TM: An alternative to DRM? Let's discuss.

[Greg Anos]

Steve,

I can't give any example of an author made popular by piracy. But I can give you an I.P. industry that was. (And the answer is...) home video! Home video started with porn and piracy. People recorded off-the-air TV shows and movies uncut movies from HBO et.al. Hollywood was so anti video that they took Sony all the way to the Supreme Court to try to kill the sale of video recorders. (1979-1984) To quote MPAA head Jack Valenti in 1982 testimony to Congress - "I say to you that the VCR is to the American film producers and American public as the Boston Strangler is the woman home alone." The Supreme Court rules 5-4 in favor of Sony. A near thing.

So? Did Hollywood go broke? As of the last agregate numbers I have heard of (for 2006) video revenue was nearly <twice> the theatrical revenue. And that's despite DVD crackers, Dixv, Organized third-world piracy, decades of analog piracy, and cheap, for-pay lending libraries of movies (i.e. Netflix). Look how much money Hollywood would have lost if they had <won> their anti-piracy suit....

Once they lost their suit, Hollywood was forced to start providing movies at prices that encouraged buying rather than copying. (Why waste you time making a copy when the commercial video was cheap?) And as long as prices are cheap, they'll make lots of money. If they raise them, (and several times they've tried) the cash flow will drop because people will decide it's worthwhile to pirate again.

Baen Books understands this. So does Apple (although I loathe them). Amazon has grasped the idea, but still hasn't fully implemented it yet. I don't see why (as a businessman) you don't intensely study the biggest success story in the e-book market. (We'll see soon if TOR has gotten the idea....) Most (but not <all> people) will pay for convienence if it <is> convienence and <is> cheap. (And remember - E.E. Smith never made a living off of his writing, either.)

[spooky69]

Originally Posted by Steve Jordan

Shyeah... I'll just put a banner on my site that says, "Hey, Pirates! Buy the next one, please!" And they'll all go, "Well, since he asked nicely..." And the next day, I'll be a millionaire.

http://en.wikipedia.org/wiki/Straw_man
You know your customers better than I do, but it seems like courting the pirate with a full wallet would involve offering buyers as many secondary services as you feel prudent, as a pirated e-book might be exactly the same as the one somebody would buy. This could come in the form of coupons for more books (once again, you'd have to decide how much is prudent), membership perks, or anything else that creates a sense of exclusivity. Though you might not like it, you're turning down money if you aren't kissing the ass of those people who pirate copyrighted materials but won't pay for it unless you make it worth they're while. Don't get me wrong, those type of people are mostly jerks, but I don't know many salesmen who won't sell to jerks.

Originally Posted by Olympus

IMHO your piracy (= "not paying for the service by each individual that receives the benefits of a service") is part of the calculation of each realistic business model.

Exactly, and piracy is a lot more complicated than "for every person who takes my product, I lose a sale."

Originally Posted by Steve Jordan

As I said, there is no direct evidence that piracy leads to later purchases by pirates, or that pirates are effective promoters of material to paying customers.

You don't know that this is true, and I've clearly stated that I've heard several pirates say that they use piracy as a way of exploring how their money would be best spent. I know that's just anecdotal evidence, but claiming that there is no hard data to show that piracy leads to legitimate purchases just because you want that to be case doesn't make it true [I know this point was already made], and it goes against the common sense assumption that some pirates are obviously going to spend their money on things that they've already pirated. By that definition, pirates are pretty darn good at promoting material to other people who just might want to spend their money on it. Once again, I'm not arguing that piracy is somehow automatically beneficial to a publishing business, but the idea that piracy is wholly independent of the realm of legitimate purchases of media is ridiculous and willfully ignorant of the shades of gray that are a part of any human system, even an illegal one.

Originally Posted by Steve Jordan

In general, piracy leads to the promotion of material to other pirates, and most likely, more piracy. They simply amount to net loss, just like theft.

