1.2m Media jobs to be lost to piracy…and why Policy & Content Owners aren’t helping.
March 26, 2010

A study entitled “Building a Digital Economy: The Importance of Saving Jobs in the EU’s Creative Industries” was recently released by the International Chamber of Commerce, here in Europe. This study predicts losses due to piracy to reach as much as €240 billion in retail revenue and as many as 1.2 million jobs by 2015. The study reveals that the Media sector is already experiencing substantial losses. In 2008 the European creative industries most impacted by piracy (film, TV series, recorded music and software) experienced retail revenue losses of €10 billion and losses of more than 185,000 jobs due to piracy.

Scary figures and something to be concerned about.

However, what actually concerns me more are the points of view expressed in the press release that announces the study and suggests actions. The BASCAP’s suggested action to battling content piracy is made clear from the very beginning of the press release: “Strong EU legislation is required to tackle the problem of digital piracy and reverse current trends” and key members of the European Parliament are quick to endorse. For example Stephan Hughes (UK S&D) states: “I encourage my fellow parliamentarians to acknowledge piracy as a problem and to work towards strong IP enforcement to preserve European jobs.”

This made me reflect on how much trouble we may actually be in; not because the study is showing scary looking numbers that predict piracy ultimately killing the industry in which I work, but by the realization that those developing our policies here in Europe – those who are suppose to be making key decisions to support sustainable economic growth for the EU zone – actually don’t have a clue on how to tackle content piracy.

BASCAP stands for “Business Action to Stop Counterfeiting and Piracy”, but there seems to be no “Business Action” in this ICC initiative at all. Instead, they are looking at policing the internet. The ICC, together with the European Parliament, is convinced that a tougher restriction on use of the internet and blocking of P2P file-sharing services will help combat piracy. The UNI-MEI (Union Network International – Media Entertainment Industries) supports “the Gallo report in its original form” and they “call the MEPs to reject all amendments that try to legalize file-sharing…”

Fine, I can understand their reaction and their position; there is much merit in ensuring that a legal infrastructure exists to effectively deal with serious cases of content piracy, but in all their efforts towards combating piracy (creation of special committees with really long names, conducting studies, holding many meetings, organizing conferences, etc.) the ICC and EU seem to be suggesting nothing from as a “Business” solution perspective. Hold on now…what was the name of that committee with “Business Action” in its name? Here’s a real question for the ICC and the EU: Wouldn’t it be more productive and effective for the BASCAP to dedicate its efforts in helping P2P file-sharing services transform themselves into businesses that actually produce taxable revenues for the industry and content rights licensing fees via new business models that charge users a very reasonable monthly subscription fee to use a better version of their existing file-sharing services, where the quality of content is ensured? I’m not going to discuss the plausibility of this “crazy” concept further, but there are many things that the media industry can learn from illegal digital content distribution services, because clearly these services are addressing most of the digital media consumer’s needs. Unfortunately, with probably one exception (iTunes), I wouldn’t state the same for legitimate services. Why this is the case, will become clearer later in my post.

The notion of understanding the advantages of illegal distribution services, and I will demonstrate how free content is not the key advantage, is something the BASCAP should be doing and it is an important step in combating piracy. Another key success factor in reducing content piracy is in better understanding the pirate’s psychology. There’s a very important question that the BASCAP has probably never asked itself: What drives the consumer to illegitimate content consumption? In fact, I would argue that the BASCAP, EU Parliament members, and other policy makers have no idea of what factors drive piracy and of what they are actually up against. Not to imply that I do, but it doesn’t take a PhD to search the web for blog and forum posts from the source of the problem, the digital media consumer, and generate a better understanding of the real issues facing the Media industry.  An educated opinion on a content pirate’s psychology and the factors that most likely drive it to consume and share entertainment illegally can be easily obtained. And I would argue that the first step in fighting piracy is to try to better understand “The Pirate” – Without this knowledge, how does the Media industry expect to win its battle against piracy?

There are many clues out there on what I like to call “Digital Pirate Psychology”, but let me begin by sampling material from an article I tweeted earlier this month, where an actual consumer states his reasons for turning to piracy. Meet “ManCat”, a 25-year-old software pirate. In reference to PC game content, ManCat states: “I’d buy more shit if the system wasn’t so stupid,” ManCat has been illegally downloading movies, music, and games for more than 10 years, claiming restrictive DRM policies are his primary motivation for theft. “If I download something legally from iTunes or Steam, I don’t have full control over my own purchase; I’m not allowed to transfer my music between machines or loan my game to a friend. Perversely, if I pirate a game or a movie I can do whatever I want with that file…I like buying games to play with friends and earn Achievements, so I only download cracked versions of single-player games with ridiculous DRM. The sooner they [game publishers] start respecting their fans, the sooner I’ll pay for Assassin’s Creed II” – Can some of the issues facing the Media industry be more obvious than this?

