Piracy as cheap market research

Name Your PoisonThis BGR headline from Thursday May 2 caught my eye:

Netflix content chief says piracy drops whenever Netflix launches in new markets

Entrepreneurs take note: You could base a lot of successful businesses on those dozen words.

The content chief in the headline is Ted Sarandos, who says,

The best way to combat piracy isn’t legislatively or criminally but by giving good options.

He thus echoes Bob Iger, CEO of Walt Disney, who said,

The best way to combat piracy is to bring content to market on a well-timed, well-priced basis.

Must be a trend!

Of course, Iger made his comment over 6 years ago, so the lesson is taking a while to sink in.

Do you wonder why? I do. I wonder why it is that, in the words of Cory Doctorow, every few years the public must drag the entertainment industry, kicking and screaming, to the money tree, and shake it for them. And I have a theory.

I chalk it up to copyright law. Our baroque (not to mention ba-roken) copyright system fosters a monopoly mindset in the content cartel. When the government defines competition as “infringement”, you view your competitors as well as their customers as law-breakers. You sue them, and you spend your money lobbying the government for even stronger laws to protect your struggling business model.

But if your business is based on competition, rather than monopoly, you figure out what your customers want and you find a way to give it to them. If another company already has their business, you design your product or your price or your service to be more desirable than the alternative. Netflix appears to have a winning combination, at least when compared with BitTorrent, and Sarandos has discovered free enterprise.

Another example comes from the current controversy over Aereo. Aereo deploys thousands of tiny antennas to capture free broadcast television signals and retransmits those signals over the Internet to subscribers. The Aereo technology and business model are designed to squeeze through copyright’s byzantine intricacies, and last month a court decided they had succeeded. The broadcasters who challenged Aereo and lost vowed to keep fighting. They also threatened to get out of the broadcast-TV business if the courts continued to side with Aereo. News Corp., the parent company of the FOX network, put it this way:

We believe that Aereo is pirating our broadcast signal. We will continue to aggressively pursue our rights in the courts, as well as pursue all relevant political avenues, and we believe we will prevail. That said, we won’t just sit idle and allow our content to be actively stolen. We have no choice but to develop business solutions that ensure we continue to remain in the driver’s seat of our own destiny. One option could be converting the FOX broadcast network to a pay channel.

Rights and courts, political avenues and driver’s seats: The monopolist mind at work.

For a different approach, here’s Time Warner CEO Glenn Britt, whose business is also impacted by Aereo:

What Aereo is doing to bring broadcast signals to its customers is interesting. If it’s found legal, we could conceivably use similar technology.

The difference couldn’t be clearer, could it?


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