This is going to be true in the majority of the cases, but methods of distribution similar to piracy (giving something away for free, basically) have been used to generate significant profits for artists. The most prominent examples are the most recent Radiohead and Nine Inch Nails albums, both of which were offered up as a free download with the option to pay for the album if the listener was so inclined. Obviously, this is not a viable business model for everybody and was only so successful because of the previous notoriety of these bands, but it's good to remember that there's more than one way to look at somebody getting your product for free, since it's a legitimate form of distribution for many people.

Originally Posted by Taylor514ce

In any case, those shows are pirated BECAUSE they are popular. They aren't popular BECAUSE they were pirated.

This just isn't correct, because it's not a one-way flow. Each viewer/pirate is different and there are so many different reasons for somebody to download a pirated copy that it's hard to link a TV show's popularity or financial success to piracy is a single proportionate way. For example, there could be somebody who doesn't get cable, but wants to watch BSG. They go and download it, and like it so much that they buy a DVD set later in order to have it in a higher quality and own it in a piece of physical media. Since this person would never have had the chance to watch the commercials on TV, this person represents a group of fans who wouldn't account for any of the advertising revenue of the show and yet still add to its financial viability. This is why it's hard to distinguish between piracy as a form of promotion and piracy as a dynamic of an existing fan base: every individual is different and has a different set of motivations for (and resultant actions from) pirating copyrighted material.

Originally Posted by JSWolf

I know this has probably been said over and over, but do we have any sort of evidence that a download eBook from the darknet would have been purchased if it was not downloaded?

I can't say whether there is any data on this either way, but it's obvious (I hope we can agree) that there isn't a 1:1 loss of sales for each download. At the same time, it's just as obvious that some of those downloads (I'd guess significantly under 50%, probably much, much less) are going to be from people who would have purchased the product legally but pirated it because the illegal copy was available.

Originally Posted by Steve Jordan

On the other hand, imaginary or not, piracy is still a perceived issue with publishers and authors, an an issue that is holding them back from releasing old and new works to the consumer. Clearly the amount of discussion indicates that something is going on, but that no one can agree on exactly what that something is. If that something is not determined, how will it be dealt with (or, if it turns out to be nothing, how will we know we don't have to deal with it)?

So even these arguments/rantings/suppositions/threats/posturing/disagreeing, while divisive, should amount to an eventual understanding at some point. At heart, we all want to work this out, so we can have e-books and enjoy them. And after all, the best things are worth working for, aren't they?

In the meantime, I agree that these piracy arguments can be downright painful. Even so, they are worth having, because it's the only way we're going to come to an understanding, and only through understanding can we take positive steps and move on.

I'm with you pretty much 100% here (especially on the painfulness of the discussions, though I find them to be good mental exercise). There are still a lot of unknowns about piracy and its relation to business, and it's clearly still too novel and dynamic to come to any consensus about many of the points involved. There is at least one certainty, though, which is the existence of piracy and the near-inevitability that a copyright work will eventually be distributed illicitly. Publishers and artists need to accept this as the current reality and work a business model around the fact that the playing field is unfairly skewed against legitimate media purchases. So far, a large majority of the reaction to piracy has reflected that the sellers and artists aren't willing or able to face up to the basic principles of this new dynamic (remember the days when Metallica sued Napster to have searching for "metallica" disabled) and would rather find ways to prop up their traditional channels of revenue as long as possible. While I think it's incredibly lame for apologists use the music/movie/book industries' failings in that respect as a justification for piracy, I think that we all recognize that there are still a lot of things that have yet to settle into place and there isn't any single way for a company to be viable in the new market where almost anything can be obtained for free.

Something is still the same is that people want quality content, and a quality product that's properly promoted will usually generate more revenue than a complete piece of crap, and I hope that whatever shape these industries take in the future, it's a step toward a system that promotes a good balance between the quality of the products and profitability.

