Yes, You Can Compete With Free, But It Has To Be Done Right

from the don't-kill-the-golden-geese dept

We've talked in the past about how good, easy, convenient and cheap/free legal content distribution services appear to have an enormous impact on reducing infringement -- and as a bunch of folks have been submitting, yet another study out of Sweden has found the same thing is true. The rate of music infringement continues to drop rapidly, and the main reason is the rise of Spotify and a few other legal services.

We've made this point over and over again for years, and it's great to see some examples backing it up. However, when we make the point that the focus should be on this, rather than ratcheting up copyright enforcement and copyright laws -- a strategy that has never been shown to work, and which has been shown to have massive negative consequences for culture and speech -- a standard refrain from entertainment industry insiders is that they did innovate with things like iTunes, Hulu etc., and yet there's still file sharing. Thus, they say, enforcement is the answer.

That's wrong. When we talk about competing with free, we don't mean doing anything to compete with free. We mean actually making the services as good, convenient and easy. There have been cases -- like Spotify and Netflix -- where the industry has really done a good job, and then we see the results like what's happening in Sweden. But, every time we see one of those success stories, we hear of efforts by the legacy industry to make those services worse, as they feel jealous that the services, rather than the content, get all the attention. Indeed, the recording industry keeps trying to cripple Spotify, even as it competes successfully with infringement. Ditto Netflix.

There's an important point here: competing with free/infringement isn't just about doing something. It's about actually understanding what consumers want, and delivering it to them in the way they want it. Netflix and Spotify have been able to do that -- and hopefully the industry doesn't suffocate them along the way -- but just saying that making efforts should be enough is kinda like saying copyright is there because artists should get rewarded for their labor. Doing stuff doesn't get you paid. Doing stuff that people want, in a way they want it, with natural ways to make money, is how you get paid.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Anonymous Coward, Oct 31st, 2011 @ 3:23pm

    Don't Prostitutes Compete with Free?

    And they still seem to be in business. I guess they must be doing something right.

     

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  2.  
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    Anonymous Coward, Oct 31st, 2011 @ 3:38pm

    Re: Don't Prostitutes Compete with Free?

    They are the oldest profession in the world. They have had a long time to work out their marketing.

     

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  3.  
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    Jim_G, Oct 31st, 2011 @ 3:48pm

    I am really starting to get tired of content "creators" (really the business folks) over-valuing their content. There's a ton of excellent stuff--I need a service which organizes it helps me find something I want to watch.

    This quote sums it up:

    "In fact, the dirty little secret of the media industry is that content aggregators, not content creators, have long been the overwhelming source of value creation. Well before Netflix was founded in 1997, cable channels that did little more than aggregate old movies, cartoons, or television shows boasted profit margins many times greater than those of the movie studios that had produced the creative content."

    http://m.theatlantic.com/magazine/archive/2011/07/why-content-isn-8217-t-king/8551/1/

     

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  4.  
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    cj7wilson (profile), Oct 31st, 2011 @ 3:50pm

    Re: Don't Prostitutes Compete with Free?

    Anyone who says they compete with free obviously hasn't bought any cows lately.

     

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  5.  
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    Anonymous Coward, Oct 31st, 2011 @ 3:53pm

    Re: Don't Prostitutes Compete with Free?

    Consider the huge cost of maintaining a household, raising children or divorce/alimony, or even just maintaining a relationship with a girlfriend and then tell the world that prostitutes 'compete with free'

     

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  6.  
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    Qyiet (profile), Oct 31st, 2011 @ 3:53pm

    You can't compete with free

    If you could people would be making money selling bottled water.

     

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  7.  
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    cj7wilson (profile), Oct 31st, 2011 @ 4:06pm

    Re: Re: Don't Prostitutes Compete with Free?

    ...and by "bought any cows" I mean the colloquial phrase for getting married, and not the more literal interpretation.

     

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  8.  
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    cj7wilson (profile), Oct 31st, 2011 @ 4:07pm

    Re: Re: Re: Don't Prostitutes Compete with Free?

    ...at least, not anymore.

     

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  9.  
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    Ron Rezendes (profile), Oct 31st, 2011 @ 4:28pm

    Re:

    This!

    The same dolts who want to hold the keys to the gate don't even know how to sell what they have behind the gate, to the people who want to pay for it!

    "Throw them in jail! Take away their internet access!"

    HELLO?! Make it available at a reasonable price and don't pretend you own the copy they paid for and you can spend your time counting the piles of money instead of sending significantly smaller piles to the legal offices you employ!

    They will NEVER get it I'm afraid.

    Queue the parade of "freetardo" trolls in 3...2...1...

     

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  10.  
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    out_of_the_blue, Oct 31st, 2011 @ 4:40pm

    "About 23 percent continue to pirate music..."

