Digital content piracy, the cause of all evil? Not really.

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Every year it is the same old song. Because of digital piracy, the artists and studios loose a lot of money…. bla,bla,bla… So here some interesting facts that might rebalance the topic.

Idea #1: Illegal film Downloads will kill the movie industry. False!

Here is the top 10 most illegally downloaded films in 2012 and, in comparison, the overall legal sales obtained worldwide.

Most-downloaded-films
So, as we can see here above, all most illegally downloaded movies are all blockbusters in the charts. If you think that the 2012 Batman and the Avengers were both best hits on sales and on illegal downloads, we can see that there is no correlation between piracy and the fact that people would go less to the movies. Please note that all downloads here were collected by Torrent Freak, on bit-torrent downloads from January 1st to mid-December 2012.

Most-downloaded-films-2012

Of course, all major hollywood studies think that they are loosing a lot of money because of all these downloads, but frankly I am not sure that we would systematically add all these downloads into tickets sold in theaters. Most of these downloads are from people that would never go to the movies anyway or that went once and wishes to review again without paying twice.

At the contrary, we could imagine that the illegal downloads contributed to the film reputation and spread throughout the world. Some films or even TV series used this “illegal” yet super viral way to distribute their content to increase the popularity.

If we compare to the legal downloads, lets take iTunes as a platform, we can see that in 2012, the Avengers, 21 Jump Street and Mission Impossible Ghost Protocol were also part of the top 10 most downloaded films for rental (source: iTunes store).

So no, the illegal downloads do not kill the movie industry. The movie industry is killing itself. They actually do not need pirates for that.

Idea #2: Illegal Music downloads will kill the music industry. False!

Let’s see now the music illegally downloaded. The music industry has been the biggest fighter against piracy of all times. Indeed, since the music industry went digital, we could finally calculate the figures. Of course, before internet we all copied “illegally” from one original cassette to another. And when the CD came, all IT mechands sold alot of CD burners… wonder why?

So here are the top 10 of biggest countries for illegal download and the most popular downloaded artist. The figures you can see here below were measured by monitoring music firm Musicmetric for the BBC and it measured the number of torrents downloaded from January 1st to end of June 2012.

Most-downloaded-artists-2012

According to Musicmetrix, the United States as alone almost 100 million illegal downloads of music in 2012, which is twice more than the second country, United Kingdom. So last year the singer Drake was the most illegally downloaded artist in the USA. Did this hurt his sales overall? No.

Drake-Take-Care-Album

End of 2012, Drake sold 2 million albums in the USA, ranked number 3 in the US Billboard 200 and was number one album in the US Top R&B/Hip-hop albums and US Top Rap Albums. Only in the first week, this album sold for 650’000 units.
Another interesting fact is the presence in the most illegally downloaded artists of Billy Van, especially in Brazil and in India. End of 2011, Billy Van was a promising yet unknown artist in Indiana USA. A new project takes place and the decision to work with BitTorrent as a partner rises. The Music label in agreement with the artist, decide to release a full experience online for download, including free music.

Billy-Van-Bittorrent

The idea is to launch Billy Van career thanks to the buzz of delivering official free music via BitTorrent. What happened until end of 2012?

  • 7 million downloads worldwide
  • From 2’000 likes on Facebook to more than 100’000 fans
  • +700% of increase of traffic on the artist website
  • Email database from 100 addresses to 60’000 addresses.

What did this to Billy Van career? Well now he is worldwide known. He is getting more frequent well-paid remixing and production jobs and is working on his first full album. To quote Bob Lefsetz, music critics and blogger, we are living now in an Attention economy. Basically, Artists, marketers, brands or labels need to fight for the attention of consumers in order to exist. How to get this attention? By being creative, in completely breakage from the standards in the dying music industry. Marketers need to be creative and artists need to have outstanding content to survive.

To give a last example on the music industry, Rihanna’s Talk That Talk album,which is a worldwide success, got 1’228’313 illegal downloads in 2012. In that same year, Rihanna’s album sold for 2’442’000 units worldwide too, making the album a double platinum record and one of the most successful albums of the year. What if nobody would cheat? Would Rihanna sell more? No. Because of 2 reasons: First because most of the pirates would never buy the real album and second, the buzz and viral effect would have been weaker. So sales would spread slower and perhaps even concert tickets would have been lower in terms of sales. Who knows.

The IFPI, (International Federation of the Phonographic Industry) represents the recording industry worldwide with some 1300 members in 66 countries and affiliated industry associations in 55 countries. According to their figures, more than 30% of the total music industry sales come from legal downloads. Digital music has been growing by 8% in average every year since 2005. In some countries like the USA or the UK (countries with the biggest rate of illegal downloads), this growing rate is a double digit every year.

