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Presentation slides for a talk at Novelists Inc.'s 2010 conference in St. Petersburg, FL. Presentation scheduled for October 8.
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NOVELISTS INC.OCTOBER 8, 2010
Quantifying the impact of piracy on paid content sales
Overview of today’s talk2
“Piracy 101”Research to dateSome potential applicationsSteps you can take
Our point of view3
Copyright mattersThere are niches, and titles, for which piracy
is a direct loss and enforcement makes senseThere are niches, and titles, for which piracy
may help build awareness and trial to spur paid sales
Goal: uncover which is which
“Perhaps on the rare occasion that pursuing the right course demands an act of piracy, piracy itself can be the right course?”
Governor Swann, in“Pirates of the Caribbean”
(itself pirated)
4
Image courtesy of Wikipedia entry on Governor Weatherby Swann
“Free” is not “new” …5
A long and successful historyGalleys, ARCs, blads, sample chaptersDigital sampling on the riseA small set of experiments …… but no title-level studies
Why look at this topic now?6
An evolving file-sharing landscape7
Centralized servers Decentralized Multiple sources
Source: Magellan research; “Impact of piracy” research paper (2009)
BitTorrent terms and tools8
Term Explanation
Content files The original document (e.g., a movie, an e-book)
Torrent files A collection of fragments (hashes) made from a content file
Indexes A directory of the fragments (hashes)
Trackers Services that point to users with one or more fragments
Client software A web interface that uses the BitTorrent protocol
Creates, searches, downloads or streams .torrent files
Seeds Sources of .torrent fragments
Leeches Recipients of .torrent fragments; can become seeds when they receive a complete file
Source: Magellan research; “Impact of piracy” research paper (2009)
How BitTorrent file sharing works9
Seeds
Tracker
Leeches
Create a .torrent
file
Host an index
Direct leeches to
content
Search for content
Receive files from
seeds
Provide hashed content
Done, leeches can
seed
uTorrentBitCometAzureus
Client software
Client software;
search engines
Source: Magellan research; “Impact of piracy” research paper (2009)
Our research approach10
•Collect prior work
• Segment attributes
• Identify data gaps
•Use a consistent data source (POS feeds)
•Measure sales four weeks pre- and post-piracy
•Compare the instance of pirated content to paid sales
• Try to assess the impact of piracy on paid sales
•Compile results across multiple publishers
• Look for trends and inflection points
• Share the analysis
• Invite discussion
•Grow the sample set
The current sample set11
O’Reilly Media
Measuring the impact on front-list sales since fall 2008
Monitored BitTorrent sites
Only PirateBay had more than a few of O’Reilly titles posted
Tracked activity of seeds (uploads) and leeches (downloads)
Thomas Nelson
Began working with Thomas Nelson’s August 2009
To date, no fall 2009 titles have appeared on monitored sites
Lag time for Thomas Nelson titles longer than for O’Reilly
Source: Magellan research; “Impact of piracy” research paper (2009)
What we have learned so far12
Low volume of P2P seeds and leechesInterest in seeded content peaks earlyLag time on P2P seedingPost-piracy “bump” in paid sales of O’Reilly
content
The number of seeds peaks quickly13
Source: Magellan research
Leeches peak quickly and then decline
14
Source: Magellan research
Lag time before seeding varies15
Average = 19 weeks
Source: Magellan research
Quantifying the impact of piracy16
Aligned sales patterns to a common starting point
Plotted average sales per weekVisual correlation between piracy onset and
unit salesBecause of different pub dates, the average time on sale for pirated content in this sample is shorter (35 weeks) than that for un-pirated content (47) weeks. Comparisons at the end of the on-sale period
are not reliable.
Average sales (weeks after pub date)17
Average week at which seeded content first seen
Unreliably small sample sets
Average sales (weeks after pub date)18
Average week at which seeded content first seen
Unreliably small sample sets
Average sales (weeks after pub date)19
Average week at which seeded content first seen
Unreliably small sample sets
+108%
Four-week rolling averages20
Average week at which seeded content first seen
Unreliably small sample sets
Three useful cautions21
Correlation isn’t causalitySample skewFuture impact may vary
Still, potentially a more nuanced model
22
“White”
market
“Gray” market
“Back channel
”
• Print sales
• DRM-restricted digital sales
• “Trialware”
• Unprotected digital sales
• Galleys, ARCs
• “Free” promotions
• Unauthorized duplication
• Pirated content
Our continuing question: what impact does piracy have on sales?