[pilotbob]

Originally Posted by Lucien21

1) lock the file with more and more encryption and DRM and make it impossible to copy. (Short of quantum encryption I don't see this working)

This is irellevent and doesn't matter. If you can't decrypt the file, you go another way. The publisher has unenrypted version, the author has it, the illustrtor has it. The "weakness" of digital security isn't the systems, it is the people. As long as there are p-books people will scan/ocr them.

Of course, and it's been said 10 thousand times on this forum, only makes it more inconvient for the honest customer. I'm sure you have all heard "locks only keep the honest honest."

Originally Posted by Lucien21

Neither option will completely eradicate piracy, but might minimise the effect and increase sales. Option 2 would be the desirable model.

The myth of "piracy" of digital stuff, music, software, ebooks, whatever... is that you loose "$X" estimated based on how many pirated copies you think are out there. Truth is, if your software, etc, wasn't available to someone to get for free from a pirate, the pirate wouldn't download it. But, they certainly wouldn't buy it. If they were going to buy it, they would have done that in the first place.

BOb

[Steven Lyle Jordan]

Originally Posted by Ralph Sir Edward

I don't see why (as a businessman) you don't intensely study the biggest success story in the e-book market.

That's only because I, as one author with 10 books, am not in the same position as Baen, with multiple authors and many more books. A subscription model works for such a company, but not for an independent small-timer like me.

[Darqref]

Originally Posted by Steve Jordan

I'll cite Stephen King's "The Plant" project as a case where unpaid downloads resulted in the financial ruination of the work, causing it to be unfinished and shelved.

Strictly speaking, King was "asking" for payment, not forcing it up-front, so the works were not technically "pirated." But they were still downloaded in large numbers, with the expectation of payment following, and which did not surface in the required numbers. The result was killing the project, which also served to sour King's rep with many of his fans. I daresay that was not a positive outcome for King.

Balls. Every publisher involved with this project thought it was wonderfully successful, based on reports I received at a recent convention (I'm willing to admit this is hearsay, and might not be complete). Every bookseller I've talked with said they would have been overjoyed to have a project that successful, and were astounded that King actually stopped posting. This one is direct evidence that this type of project works, based on the actual revenue instead of the percentage of people who paid something (some people paid much more).

On equally flimsy evidence, I'm perfectly willing to say that the *average* downloader of pirated mp3s BOUGHT MORE MUSIC than they did before starting to download said mp3s. Lots of reports of people saying they did that. And in the newspaper business, most daily papers have all their print content available online, and they still make almost double the advertising revenue that they did 20 years ago. (everyone concentrates on the recent decrease from the all time high, and doesn't compare to the revenues from 20 years ago.) see http://longtail.typepad.com/the_long_tail

I'm willing to believe that there are many publishers who have experienced losses from copyright infringement that have severely effected their business. But there are also publishers that find that having some material freely available, whether "pirated" or not, makes sales of both that material and other related material go up. It is simply NOT TRUE that all cases of copyright infringement are equivalent to a lost sale.

[Darqref]

J.S. Wolf said:

I know this has probably been said over and over, but do we have any sort of evidence that a download eBook from the darknet would have been purchased if it was not downloaded? (endquote)

Would you consider a free product from a different publisher and website at least analogous to pirated content?

Case: Mercedes Lackey. She publishes fantasy through at least three different publishers, and has a sizeable back list. Her first book is "The Arrows of the Queen". It had slow but stable residual royalties from DAW books. Then, on BAEN books, a completely DIFFERENT publisher and website, she allowed her collection "Werehunter" (which incidentally is mostly SF instead of Fantasy) to be included in the Baen Free library.
During this time she continued to publish new work, but no other content was included in the Free Library, although some of it was added after that first year.

One year after "Werehunter" was posted, royalties for "Arrows" TRIPLED, completely through backlist sales (no ebook available, the paperback was still in print but had not been re-released.) Other books in her back list had smaller increases. She said (online) that she thought this was evidence that people were seeing her work for the first time, and then looking for "what else she had written", and trying the first book.