    Takes only a skim to find the key fact, that, oddly, hasn't been highlighted by Mike. Still a large number.

    I can't pass by quibbling that it's a /survey/. With all the attention on The Pirate Bay and its leaders now convicted, there's less likelihood of Swedes saying, "Yes, I steal music." -- Besides not get caught and lose internet service or pay enormous fines (yes, I know those aren't yet true in Sweden: coming soon, bet your last krona).

    However, for Mike to claim that ordinary, hundreds of years old, market forces of lower price and more convenience proves his "competing with free" notions just won't fly. The record labels know that people have a moral imperative to /pay/ built-in as part of a clean conscience. That's what's visible in the "study". -- But IF a truly "free" version were available without legal or even moral consequences? -- You're not in an ivory tower, Mike, have to see the full context: increased enforcement is in the mix of reasons, to some degree.

    >>> "Streaming services such as Spotify are now the most popular way to consume music. More than 40 percent of the participants in the survey now use a music streaming service, compared to less than 10 percent who say they download music legally."

    So, /streaming/ has increased; downloading decreased. I'd say there's also the fact that everyone is out of space on their hard drives, have more music than can listen to in a lifetime.

    And the touted Spotify is still in start-up phase, but already changing "its free service would have some new limitations". Wasn't Netflix great until it hiked prices? How many here said that they weren't going to pay the rather modest increase?

     

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  11.  
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    The eejit (profile), Oct 31st, 2011 @ 4:53pm

    Re: "About 23 percent continue to pirate music..."

    IF nearly a quarter of your market is doing something considered illegal, then perhaps the market is right and you are wrong. That is basic economics.

     

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  12.  
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    Ron Rezendes (profile), Oct 31st, 2011 @ 4:58pm

    Re: "About 23 percent continue to pirate music..."

    "I'd say there's also the fact that everyone is out of space on their hard drives, have more music than can listen to in a lifetime."

    You should change your handle to "out_of_my_ass" since these "facts" you claim smell like $hit and are no where near actually being factual.

    Some truth in advertising would be nice.

     

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  13.  
    identicon
    Anonymous Coward, Oct 31st, 2011 @ 5:06pm

    Re: Re: Don't Prostitutes Compete with Free?

    Play the game right. Stop taking them out to eat shrimp cocktails and all that BS. Wrapping it up takes care of problems 1, 2 & 3. If you feel like getting married for reasons other than you got some girl pregos, thatís on you, so don't compare that to enjoying a lady of the night. I have seen many people pay for valet or parking in a garage when there is free street parking (and I have had some mighty fine free parking spaces).

    And what if your girl makes more money than you? Do you still have the same position that it is not free?

    However, I do see your point, as well as cj's. Good luck with your "Cows." Now please let us learn from your mistakes.

     

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  14.  
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    ECA (profile), Oct 31st, 2011 @ 5:50pm

    Dictionary

    The folks in the BUSINESS..
    need to explain their wording.
    Everything is pirating, if you DIDNT PAY THEM..

    Lets look at what they THINK they did(but didnt)
    They sold music rights to itunes, at a good price, then RAISED the amount of payments they wanted on EACH SALE..
    Hulu, is/was a good idea, but every time Hulu thinks its settled..they change the contracts and WANT MORE.
    Cartoon network, is so screw'd up, you cant watch anything unless you sign up with your CABLE PROVIDER..
    Netflix?? same as hulu..the contracts keep changing..

    WHERE in this list do you see ANY movie/music corp?? these are all sub companies TRYING to make money. Every time they get it working the CORPS change something.
    From having a FULL selection of a program, you only get the last 5 OF THAT SEASON..

    so..

    Internet services that SELL availability or a site that lets you watch ALL/ANY show as you want/wish..
    these are 2 different types of company(?) sites(?) resources??
    SO WHAT they advert on site..and make abit of money..

    the Movie/Music corps could do the SAME THING, and MAKE MORE MONEY.
    Even HERE, you posted info, on the movie/music industry FIRING every info TECH that gave them ideas on "how to get on the NET"..

    Lets compare..
    A 90 year old person, that STILL has a phonograph, NO TV, and is self sufficient..living in a log cabin..
    you could install ALL new tech in there house, and they wouldnt use it...would know/learn HOW to use it, and would PROBABLY give it away..and NOT give a damn about it.

    There copyright is NULL, as they are not willing to improve/innovate/change.

    For some that dont get this..the movie industry has carried and RE-distributed movies for YEARS. Look up the original wolf man movies..created with Lon Chaney jr.. shown OVER and OVER, and created WHEN?? they dont WANT NEW..they want to make the SAME thing, and get MORE money.
    How many of those OLD movies should be in the PUBLIC domain? about 2/3 of the ones from our childhood.(if you are over 30)

    Another point I would make is that COPYRIGHT is for the individual...NOT THE CORP.

