although some do and Big Content is using DRM to squash both), picking and choosing which forms of free use is “theft” is not only hypocritical but also exposes the flaws in their arguments.

    Long story short pay for tangible things and pay people for their time and effort. Avoid paying for intangible things as a proxy for time and effort.

  6. @Sturmovik, well, we could get into the whole “theft is only theft if it deprives someone of their property” argument. Neither library lending nor piracy are theft under that definition. I don’t lose much sleep over piracy because it just gets too complicated and emotion driven. Basically, I want someone to read my books. Note: I don’t want someone to take my intellectual property and sell it as their own. But if someone downloads my book on a pirate site and reads it that way, well, so be it. However, I do enjoy writing about the subject and reading other views.

    Now you’ve got me thinking hard about a practical way to pay for writing time and effort without paying for the intangible thing as a proxy. That’s a point I hadn’t considered before.

  7. Juli, et al

    The way I have started approaching things is the patron model.

    I either do work for hire for something that I want (highly customized things) or I use a service like Patreon to pay for it.

    Patreon works similar to the PBS model mentioned above, you pick a level of support you want to give a person for their output. For a couple of dollars a month I get expert opinion on a topic (the journalism model).

    http://www.patreon.com/anstett

  8. @BOB, interesting idea, but I’m not sure how to apply that to authoring a book. Unless you could get enough fans to become patrons, which might be possible. Hmm.

    Love the maps, by the way. Tomb of Xaxthos looks interesting.

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