This appears to me to be exactly analogous to a pirated work generating sales.

[Lucien21]

Originally Posted by pilotbob

The myth of "piracy" of digital stuff, music, software, ebooks, whatever... is that you loose "$X" estimated based on how many pirated copies you think are out there. Truth is, if your software, etc, wasn't available to someone to get for free from a pirate, the pirate wouldn't download it. But, they certainly wouldn't buy it. If they were going to buy it, they would have done that in the first place.

BOb

Ah the old. I would never have bought it in the first place excuse.

While it is true that you can't say that number of downloads=number of lost sales I've always had a problem with this excuse.

Everybodies time is finite and we choose how to spend our free time. Surely if there is a piece of entertainment you choose to fill up your free time with then it is worth rewarding the creator. If it is not worth anything to the person downloading then why download it in the first place. People tend to download for download sake (I know people who will just download every game for the DS whether it is good or not)

If it is worth your time to view/read then it is worth paying for. Otherwise there are a million other things to spend your money on. In this world of instant gratification people just want everything and they want it now and preferably for as little as possible/free.

[Lucien21]

Originally Posted by Darqref

This appears to me to be exactly analogous to a pirated work generating sales.

Or a pirated work generating more piracy to download her other books.

[pieter]

iTunes and the iPod (or other mp3 players) would never have gotten as popular as they are now if file-sharing of copyrighted music wasn't popular. Do you really believe it would have become mainstream for 15 year old kids to have a device that holds up to 80gb of music if the only way to fill it up would be to pay for every song?
iTunes was late by a great many years. File sharing was way ahead of iTunes and the iPod.
This still works like that. Many people buy an iPod because they know they have the option to fill it for free. Be it copying cd's from friends, asking other people to download stuff for them, or going to bit torrent sites by themselves to get stuff. You can't try to disconnect the mp3 from file sharing. And a large portion of why mp3 has become a mainstream format is because of file sharing.

The same will be true with the digital book format. And already is. There are many file sharing sites with only ebooks on the internet, and the more popular the ebook format gets the more of those sites there will be. AND VICE VERSA! You can't have it just one way. The more popular file-sharing of ebooks gets, the more popular the ebook format will get.

It seems some people want the ebook format to get popular, but dont want file sharing to become more popular, but that just isn't how the internet works. Either don't bring your content to the digital age and make sure paper will stay the normal way to read a book. Or go digital and experience how the internet works with digital content. That involves file sharing as well.
And you want ebook to do well and become popular, then know that it will only be that way with file sharing of it being very popular as well. The file sharing popularity of a digital format goes hand in hand with the overal popularity of a digital format.

Saying file sharing does not generate sales is very short sighted, just like saying that file sharing does not stop people from buying content is short sighted. This is so, because the "pirates" and the "honest people" are the same people.
Or maybe you'd only want to sell a book to somebody who never in his life has copied a cd from a friend, or copied a part of a copyrighted textbook, or did something else that is against copyright law.

[Olympus]

Originally Posted by Steve Jordan

You're right: I wish I could depend on people to download something that I ask them to pay for, and actually see them pay for it. This is why stores place their cashiers before the exit... they know how much they'll lose if they put them out in the parking lot, and give their customers the choice of paying or not...

Flashback: isn't this the business-model for share-ware?
I know that when I could afford it I decided to pay for these sharewhare programmes after years of "piracy" usage: anybody using ARJ, WinZip have the same experience? Funny that WinZip is still around :-)

The proof you asked for: The Alchemist by Paulo Coelho (although the author encourages downloading I haven't got a copy. It gave a lot of publicity and might people get interested in the sequels

[Greg Anos]

Originally Posted by Steve Jordan

That's only because I, as one author with 10 books, am not in the same position as Baen, with multiple authors and many more books. A subscription model works for such a company, but not for an independent small-timer like me.

