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Wednesday, August 12, 2009

IP update Feb 2011 : The EFA released a report exposing some flaws in the AFACT paid research. I stand by my suggested model below.

I recently read this PDF from Intellectual Property Awareness Australia. It's a group advocating for Intellectual Property
owners and against pirates. What follows is a mess of notes I've mated to a mess of quotes from the document above. Had I the time, were someone to ask me to, I'd formalize the thoughts into a coherent essay. Also, I tried to keep this short. Yes, I consider this a short opinion on the subject. There's a lot more to say.
Short time and motivation, we're stuck with this disjointed and somewhat clunky assemblage of thought. Welcome to my world.

Although I do not disagree with the basic premise that a property owner has rights (in this case copy rights), I was uninspired with their interpretation of the current reality and the resultant direction they offer. But who
am I, right? I don't own IP. I'm not licensed to distribute IP. I don't have a stake in this. But I do. I am the consumer. I am the target of their campaign. And I don't appreciate it. In fact, I find it a bit insulting. That's a
problem for IP Awareness. One problem is that I have an opinion on the subject that differs from theirs. The other problem is that I have an opinion at all.

Do consumers really have an opinion on the somewhat labyrinthine structures and strictures of IP Law? Without knowing it, yes. I've had several conversations in the last 10 years with the consumers in an evolving
culture. And in none of those conversations did I hear as blunt and un-nuanced message as IP Awareness is putting out. But surely there is a selection bias here. I am a blogger, a "knowledge worker", a university
graduate, etc. whatever. And surely I am not an expert either. All true. But I doubt either of those facts are relevant to the argument I'm prepared to make. The argument is something along the lines of "The customer is
always right".

There is a consumer revolution going on. IP legislation can pay attention to that revolution, or it can become irrelevant, damage business and fulfill a prophecy they tout in their published materials:

"Less local choice – fewer movies, TV shows and documentaries.

• Higher costs and fewer locations to buy/see movies, as cinemas & DVD
stores go out of business.
Advice on how to avoid the pirates:
"Don’t buy dodgy DVDs – enjoy the real, original DVD experience with all the
trimmings (extras, Directors cuts etc).

• Don’t download from illegal websites – go and see the original on the big
screen in the cinema.

• Don’t copy and burn DVDs to share with your mates – see it together at the
cinema, or buy your own copy to support the production of more movies.

I totally agree with these points. But it's unfortunate that this is where IP Awareness intends to end the conversation. It sounds a lot like the "Just say No" campaign in the War Against Drugs, or the Abstinence
campaign against teen sex. Neither campaign worked. Why do it again?

On Kenny:

"when he found friends and family had freely admitted to watching or owning
illegal copies of the film months before the official DVD was released. When
asked by Jacobson why they did it, his friends replied: “Well, I went to the
cinema and it did really well, so you got my dollar there so I thought it would be
okay to burn it?”
...."If this is the
case, how do you suppose movies can continue to be made? Investors
will be less likely to invest in movies in the future if they lose their some
of their return to piracy."

Again, IP Awareness assumes no value in the 26% they concede who do buy media legally after viewing illegal copies, much less the 72% of people who don't go on to make a legal purchase. But that entire group of
people who view a film, whether they purchase or not, form a word-of-mouth group that is worth having. If we learn anything from the proliferation of "product placement" in movies, we learn that eyes are worth money. A
soft-drink manufacturer can expect x$ return on a product placement in a Bond film, so will pay x$-1 to buy that placement.

Similarly, when a pirate sells a copy of a film, it's worth x$ to the IP owner in revenue future.
Calculating the differential is problematic, but it's not a 1-to-1 relationship. A problem with any black market is that they are largely opaque to the wider market. This opacity hides the loss as well as the gain.
A larger problem with black markets is that the money tends to find its way back to much darker things.

Neither of these problems are resolvable by asking people to "Just Say No". A black market arises because of a perceived (or real) gap between cost and value. The black market provides a commodity at a price that
better matches the customer's perceived value - perhaps at a further discount to lure the consumer over the ethical line. Problematically, this has the effect of showing consumers a false margin. We are taught to think
"if pirates can sell DVDs for $3, those nasty capitalist studios could surely do better than $30". The truth may lie somewhere in the middle. And it's important to get to the truth to prevent this "learning" taking place in
the first place.

Two ways to put the pirates out of business, off the back of a napkin:
1. IP law reform

2. Leaner distribution channels

1. IP law reform

Create incentive for pirates to come in from the cold by acknowledging the value in the eyes they're serving.
Create a constrained quality/content format that's simple to participate in and free to would-be pirates:

DVD sales restricted to content that is copied from screen to camera (so good quality copies would still be illegal) PAL or NTSC non-HD

DVD sales restricted to the primary content (i.e. the film, not the extras)
This would allow any mom-and-pop shop to copy from screen (TV or Film) onto a camera, but not record from DVD to DVD or from primary source.
No in-line sound either. The recording must be "ambient" in effect.
These recordings could be sold above board given the vendor is certified.
And certification would include some IP awareness education for vendors, a test, whatever, but no $$ from the vendor. 
Vendors/market sets the price.
IP producers could offer their own low-quality version, under a different/shell brand, to relieve vendors of having to produce their own copies.

This would pretty-much kill the organized pirate gangs by saturating the market with law-abiding citizen-entrepreneurs and as a by-product brings the revenue into a taxable realm (hint: the tax should then be fed back
into the film industry thereby reaping ROI for the ever-generous Australian government). It also gives the vendors and consumers security. People, on balance, don't like to break the law.