     

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  15.  
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    WysiWyg (profile), Nov 1st, 2011 @ 1:54am

    Re: Re: Don't Prostitutes Compete with Free?

    Following your logic, online piracy isn't free either. You have to pay for the Internet and the computer at the very least.

     

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  16.  
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    WysiWyg (profile), Nov 1st, 2011 @ 1:58am

    There's your problem right there...

    "[...] and yet there's still file sharing."

    That, right there, is the reason for this madness. Everyone in the "content-industry" are so focused on piracy numbers, that no one stops for even a moment to ask the pertinent question: "how do we maximize our profits?".

    Or rather, they did ask that question a couple of decades ago, and someone said that they had to crush piracy, and no one has asked the question since.

     

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  17.  
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    PaulT (profile), Nov 1st, 2011 @ 3:05am

    Re: Re: Don't Prostitutes Compete with Free?

    I'll bet any married guy still has the use of his main hand, if you know what I mean. Is that not free?

     

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  18.  
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    PaulT (profile), Nov 1st, 2011 @ 3:14am

    Re: "About 23 percent continue to pirate music..."

    "I can't pass by quibbling that it's a /survey/."

    As are all "facts" on piracy.

    "So, /streaming/ has increased; downloading decreased."

    Yes, LEGAL, PAID streaming has increased while FREE, INFRINGING downloading has decreased. Are you trying to say this is a bad thing?

    " I'd say there's also the fact that everyone is out of space on their hard drives, have more music than can listen to in a lifetime."

    Citation needed. This faulty assumption has less than a fraction of the truth of the surveys you're questioning. Facts, or GTFO.

    "And the touted Spotify is still in start-up phase, but already changing "its free service would have some new limitations"."

    That would be the RIAA interference already noted. Plus, it's only the "free" options that have changed. My Ä10/month unlimited option with offline capability hasn't changed one jot.

    "Wasn't Netflix great until it hiked prices? How many here said that they weren't going to pay the rather modest increase?"

    Americans, who are spoilt for choice with rival services and have access to both streaming and physical media, have said this, yes. Here in Europe, where most of us don't have any equivalent service available, would happily pay but are thus far not allowed to by the industry.

    My God, you mean the industry is actually being subjected to market forces and customer demand! The horror...

     

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  19.  
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    Ninja (profile), Nov 1st, 2011 @ 3:20am

    Re: "About 23 percent continue to pirate music..."

    I'd say there's also the fact that everyone is out of space on their hard drives, have more music than can listen to in a lifetime.

    No such thing. HDD space is not an issue. Puhlease, 120 dollars 2Tb HDD on Frys. The regular pirate will keep only a fraction of what he/she downloads and they usually have more than 1 HDD. I have 10 in a total of 7Tb and my issue is physical space inside my case.. And I haven't even mentioned writable DVDs and blu-rays. No, this argument is flawed.

    Wasn't Netflix great until it hiked prices? How many here said that they weren't going to pay the rather modest increase?

    It's still great. But the price hike wasn't modest. At least not for us ordinary folks that are not rotten rich like you seem to be. And MAFIAA had good deals with Netflix until they went greedy. As always. So your argument might stand depending on what modest means to you. A 100% hike might be modest for uncle Bill Gates but he has billions in his deep, deep pocket...

    And oh my, you are at the stealing music again. It's getting old, tired and boring don't you think? A survey usually protects the identities of the participants. If one could get convicted by what he/she said in a survey we'd see more of those surveys being used as evidence in the courts and much less ppl replying to any survey. Can you point me to a case where it happens? Oh no you can't.

    You seem to be exceeding yourself in the trolling ways these days my young grasshopper!

     

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  20.  
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    btrussell (profile), Nov 1st, 2011 @ 4:44am

    Re: Re: Re: Don't Prostitutes Compete with Free?

    What is your eye sight worth?

     

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  21.  
    identicon
    Anonymous Coward, Nov 1st, 2011 @ 6:15am

    Part of the question rarely addressed in all of this is one of erosion: It isn't just if you can bring non-payers (aka pirates) into paying at least something or using a legal service to obtain their music, but also what the effects are on your existing client base.

    Someone who goes from buying 1 or 2 DVDs a month, and instead starts using netflix at $10 a month is quite possibly a loss. Someone who was going to see 10 theater movies a year and instead is using netflix could be a net loss.

    Someone who was renting from a $3 a shot video place a couple of nights a week, but becomes a netflix user instead is probably a net loss.

    In each case, you have eroded away what the consumer spends, because you have been trying to pander to a lower price client base.

    Most content companies aren't in a race to the basement because they have long since figured out that they would be trading dollars for dimes. They aren't sure there is a real valid reason to do it.

