The Pirate Bay's New Owners: Service Providers Will Pay Us, We'll Pay Users

from the in-theory... dept

One of the things that got a lot of attention with the announced sale of The Pirate Bay to GGF was the claim that the new owners would launch new business models that would compensate copyright holders. Many took this to mean that it would stop offering tools where people could freely exchange content themselves -- but that's not what GGF said. It just said it would compensate copyright holders. That could involve a variety of different business models, as surely they recognize that trying to charge directly would simply lead to mass abandonment of The Pirate Bay. And, indeed, it appears that GGF isn't planning to charge users at all. Instead, it's actually trying out a business model based on BitTorrent's original purpose: making sharing files more efficient by breaking up the pieces so that a single source doesn't bear the brunt of the bandwidth costs. GGF's argument is that they can use the community at The Pirate Bay to reduce congestion for ISPs and bandwidth costs for other service providers. On top of that, GGF claims that rather than having users' pay, its plan is to pay users for providing a service to those who have files to distribute. In an interview with the BBC, GGF's Hans Pandeya explained the plan:
"More than half of all internet traffic is file sharing and P2P [peer-to-peer] traffic and buying Pirate Bay gives us one of the biggest sources of traffic.

"We can then use this massive network of file-sharers to help [internet service providers] reduce overload.

"Let's say a popular song comes out. Rather than a million downloads from a site - which would cause a considerable strain on that ISP - we can take that song and put it out on P2P.

"The copyright holder still gets paid, the users still get their file, the ISP doesn't have a million people all grabbing a file and - for the users who share that song - a payment for putting that file on the P2P network."
This is the sort of thing that sounds good in theory, but that the entertainment industry will never go for. GGF is right, in some ways. The fact that individuals are sharing the content via BitTorrent actually is helping decrease the distribution costs, but as we've seen, the entertainment industry likes to ignore that, and assume that the entire value is in the content, not in the distribution. I can't see the entertainment industry seeing this as a viable solution, even if it makes some amount of sense (distribution is expensive, GGF can use TPB to reduce distribution costs, that seems like a service worth paying for). I just don't see the industry buying into it.

Separately, I have to take issue with one comment from GGF:
Mr Pandeya said that one of the biggest hurdles in overcoming illegal file-sharing was that there was zero cost to the users, while legitimate sites required users to pay for content. The only way to make something more attractive than free was to pay users to share files.
On this, he's fundamentally wrong. There are many ways to make something more attractive than free without paying users. In fact, there are many cases where paying users actually makes something less attractive than free because they're doing things for non-monetary reasons, and the money actually changes the equation significantly. Yes, paying users is potentially one way to make something more attractive than free, but it's hardly the only way, nor is it always the best way.

Filed Under: business models, file sharing
Companies: ggf, global gaming factory x, the pirate bay

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  1. icon
    Brooks (profile), 1 Jul 2009 @ 1:00pm

    Payment does change the equation

    In fact, there are many cases where paying users actually makes something less attractive than free because they're doing things for non-monetary reasons, and the money actually changes the equation significantly

    Indeed. This brings to mind an probably apocryphal anecdote from a professor I had. It goes like this:

    There's a older guy who takes great pride in his lawn. It's a huge and gorgeous piece of grass, and he puts a lot of work into maintaining it, and has done so for years. One weekend, to his dismay, a bunch of high schoolers show up and start playing football on it.

    The game is noisy and irritates him, and tears up his lawn. During the week, he repairs the damage, only to have the same thing happen the next weekend. He's really irritated, but he knows enough about kids to realize that he can't yell them off his lawn, and that if he calls the police or something, he'll probably get his windows broken or worse.

    So, being a smart guy, one day he goes out to the kids and tells them how happy he is that they're playing football on his lawn, and that he gets great value out of the entertainment they provide, so he wants to pay them. He'll give them a dollar each, every day they show up to play. The kids are thrilled.

    This goes on for three or four weeks, the old guy shelling out $20 or so a weekend. Then, one day, he very apologetically tells the kids that he can't afford to pay anymore, but that he hopes they'll still play on his lawn. "No way," the kids say, "if you're not going to pay us, we're going to take our game somewhere else!" And they do.

    Note to the literal minded: this probably never happened; it's just told to illustrate the point that money changes perception, and perception changes behavior.

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