But you <are> in the same position as Baen. You are not just an author, but a publisher. A very small one, admittedly, but one just the same. As a publisher, studying what works to see what can be used to build a business is a useful business concept.

[Greg Anos]

The answer to the question of how an author can make money in a world of piracy is p-books. They are the "live concert"/"theatrical showing" of authors. Until the world totally shift away from p-books (if it does), that is the non-piratable venue for authors.

[Olympus]

Back to the original question: Traphic Monitoring to replace DRM.

I despise all BigBrother solutions like Traphic Monitoring as this would remove any privacy although I should be considered innocent until proven guilty.
It is the same solution to build a monitoring device in all cars and automatically send speeding tickets when the system thinks you are speeding. Where to complain when you think the system is defective, what guarentees do I get that this information is not used by other parties (my insurance company, my employer, tweak the maximum limit to generate more speeding tickets ..)

And the fact that it is impossible to detect textual copyrighted material as I could be sending a document to my "professor" that includes some quotes it could raise an alarm.

What I see is another major difference with other shared files like music and movies: e-books are hardly reusable. An mp3 can easily be "consumed" without too much effort by the consumer: therefore mp3's are reused over and over again. An e-book is (mostly) one time experience: once read the consumer has no incentive to get an legitimate version as the he/she will just carry on to the next book. Therefore the library is such a good institution: people read one and return the resource to a public place where someone else can reuse the product which would otherwise be abandoned (stored on a shelf).

Warner/EMI just introduced an Internet "tax" collected by ISP's to download copyrighted material from a site. One might restart that not everybody is using/downloading MP3 - it's similar to the DVD/CD/Xerox-tax we pay for blank materials (in Holland this tax is collected however never distributed to the parties concerned as they can't agree which parties should get this money and how much).
How do we prevent many more parties to claim a tax because they suffer some sort of income decrease by illigitimate internet sharing?

Recently I discovered an abandoned e-book (Microsoft Lit) on my harddisk that I bought in 2002. I bought the book at amazon because it was book 2 of a series and I desperately wanted to know what happened to the characters.
Because it was in Microsofts Lit format all I had to do was: install Microsofts reader and activate the reader with my (abandoned) email address. This way the e-book is DRM-ed to the person that paid for the book and not the place/device that it's stored on.

So perhaps the business model should be: distribute part one as drm free on dark-net, websites whatever. As a writer you should be self confident that you are capable to get the readers attention so that they are more than willing to pay for a drm-ed - personalised version of the sequal.??? (just thinking out loud)

[Steven Lyle Jordan]

Originally Posted by Darqref

Would you consider a free product from a different publisher and website at least analogous to pirated content?

Um... Nope.

A publicly-offered text at a legitimate site is going to make more buzz than a pirated work, and result in more legitimate sales. As I said before, stealing the work just makes it popular among thieves, and there is no data that indicates pirated works equate to legitimate sales down the road.

[JSWolf]

Originally Posted by Lucien21

While it is true that you can't say that number of downloads=number of lost sales I've always had a problem with this excuse.

Take Photoshop for example. I know there are a lot of people out there who have downloaded, installed, and use Photoshop. But, these people would not be using Photoshop had they had to purchase it. So as far as profits for Adobe go, these people cost nothing to Adobe. But, the issue here is if these people did not get a free copy of Photoshop, what would they be using instead? Would they have purchased a lower cost alternative? So while Abode lost nothing, some other companies did lose something. They did not have their program stolen, but they did have their sales stolen. So while you can argue that the person would never have bought the program anyway, it means they don't need to buy one in that category of software now so someone loses the a sale.

The analogy that a free download from Baen is like a free pirated download does not wash. If I download a free eBook from Baen, I'm doing so via a legal method. I think know if I want one of Baen's offerings that is not free, I have to pay for it. But, if I was to get a book on the darknet for free and read it and decided I wanted more from the same author, That person might very well go back to the darknet to have another look.