     

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  22.  
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    PaulT (profile), Nov 1st, 2011 @ 6:59am

    "Someone who goes from buying 1 or 2 DVDs a month, and instead starts using netflix at $10 a month is quite possibly a loss. Someone who was going to see 10 theater movies a year and instead is using netflix could be a net loss."

    Perhaps. But, in the real world it's more complicated than that. For example, a person might have been buying 2 DVDs a month but couldn't afford it any more (we're still in a global recession, remember). Or, they realised they just had a couple of hundred of them lying around collecting dust so decided to switch to Netflix.

    In this case the person who went from DVDs to Netflix actually went from buying DVDs to buying *nothing*, then went from that to Netflix, meaning a net profit for the industry. The profit might even increase - for example, the guy who used to collect DVDs might think that the movie he just watch on Netflix is worth the buy for the feature-packed box set and spend money he otherwise wouldn't have, on top of his Netflix sub.

    "In each case, you have eroded away what the consumer spends, because you have been trying to pander to a lower price client base."

    Yes and no. The problem with this thinking is that it ignores 2 realities. The first is that you're not simply taking away from traditional DVD rental services with Netflix, for example, you're also addressing those people who want to "pirate".

    I've found that the best way to sell Spotify to friends is just to say "it's easier than piracy". Which it is, assuming the content you want is offered. If you convince someone who used to pirate to sign up for Netflix, it's all profit compared to what you used to get. It's certainly easier to offer a former pirate an "all you can eat" package than trying to force them to pay $3+ per movie again.

    The second is that there have long been different pricing tiers for content. DVDs sales are cheaper than theatrical tickets. DVD rentals are cheaper than sales. Waiting for the movie on cable is cheaper than DVD, and waiting for free-to-air is even cheaper. Yet, despite this, the movie industry are making more money than ever.

    The existence of cheaper pricing points should not mean that everyone suddenly chooses the cheaper option. However, you need to make the higher price points worth paying for. If there's one thing customers will refuse, it's paying a premium price for a non-premium product.

     

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  23.  
    identicon
    Anonymous Coward, Nov 1st, 2011 @ 8:17am

    Re: Re: "About 23 percent continue to pirate music..."

    Actually, I think out of the blue is a perfect name for him. He makes up his 'facts' out of the blue.

     

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  24.  
    identicon
    Machin Shin, Nov 1st, 2011 @ 8:27am

    Re:

    Wow, your arguments are just sad and show how little you understand about how things work.

    "Someone who goes from buying 1 or 2 DVDs a month, and instead starts using netflix at $10 a month is quite possibly a loss."

    Ok, this possibly is true but I doubt it. When you buy a DVD for $10 your $10 does not go directly to the maker of the movie. The store you were in gets a cut as well as the disk manufacture. So in reality the movie maker will only get a very small part of this.

    "Someone who was going to see 10 theater movies a year and instead is using netflix could be a net loss."

    This is just down right stupid. I can tell you as someone who goes to the movies and uses netflix that no one going to theater 10 times a year is going to replace that with netflix. People that go to theater will still go no matter what other way you offer the movie. It is about the theater experience.

    "Someone who was renting from a $3 a shot video place a couple of nights a week, but becomes a netflix user instead is probably a net loss."

    This is probably one of the weakest arguments. Yes netflix hurts the profits of the movie RENTAL industry. As in it hurt blockbuster. The movie makers are still getting their money. The rental places were not paying the movie maker per rental so the loss of rentals does not hurt the movie maker.

     

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  25.  
    identicon
    Anonymous Coward, Nov 1st, 2011 @ 8:36am

    Re: Re:

    How about if we ostrich-ize (ostracize like an ostrich) the dolts by burying their heads in the sand, preferably near a red ant hill, but near enough to civilization so folks could go by an laugh at them.

     

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  26.  
    identicon
    Larry, Nov 1st, 2011 @ 8:43am

    Music Industry invented streaming

    I don't know where you get the music industry is squashing Spotify. The MAJORS own Spotify.

    Do your research! Jeez.

     

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  27.  
    identicon
    Anonymous Anonymous Coward, Nov 1st, 2011 @ 8:47am

    Re: Dictionary

    Interesting point. I wonder if making original copyright non-transferable might make a significant difference? Let there be an agreement between parties, but limit the ownership of IP as always belonging to the creator.

     

    reply to this | link to this | view in thread ]

  28.  
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    heyidiot (profile), Nov 1st, 2011 @ 1:30pm

    Re: Re: Don't Prostitutes Compete with Free?

    Business has dropped precipitously since the advent of YouPorn...

    Um, well... that's what I've heard, anyway...

     

    reply to this | link to this | view in thread ]


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