Understanding piracy …23
Start with the reader’s experienceAvoid conclusions with limited dataChallenge assumptions about the value of
DRM
Chris Walters, BooksprungChris Walters, Booksprung
Kirk Biglione, MedialoperKirk Biglione, Medialoper
Release digital content (don’t frustrate demand)
Don’t cripple content or limits its devices or uses
Provide high-quality (not substandard) digital editions
Don’t try to “solve” piracy; think about managing it
Provide a high-quality consumer experience
Value consumers’ time as well as their resources
Kindle purchase: 2 clicks
Rapidshare download: 6 clicks
24
Start with the reader experience
Sources: www.booksprung.com; www.medialoper.com
What can pirate activities reveal?25
Developing interestOpportunities to innovateOffering more extensive or current services
None of this represents an argument against enforcement. However, activity like this may
represent “weak signals” that can help publishing compete now and in the future.
A pirate-site example26
Source: www.evanglibrary.org.uk
Legitimate alternatives exist27
Source: Evangelical Library web site
Source: quantcast.com
29
Attributor: piracy is a “$3 billion problem”Macmillan: a seven-point planRichard Curtis: “greatest threat”“Moral panics” replace dialogue with urgent
callsWe don’t know the answersWe should develop the data to find out
Avoid conclusions using limited data
Sources: Attributor.com; ereads.com; W. Patry, Moral Panics and the Copyright Wars
Top 10 pirated titles (maybe)30
1. Kamasutra2. Adobe Photoshop
Secrets3. The Complete Idiot’s
Guide to Amazing Sex4. The Lost Notebooks of
Leonardo daVinci5. Solar House – A Guide
for the Solar Designer6. Before Pornography –
Erotic Writing In Early Modern England
7. Twilight – Complete Series
8. How To Get Anyone To Say YES – The Science Of Influence
9. Nude Photography – The Art And The Craft
10. Fix It – How To Do All Those Little Repair Jobs Around The Home
Source: TorrentFreak, via Teleread (Paul Biba)
31
Sony: DRM … “allows content creators and distributors to make money from book content”
Reality: true pirates don’t worry about DRMDRM restricts readers in case they turn into
piratesThe value of DRM-restricted content? Less.
DRM does not stop piracy
On DRM restrictionsOn DRM restrictions On business modelsOn business models
DRM is a bad idea. It decreases sales, and believe me, it has never stopped pirates.
When people buy ebooks, they want to do things like read that book on any present and future device. So many people break the DRM (it is easy) but breaking the DRM is unlawful, so your customers have paid to be outlaws. This is not the kind of thing that discourage piracy.
Every time I have bought a DRMed book I broke the DRM for the above reason and I did feel fooled because I paid but I was out of law. Just imagine which is the effect on your law-abiding customers. They get a product that is worse than what I get when I pirate. Do you want to reduce piracy? Sell your books sans DRM.
Btw I prefer to buy O'Reilly ebooks, they are not DRM’d
My best hint for you: don't obsess with piracy, focus on selling.
Part of my money went to Dan Brown's pockets. If you are interested in business, (ask) why many people go to the library, download books AND buy books. For centuries books have been bought by the very same people that go to libraries.
Most pirates buy content in a way or other …In fact many pirates are high spending people. And many music pirates are buying CDs, the real problem of CD market is that CD is becoming obsolete. Digital sales (iTunes and alikes) are speedily increasing. Hulu is not yet available in my country but I am willing to try it as soon as possible.
Do you really think a guy who is scanning a book and uploading it is trying to avoid buying it at Fictionwise? That's nonsense.
32
In a pirate’s words …
Source: Richard Curtis, http://www.ereads.com/2010/02/wicked-wisdom-of-e-book-pirate.html
A call to action33
Find out where your titles are sharedWork with your publisher
Establish the impact on sales Invest in measurement on an ongoing basis
Learn the right lessons from other industries
An old(er) problem …
“Information wants to be free. Information also wants to be expensive. Information wants to be free because it has become so cheap to distribute, copy and recombine – too cheap to meter. It wants to be expensive because it can be immeasurably valuable to the recipient. That tension will not go away. It leads to endless, wrenching debate about price, copyright, intellectual property, the moral rightness of casual distribution, because each round of new devices makes the tension worse, not better.”
34
Source: Stewart Brand (1984)
For more information35
A piracy research guide: http://bit.ly/buKEMa
Includes links to work cited in this presentation
Piracy blog posts: http://bit.ly/bvfka2Research paper: http://tinyurl.com/[email protected]