Digital music models are evolving towards new ways to listen to music. Subscription is one of these. Services like deezer or Spotify are changing drastically the way people buy and listen to music. Spotify declares to have today 6 million users with a paid subscription. Another new behavior is video music. In deed Youtube became one of the biggest platforms for music listening in the world. In the US, 64% of teenagers listen primarily to music via Youtube, then via radio, iTunes and only then from a CD. The world changed and the music industry needs to adapt.

So no, the illegal music downloads are not killing the music industry. It has more like a booster effect for worldwide successes.

Idea #3: Illegal Software downloads will kill the Software industry. False!

Softwares make the world turn round. All computers and devices would be useless without softwares to run it. Or they would be simple objects. So software is the key. Historically speaking, softwares have been the target of pirates for several decades. From video games to business solutions. So how illegal software downloads are hurting the business. It is not so obvious.

According to Dailytech, the global loss because of piracy is about $50.1Billion. Until 2009,  almost 43% of all softwares around the world in computers was pirated. The world top pirate countries are:

  • Georgia, almost 95% of all software is claimed to be illegal
  • Zimbabwe
  • Bangladesh
  • Moldova
  • Armenia
  • Yemen

The top 4 countries with the lowest score of illegal software are:

  • USA with less than 20% of all software
  • Luxembourg
  • New Zealand
  • Australia

According to YahooNews! more than 900 million computers in Asia have illegal software installations on it.

But how bad really this is for companies being victim of piracy. Let’s take the example of Microsoft. Why? Because Windows operating system and the Microsoft office suite are the most pirated softwares in the world. According to FAST, Federation Against Software Theft, here are the most pirated softwares in the world:

  1. Microsoft Office, with 24% of pirated installations.
  2. Microsoft Windows with 24%
  3. Adobe Photoshop with 16%
  4. Adobe Illustrator with 16%
  5. Adobe Creative Suite with 10%
  6. Solidworks with 6%
  7. SQL with 6%
  8. Quark with 4%
  9. Autocad with 4%
  10. Virtual DJ with 2%

So how Microsoft is surviving this tsunami? Not that bad actually. In 2012, Microsoft announced a total revenue of $73’723’000’000 and a profit of $21’763’000’000. Not bad for a company being victim of so many robbery. If we take only the revenue from the sales of Microsoft Office, these represent $23’991’000’000 for a profit of $15’719’000’000. This represents a evolution of +7% vs previous year.

 

If we take the second victim in our table here, we are talking about Adobe. In 2012, Adobe made a total revenue of $4’404’000’000 which is +7% vs 2011. With a employee growth rate of +12% every years, it is hard to see difficulties.

Aside of Softwares, what about Apps for mobile devices? With more than 45 billion apps downloaded in 2012 from legal platforms (+74% increase vs 2011), we can say that the App business is pretty legal. According to the main platforms (Apple, Amazon, Google) there will be 300 billion apps downloaded every year by 2016. All from legal platforms. source: Mashable.com. So we cannot really say that software companies are having a hard time right?

Digital content, a different approach of ownership.

We can see piracy or illegal downloads are not really the problem. It is about aligning the entire Content producers industries to better serve the today’s consumer habits. People tend to consume content in a different way and also depending on the content itself. We all have singers that we will always buy music from them, and others not. Or we all have movies that we would not pay to watch them in theaters but would be happy to watch them for free.

Another interesting topic is also the dematerialization of possession. How did we evolve from ownership to rights of usage? From a real CD to Spotify, we loose the physical ownership of a CD towards the subscription of a right to access the content. By the way, you can inherit from your grand-father all his CD and vinyl’s collection, not his Spotify account!

There is a lot of education to be done too. It is not because something is available in the internet that it is for free. The hardest topic right now is about images. Some websites quote as a image source: Google Images, like if the entire internet became a free library. People need to understand the difference between free access and free of rights. Some photographers tend to believe that Internet killed copyrighting and the in exchange artists get in a few month, a level of worldwide awareness that would take them several years to accomplish it. Evolution is requested.

So the industry needs to evolve. Check the example of Netflix. It is an american online service in which you can watch on-demand videos, movies, series and even television. By mid-2013, Netflix has 37 million users around the world who generated a 3.6 $billion revenue. The netflix.com has around 200 million visitors every year and it is expanding successfully around the globe. It is not revolution but evolution.

LA

 

Info sourced at dailytech.com, adobe.com, microsoft.com, netflix.com, vilabs.com,wikipedia, YahooAnswers!, mashable.com, spotify.com, gizmodo.com, FAST.com, musicmetrix. All content is copyrighted with no reproduction rights available. 

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