2. Leaner distribution channels

Totally abolish DVDs as a studio distribution vehicle. Leave it to the Mom-and-pops. Fibre-Optic-to-the-Door is coming in Australia. Establish an industry standard rental, lease, pay-per-use regime for content over the
net. Lead on this one, or suffer the same consequences as the former music industry. Film has had all of the music industry drama to learn from over the past 10 years. Have they? Pirates won't be to blame if the IP
people and the film people don't get the immerging business model right. Lead. Filmmakers and film investors pride themselves on their ability to take risks. Take this risk. Don't fool yourself into believing that the context in which you take risk is immutable. Lead the change or be left behind.

Where would this leave the message for IP Awareness? What message do I think they should push? Something along the lines of "buying from pirates gives money to violent criminal forces. They don't respect our property, do they respect yours? We're going to help you to cut off their income with this strategy...look for this icon at your local mom-and-pop (or website) video shop to know that they are legit". Something along those lines, "let us help you" instead of "we will hunt you, find you, and prosecute".

"Making a film isn’t simply a 9 to 5, Monday to Friday job. It’s fueled by a
passion and desire to bring a project to life for the audience. Many
people spend years to get a movie made and with no guarantee of any
financial return."

So, are we to suppose from this statement that film is only business? Using the word "film" implies "art" in my mind. Art does not then imply "profit" in my mind. I'm an advocate of divorcing the idea of profit from the
act of creation (even from the product of creation). I've oft heard in relation to most art careers "if think you can do anything else, do it" - which implies the corollary "Only people who can only be fulfilled doing this thing,
should attempt this thing" - and it applies equally to wide array of human occupations and endeavors soldiering, lexicography, writing novels, living off the grid, etc. Mostly none of these non-filmmaking efforts are as
loudly insistent in their right to exist and their importance to mankind. Film-making is only a noble cause to the degree to which films are "good". The relationship between profit and "good" is dubious, sadly.

"Research has told us that only 16% watch a 
movie at the cinema after watching a pirated version of it on the internet or on
DVD, and, only 26% of people would then buy an original DVD, movie or TV
show after watching a pirated version of it; With a significant 72% of people don’t
watch or buy it legally (at all) after doing so illegally."

80-20 rule writ large here. The 80-20 rule applies liberally to the human experience. It's found in nearly every economic interaction. The more interesting, and not-mentioned statistic is, of the 26% of the
people who do end up buying the IP, what % buy because of the pirate version? (i.e. piracy as advertising). How many consumers is piracy bringing to the market? As many as advertising? - remember licensed IP
vendors pay for advertising to promote and then are paid by advertisers to screen/play (think TV or radio advertising)? What value do the licensed IP vendors bring to the transaction that pirates don't? How to
amplify/leverage that value? What part of the download or car boot market experience can licensed IP vendors coopt (e.g. iTunes)?

From IP Awareness PDF:
" Poor quality – you’re ultimately robbing yourself of the best experience...why
watch a movie or TV show that is sub-standard…the sound is distant and
echoing, or there’s someone walking across the screen, or the colour is all

Put these two statements in context: "you’re ultimately robbing yourself of the best experience" and "there’s someone walking across the screen". 
Ostensibly, they're suggesting that your pirate DVD might include someone getting in your way while watching the film. But that video is a record of this "best experience" - that person walking in front of the camera
was walking in front of a whole row full of theater goers too. And the sound, instead of "distant and echoing" might have been excruciatingly loud (as I often find in theaters).

Sure films are made to be shown on the big
screen, but the humble VCR showed us (in the 80's) that that "best experience" is a subjective measure. At Govinda's they believe the "best experience" includes having your shoes off and laying on the floor, others
can't get past the smelly feet and the prospect of bedbugs. IP owners and producers need to pay attention to this.

The current IP laws, mores, norms are being subsumed by a wave of new ways, interests, abilities. Will IP law be like the brittle tree, or bend in the wind like the spring grass? If this aspect of the discussion is not
taken into account in the advertising/awareness campaigns of IP advocates, and instead the they merely point a big finger with the words OBEY written on it, the future looks bleak for IP culture.
 (How the music industry got it wrong)

This is the size of the problem: In 2005, global independent research (LEK)
found the cost of piracy to the Australian film industry to be $233 million dollars.
That’s enough money to make roughly another 200 films with the budget of the
much-loved “Kenny”.
Globally the Motion Picture Association puts the losses on filmed entertainment
worldwide as a result of piracy at US$18.2 billion1."

RIAA has been pushing similar numbers for a long time. It's important to remember that statistics are lies. There are a dozen ways to make these numbers dance. The simple calculus of "how much money would we
have made if all these pirate sales had been made to licensed vendors instead" does not hold legal water because of other economic effects.
I don't have the data and again I'm not an expert media data analyst, but I don't trust the analysis presented because of the way it's presented. I also don't trust it because I'm aware of the track record of other IP
bodies like RIAA. Give me a balanced picture, not an advocate’s didactic spin.

Also be aware that there are a lot of ways to read numbers. Example: What are the most downloaded/pirated movies? "Blockbusters". The name "Blockbuster" indicates that here is a film that made big money (accurate or not for individual movies, and even though it's a head-in-the-fire-feet-in-the-freezer scenario, the average for Blockbusters is well in the black). Correlate highest profit films with higheset download/pirated films and a narrow reading of the numbers suggests filmmakers should have a marketing campaign to get their films pirated and copied more. So, be careful with numbers.
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