Internet

What Do Consumers Want? Watch the Pirates


Media companies are trying to lure fans away from the dreaded pirates—sometimes, by copying them

Photograph by Mary Evans/Walt Disney Pictures/Everett Collection

Media companies are trying to lure fans away from the dreaded pirates—sometimes, by copying them

If you want to run a media business, you should study how savvy users are consuming media. To that end, Warner Bros. (TWX) executive David Kaplan wants to look at the savviest of media consumers: the pirates.

“Generally speaking, we view piracy as a proxy of consumer demand,” Kaplan, the head of anti-piracy efforts at Warner Bros. Entertainment, wrote in a piece posted on the website of this week’s Los Angeles-based Anti-Piracy & Content Protection Summit. “Accordingly, enforcement related efforts are balanced with looking at ways to adjust or develop business models to take advantage of that demand by offering fans what they are looking for when they are looking for it.”

Kaplan says it makes sense to loosen up on copyright infringements that don’t pose legitimate threats to business, acknowledging that fans who make mash-ups of your material are like an extra ad department that works for free:

“We give a wide berth to ‘fan use’ and permit fans to use and interact with our content in ways that might technically still constitute copyright infringement, but do not directly substitute for the full length feature, episode or game. Warner Bros. and Time Warner, for that matter are content creating companies. Indeed, we include major news outlets. Freedom of expression is key to our businesses, and any actions pursued on the enforcement side are taken with that in mind.”

Many video-game companies have taken this approach to the insanely popular in-game replay videos that fans make and post to YouTube (GOOG) through channels such as Machinima. At the same time, Nintendo (7974:JP)‘s recent decision to start claiming a portion of the ad revenue from these videos is a reminder that openness seems more threatening when money is on the table.

Media companies may also be coming around to the idea that the models for moving pirated content are worth imitating. A 2010 study by researchers at the University of Texas, Dallas found that legal digital music marketplaces blunt demand for illegal ones; while the impact of music piracy continues to be disputed, legal online music services have since then gained steam.

Hollywood studios have begun to question some of the basic tenets of their distribution model. According to the Wall Street Journal, Disney (DIS) and Sony Pictures (SNE) are letting Korean consumers stream movies at home, even while theaters are still showing them, in an attempt to reduce the incentive to pirate new releases.

The idea has its opponents. Major U.S. movie theater chains require a period of exclusivity from studios, precisely because they’re concerned that many people would stay home if they could. This idea is probably not going to be coming to the United States any time soon.

The streaming movies aren’t necessarily cheap, either. But there’s definitely a school of thought within media companies that customers would be willing to pay for the relative convenience and safety. And anything that might steer people away from BitTorrent is worth a shot.

Brustein is a writer for Businessweek.com in New York.

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  • TWX
    (Time Warner Inc)
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    (Google Inc)
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