How Netflix is wiping out piracy
A HACKER who unsuccessfully tried to hold Netflix for ransom has achieved an unexpected result – his failure shows subscription-based business models in content distribution is making piracy pointless. Intellectual property owners’ slowness in adopting these models is the only reason content is still being pirated.
Someone calling himself (or herself or themselves) TheDarkOverlord stole most of the new season of Netflix’s popular series Orange Is the New Black from a post-production studio and demanded a ransom. Netflix refused to pay and TheDarkOverlord put the stolen material on the Pirate Bay for anyone with a torrent client to download. But it’s not likely that others being targeted, like Fox, National Geographic and ABC, will pay up either. Nor will Netflix regret its decision – it’s safe to say its bottom line won’t be affected; the most that might happen is the fifth season of Orange will be released earlier than planned.
The reason for that can be found in networking solutions provider Sandvine’s Global Inter net Phenomena Report. Last year, BitTorrent traffic reached 1.73% of peak period downstream traffic in North America. That’s down from the 60% share peer-to-peer file sharing had in 2003. Netflix was responsible for 35.15% of downstream traffic. File sharing is the only traffic component of internet traffic that isn’t growing and isn’t projected to grow according to Cisco Systems.
Its content has been pirated since Netflix began producing its own shows but it’s never left a mark. It has the resources for legal fights when they’re called for but who wants to go to the trouble of using torrents – and risk problems with one’s internet provider or the law – to see a season a little earlier?
No one will cancel their Netflix subscription because one series is suddenly available for free download with an increasingly unpopular, inconvenient technology that doesn’t allow instant streaming.
“Subscription” is the key word here. This business model is a piracy killer.
For 15 years, Adobe Systems tried to sell its software for thousands of dollars per box to photographers and designers – and most used pirated copies at home. Now that the software is sold for a monthly subscription fee, they pay more or less happily.
As Richard Atkinson, Adobe’s global director of piracy conversion, put it: “Having tried various anti-piracy solutions over the past 15 years that consistently were viewed as having been ineffective… it was key for Adobe to make a fundamental change and begin thinking about piracy as a business problem.”
Adobe managed to switch to the subscription model without losing revenue. For the content industry, however, it’s been a scarier transition. Record companies, for example, lost huge money in the shift to streaming, not least because the music streaming industry pioneers initially gave a lot away for free, hoping to build advertising-based business models. Now that this illusion is gone, streaming revenue is growing and music catalogue owners and artists are more willing to co-operate with streaming services. That means more songs on the likes of Spotify and Apple Music – and less piracy.
According to digital content protection firm Muso, last year saw a 6% decline in visits to music piracy sites.
When it comes to video piracy, sites that illegally stream copyrighted content are the channel that beats torrents and other downloads today. Though it’s far more convenient than torrents, video piracy is slowly declining. Subscription services are driving it down by expanding user choice and producing their own content.
There will always be a small number of people who consume pirated content because they are averse to paying even a small access fee. Mostly, however, consumers are motivated by convenience. Subscription services don’t cost much and they’re easy and safe to use. Finding decent quality videos on piracy sites sites without watching invasive ads and running the risk of malware infection is difficult. If you’re like me, you’ll only do it cautiously – and only if the content you looking for is not available from any of the top legal services.
Therein lies a problem. When it comes to video, copyright owners are less willing to release new and in-demand content to subscription services. They are eager to preserve their revenues during a movie’s first run and they’re happier selling older movies to Apple and Amazon which offer them on a pay-per-view basis.
Eventually, movie studios and streaming services should work out a reasonable subscription price system to make more content available online. It would drive down piracy, as the subscription model did in the software and music businesses, and it would make theft nearly pointless as in The DarkOverlord’s case. – Bloomberg