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In an article prompted by the House Judiciary Committee’s discussion of the Stop Online Piracy Act, The Hill carries a piece by two professors from Carnegie Melon University.  They conducted research into the windowed release of movie DVDs:

… our research suggests that Hollywood is leaving money on the table — and is in turn failing to address a root cause of piracy — by preserving its separate release windows. Based on our analysis of seven large nations, we find that in most countries, every week customers have to wait before they can buy a DVD translates into, on average, 1.8 percent lower DVD sales. Given that good-quality pirated versions are available close to 14 weeks before the legal versions, the losses can be in the millions of dollars. Not surprisingly, a 14-week delay also translates to a 70 percent increase in pirated movie downloads in those countries.

And there are similar trends in several other settings. When NBC removed its content from the iTunes store for about nine months in 2007 and 2008, there was an 11.4 percent increase in piracy, but no increase in NBC’s DVD sales — a loss of close to $20 million, given 23,000 lost sales per day at an average price of $3. And when ABC added its content to Hulu in July 2009, piracy dropped by 30 percent. Likewise, when a major book publisher stopped selling new Kindle titles on Amazon in 2010, there was no increase in hardcover sales, and when the Kindle titles were finally made available, their sales were 50 percent lower than they otherwise would have been.

Together these results suggest that delaying content in the presence of digital channels is likely to cause consumers to lose interest in the product at best, and lead consumers to alternate pirated channels at worst. A better strategy would be to do the opposite: Make it easier for consumers to buy the content in physical and electronic channels.

More in the article.

4 COMMENTS

  1. I’m sure the Regionalization of ebook publishing has the same result. Nothing peeves me more than having to pay “protection money” to local ebook suppliers (2) here in South Africa when I am restricted from buying a kindle copy. Amazon should make global pricing its next publisher battle – and drop the moronic $2 surcharge. From Durban – good enough to host the world at a climate conference – but backward in terms of digital media access. No iTunes, B&N, etc.

  2. Amazon *is* doing something about regional rights; their in-house publishing efforts are mostly global. Oddly enough, this particular problem (for a change) *can’t* be laid at the feet of the publishers. More often than not they themselves only own regional rights as that is how authors and their agents market them.
    Thinnk of it as “legacy thinking”: in the old days it made more sense to let australian, or South African printers publish a local edition of a new book than to give all rights to a US or UK publisher and trust it to serve the entire planet as well as its home market. Location mattered. Shipping costs mattered.
    Now, with digital media, the entire planet can be one marketplace.
    Can.
    But it still isn’t.
    Sucks rivets, but it’s going to take time before global language right becomes the norm for author contracts.

  3. While I agree with Mr Smith and Mr Telang’s broad brush on the fact that restrictions on consumers brings upward pressure on piracy … the un-spun truth is that they figures are nothing more than fantasy. These numbers are spun out of the Media Industry’s self promotion machine and are not worth the paper they are printed on or the electrons used to view them.

  4. Felix, as an Australian keen to buy ebooks and routinely running into “not for you” signs on bookselling sites, I have often written to authors asking them why I was not allowed to buy their books.

    The most common reply was a bewildered, “But I insisted on world rights for ebooks!”

    Publishers do make these decisions. Diesel eBooks wrote this year to HarperCollins on my behalf (HC wouldn’t reply to me) about an egregious geolims conflict. HC’s response was, “We haven’t turned on any of our titles for Australia yet.”

    This was confusing, since the original enquiry was why three consecutive titles by the same author in the same series, released on the same day by the same publisher, had different geolims. If enabling customer access is “turning on” ebooks, I don’t think there’s a steady (or even competent) hand on the switch.

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