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Free Content Ahoy! Inside the Home of a Multichannel Pirate

  23 January, 2013

You Wouldn't Steal a HandbagHas TV dodged the piracy bullet? While TV piracy certainly exists, is hasn’t had the same kind of disruptive impact as it did on the music industry. TV can only be watched once, it takes longer to download and is more vulnerable to any deterioration in quality. Plus, with the advances in VOD and OTT services, perhaps the industry is outpacing the pirates, right?

Wrong, says Jason (not his real name). Jason has spent most of his career working in ad tech and media. But in his spare time he’s also an exceptionally enthusiastic consumer of pirated content. He doesn’t fit the stereotype of a pirate. He’s a well-heeled professional who lives in a spacious house in a leafy London suburb. “There was a time when you had to have a certain amount of technical knowledge to download illegally, but now it has become so easy and so automated that it’s child’s play,” he says.

Piracy Still Going Viral?

“Now housewives are downloading. For instance, my sister-in-law is completely computer illiterate. But because she has been trying to get music she couldn’t find online, she turned to finding it illegally. Once she discovered how to do it, she found she got a buzz out of finding music she knew she wasn’t supposed to have access to yet. Now she meets other mothers at the school gates and then shows them how to do it and they all regard her as some sort of Internet guru.”

While Jason is keen to emphasise how piracy requires minimal technical knowledge, his own set up would fall into the advanced category. When he’s downloading content, his weapon of choice is Usenet, which – unlike torrents – prevents his ISP from knowing what he’s downloading.

Once the content has joined the terabytes of other movies and TV shows Jason has downloaded, the content is readily accessible around the home via a combination of home servers and a jailbroken Apple TV. When it comes to software, he usually uses the Apple TV, along with the Plex and XBMC apps.

Jason gives me a demo of XBMC. He opens a list of available movies listed on torrents and Usenet sites. Movies have been verified by users according to quality and I’m half expecting him to start downloading a torrent. But XBMC takes the torrent or file on Usenet or a site like Pirate Bay and plays it in real-time in the same way you’d stream anything else.

Pretty Piracy

Piracy can be pretty.

“I’m amazed people have the time and bother to upload so much content,” he says. “It seems like people Tivo the shows and then upload them as soon as they’re finished airing. It’s literally available in minutes and the ad breaks have already been edited out. I think people do it for the name, even though it’s anonymous. I think it’s a bit like having an avatar online, so for example they feel a sense of pride if someone says ‘XYZStreamer always has the best quality streams’. It’s a community.”

Jason then pauses a TV show on the living room screen and when we go into the home gym, he turns on the TV and the movie we were watching in the living room continues where we left off before. When he’s out and about, he can view all of his content on his mobile.

The Rationale

So how does Jason justify taking so much content without giving anything back to the people who produced it? He blames what the existing business models. “The industry doesn’t help itself and people are being driven to do this. They’re behaving like the music industry, who used to create a buzz in the US and release things on vinyl only in the US market, which fuelled downloading around the world as people were downloading music they couldn’t wait to get their hands on.”

“Now the same thing is happening on TV. You’re seeing promotions for US TV programmes being shown online, but in Europe it’s usually not available at the same time, and then it’s not on iTunes.  Audiences outside the US are being hyped up along with US audiences via the Internet, but it’s only available to US audiences.”

“Blockbuster is a classic example of a company that was run by dinosaurs. They spent years locking down all sorts of great content deals and they owned the market. But as soon as someone came along and thought about what the consumer wants, they instantly lost out to Netflix and Lovefilm. Now Blockbusters – who had everything in terms of the catalogue of content, capital and resources – are finished. But the dinosaurs at the top were happy with their model and tried to protect it.”

“Then there’s the pricing,” he adds. After showing it to you on TV, they want to sell you a DVD for forty quid, and then they’ll try and sell it to you for the same amount when it comes to the download version, in spite of the fact that there’s little or no cost for materials, delivery etc. When someone is faced with paying forty quid or just spending ten minutes of their time finding it and downloading it for free, what do you think they’re going to do?

Decline in Production Costs not Being Passed on to the Consumer

“All of this is happening when the production costs are going down. The price of a broadcast quality camera – take the Red cameras, for example – has gone down and you’re not having to shoot on 35mm film any more. Hard discs are incredibly cheap and reusable. Editing software such as Final Cut Pro costs just a few hundred pounds and a nice set up would cost around £5k, whereas before you’d have to spend around £120k on an editing suite.”

“When it comes to selling the content, if they sold it for five pounds or a few dollars, people would buy it en masse and would be far less likely to bother downloading when you can have a high quality version at a reasonable price. They need to think differently and exploit the economies of scale available to them on the Internet.

“The TV and movie industry could learn a lot by looking at what’s happening with apps. Would anyone bother trying to download a 50p cracked app? Between the hassle and having to download a new version for every update, it simply isn’t worth your while. The same thing goes for ebooks. Nobody would bother downloading an ebook without paying for it because it’s just not worth the hassle.”

In spite of Jason’s heavy use of pirated content, he insists he is willing to spend money if he feels he’s getting a fair deal. “I do buy box sets occasionally, I have a Roku and I subscribe to Netflix,” he says. Although he then adds that I use a proxy server to get the US version of Netflix which apparently far more content available than the UK version.

Piracy’s fine if I’m not making money from it

So is he happy to see people like Kim Dotcom profit from piracy. “That’s a whole other side to it. People are making millions from downloads. That side of things I do have a problem with. I know people who are making £90,000 a month. So sites offering faster download speeds than the likes of the Pirate Bay can make a lot of money by offering a service that allows people to download things in a minute.

“Someone told me that with some of those sites, they get about 200 paying users for every 1,000 using the site. People will often have a site themselves and then set up affiliate relationships with other sites that stream the content, and those sites work on a commission, so for every payable download, you get a commission.”

“There’s a girl I know in the Ukraine who makes about £90,000 a month on a fairly average site. Out of that she pays about £25,000 to £35,000 in commission to webmasters. This girl is only about 25 years old and she just sits there at home and watches the money roll in by hitting the refresh button.”

 Is there a silver bullet for piracy?

So what would the industry have to do to pull Jason away from piracy for good? “I think they need to bring the content down to app level pricing. They’ve usually already made their money on content by selling to the TV stations and nowadays they make even more. In years gone by you could only sell your content to a handful of major broadcasters, but now you have multiple small digital broadcasters and online publishers to syndicate your content to, so there’s a long tail that wasn’t there before.”

Even though Jason would have deeper pockets than the average UK parent, he feels he’s being priced out of things like taking his son to the cinema. “Their prices are ridiculous,” he says. “For instance, it cost me £12 per ticket to take my four-year-old son to the cinema, and then we bought some popcorn, a coke and a slushie drink, which came to £39 in total – £45 if you include the parking. I nearly choked, but it was a film he really wanted to see so there wasn’t really another way for him to see it at that time. But you’re not getting much for your £45.”

Then they need to free up the content and make it more widely available. If you look at the legal options, not all of the films are available where you need them. For example, you pay for Netflix and then none of the Disney films are available. So you go to iTunes, but the Disney films aren’t available on iTunes either, so the fragmentation makes it difficult to even find the content you want in the first place.

“However, I can show you where I can go online and download the entire Disney collection, which will be on my hard disk in glorious HD in a few days – that’s over 200 movies. While it took a while to download that much content, I have it now and my son loves to watch them. I would have been happy to pay a reasonable price for that content. I genuinely believe that by trying to hold on to their old model and cream as much off as they can, they’re missing the bigger picture and are going to lose out in the long run.”

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