Do low-priced videos mean too little income?
Is Encryption Really Needed to Turn a Profit?
| A video was priced so low it looked like a steal -- but made a million. This 2011 article is from The Economist, Dec 23, in their blog on the intersections of science, technology, culture, and policy, named after Charles Babbage, a Victorian mathematician and engineer who designed a mechanical computer. |
Digital Rights Management (DRM), as wrapping video in encryption that may only be decoded by licensed hardware or software is known, is the only way to prevent widespread piracy of films and television shows. That, at least, is what the respective industries that create the programming will have you believe. This is tosh, of course. Tune in to any public torrent-seeding site -- which links up millions of people willing to share pieces of a digital file -- and take your pick of all the latest entertainment. Then there is the invitation-only Darknet, a busy back alley of encrypted servers sporting the full contents of cracked Blu-rays and up-to-the-minute bootlegs obtained by surreptitiously filming a cinema screen.
While reverse-engineering DRM is (mostly) illegal in the United States under the Digital Millenium Copyright Act, and illegal or frowned upon in an increasing number of countries, DRM is the pasties in a strip tease. It hardly hides the real goods, which are there for the taking. It is trivial to share video, despite the threat of fines, imprisonment and, perhaps worst of all, temporary disconnection of one's internet feed. Further, nearly all music sold as digital downloads in the western world is free of DRM. The music industry acceded to retailers' wishes to sell unencrypted MP3 and AAC files to break Apple's pricing stranglehold on online music purchases.
Now Louis C.K., a comedian, has put his oar in. In early December he made available for sale from a bespoke website a DRM-free video of a summer performance of his latest material. He priced the hour-long show at $5, a significant discount from the $15 to $20 such a gig would typically cost (though given the lack of intermediaries, he might net the same per-unit fee). He soon clocked 220,000 purchases and (according to a screenshot he posted) over $1m in receipts after processing costs. He says his move was dictated not by the failure of other methods of distribution, but undertaken in the spirit of experimentation.
As Mr C.K. explained in a blog post on December 13th (not shying away from the odd obscenity), he did not stint on the production. He paid hundreds of thousands of dollars upfront to stage and record the shows, and many hundreds of hours of his time were taken up in creating and testing material, and then editing the final production, not to mention the technical and financial details. (Mr C.K. has form: he singlehandedly edits his television series, now entering its third season on FX network.)
Of course, many performers and bands have made DRM-free audio directly purchasable from their own websites. Creating a high-quality video takes much more effort and expense; your correspondent is unaware of any efforts other than Mr C.K.'s that were not free, promotional, or hosted by a studio or network.
Attention to detail was key. Mr C.K. splurged $32,000 on developing a site that would make it easy for his fans to pay, and then stream or download the video. It may be streamed from the site twice, or downloaded three times, though only a single download is necessary since the unprotected file may be viewed by any number of standard digital video players on desktop and mobile operating systems. He also made a number of particularly friendly choices in his website construction. When signing up to purchase, for instance, he offers to put the buyer on an e-mail list, but pre-selects the opt-out option, which he labels as "No, leave me alone forever, you fat idiot." The purchase, handled by PayPal with either a credit card or a PayPal account, leaves the user automatically logged in without requiring a separate step. When resetting a lost password, as your correspondent needed to do, the new code is true to form, and begins with "stupid".
The performer says he priced the video so low as to make it look like a steal, and so prevent the file from becoming a popular torrent from which no benefit would accrue to him. Inevitably, someone posted a torrent seed on Pirate Bay, noting "i kinda feel bad putting it here but people like louis ck gotta realize without torrents and the net he wouldnt be anywhere." This provoked a deluge of angry comments from other users. Hardly the types to shed a tear for big film studios' piracy woes, they nonetheless respected Mr C.K.'s approach.
Now, of course, Mr C.K. has the advantage of millions of fans from his live and television performances. He receives praise from his fellow comedians and appears regularly on late-night television. His approach would probably not work for someone appearing at open-mic night in Duluth once a month. But it is a chink in the DRM argument: that a popular video will inevitably be so widely stolen that the creator cannot count on a reasonable return. Mr C.K. is the first to try this method, and thus earns additional attention -- and sales. Others are sure to follow.
To see the whole article, click here .
JJS: One rule of ethics is that if an act is impossible, then it can’t be good or bad. E.g., you can’t prevent a murder on the moon so your failure to do so does not make you irresponsible. Because it’s so easy to download without paying and so difficult for governments to punish those free-riders, it re-raises the question of whether knowledge should be private property. Of course, entertainment is not knowledge but it is similar; people tell jokes all the time and don’t compensate anyone. So, it intrigues me to see that it may be possible for creators to profit without having the state defend anyone’s so-called property rights.
And even if the state should be granting and defending patents and copyrights, should it do so for free or charge as much as the service is worth, as would a private business? In the case of deeds to land, government should recover the annual rental value of the location; that principle could work for patents and copyrights, too. Staking out a claim to exclude others from a real field or from a field of knowledge, same thing. Sure, profit from your development of the site, but also compensate those whom you exclude.
Should we worry about poor inventors? Not really. Their ideas are not yet so valuable that the inventor would have to spend much for a patent or copyright. If something is fair, it works, and usually vice versa -- which is one thing I like about geonomics.
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Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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