Okay, now let’s actually look at an expert Gamer’s blog…probably not a pirate, but someone who best represents the needs of the media industry’s key market segment. Meet Mr.Evans and here are some of his thoughts (full blog): “Valve [game publisher and owner of Steam, a digital games storefront] is showing that there’s a right way to offer digital distribution, and it’s working.  It’s valuable to the customer.  They promote games like World of Goo, Zeno Clash, and others that would have had a quick death at retail.  They’re working in the customer’s interests and not the company’s interests, and it’s benefiting the company…Companies really, really want consumers to adopt digital distribution since it’s in the companies’ best interest.  However, they refuse to lower prices on their games even though it’s cheaper to provide digital distribution than retail distribution”.

So what should these two samples from digital consumer thoughts be telling us about the potential psychology of the pirate? To me, a media professional with over 7 years of expertise in the digital space and a solid understanding of today’s entertainment distribution network, it’s plain and simple. The Content Pirate exists because:

  1. Strict DRM is often imposed on legally purchased content, limiting content use and flexibility…so, users look to other sources for their digital content, whilst others strive to just “beat the system”;
  2. There are few digital content storefronts out there and most are a bad and restrictive user experience…so, users look to other sources for their digital content;
  3. A consumer‘s willingness to pay for digital content is lower than that for a physical version, yet most content owners are not willing to lower digital format pricing points in an attempt to retain the perceived high brand value of their products…so, users look to other sources for their digital content;
  4. Policy makers & content owners are striving to a) eliminate distribution channels, such as P2P file-sharing services, that are most convenient to many digital media consumers and b) impose strict control over the internet…so, consumers who value the concept of the free Net fight back;

And this last point should be obvious to Mr. Hughes of the European Parliament and to the EURO-MEI (another of the many committees with really long names, and not to be confused with the UNI-MEI committee) even without doing their research. They should understand the implications and real risks of what they are suggesting. The more control and restrictions you impose, the more certain individuals will be inclined to resist and to make it their mission to undermine protective measures…and this applies to many of our content pirates. So no matter how many restrictions you impose, how strong you make your DRM, or what access you block, some pirates will always find a way to hack through. But worst of all – and here is the real problem – they will then make it their mission to share their breakthroughs with the community at large; all in the name of undermining efforts to “control” their actions. It’s not rocket science – Just simple psychology. Digital consumers should be driven away from piracy and encouraged to consume content legally, not blocked or policed by external bodies who do not understand their psychology and needs.

With the exception of this last point, it is my opinion that content owners are mostly to blame for the existence of piracy and they are not helping their situation by keeping digital product prices, minimum guaranteed fees payable by their distributors, and DRM standards so high. In the long run, this is negatively impacting the entire digital entertainment ecosystem resulting in a small number of legitimate digital storefronts, where content prices are too high, and where flexibility on content use is too limited. And this is helping to catalyze the rapid growth in content piracy.

Many would argue that digital pirates are mostly hiding behind “moral” outrage and the poor flexibility/quality of existing digital stores as an easy excuse to not pay for content, and this maybe a valid point in some cases, but I am arguing that piracy would be reduced by not only making content more widespread and easily accessible in digital format, via DRM free and user friendly services, but by also reasonably reducing the digital version pricing point with respect to that of the same product’s physical format. Additionally, if you read the numerous P2P file-sharing site forums available on the net, it is clear that the content distributed on these services is often not the best quality. So, there would be an added advantage to the digital media consumer to avoid illegal sources and to obtain their content from legal storefronts, where the quality of the content would be certified and ensured.

But don’t take it from me. If you are still not convinced with my reasoning and suggested solution to the piracy problem, take it from the most successful entertainment industry ever to hit the market…take it from the industry that drove the VHS, and later DVD, format revolution to mass market consumer stardom…take it from the adult entertainment industry. An interesting article reports on how this industry is exploiting free content sharing for its own commercial benefit. Here are some interesting quotes:

  • Mr. Hymes of AVNOnline, an adult content distributor, states that the salvation for the content industry “would come not from laws or lawsuits as much as from bits and bytes. Technology is going to solve the problem that technology has created,” he adds: “The people in this space are seeing it as an opportunity to change habits and to create new opportunities.”
  • Titan Media, an adult content owner, states that the company is coming to realize that “the key is to make a product available that’s reasonably priced and reasonably easy to obtain.”
  • And lastly, an entrepreneur from the industry believes that “Free is very anarchistic and hard to deal with, and you don’t know what you’re getting…Cheap is more convenient.”

The adult entertainment industry is therefore testimony to the success that such a strategy can have on reducing piracy and on increasing digital content revenues. By making content more easily available digitally, and at a cheaper price than physically, you stimulate its consumption, reduce your loses from illegal trafficking of content, and generate increased growth in digital revenues. This same notion could become the great hope of the mainstream entertainment industry. And it’s already working for the music industry. Besides the adult content industry, recent developments in digital music are a great example of how digital distribution should work: Low pricing points, user friendly storefronts, and more flexible DRM. Granted, there is a large difference between the pricing point of a music track and that of a movie, and the music industry is still losing millions a year to piracy, but it would have been much worse if they had stuck to the protective behaviour currently plaguing other mainstream entertainment industries. By embracing and facilitating the expansion of digital entertainment the music industry has tapped into a new source of revenue that is also rapidly growing. It has also reduced the number of consumers turning to piracy by delivering what the customer wants, and they have given the impression of listening to their key target segment.

If mainstream content owners, European Parliament, BASCAP, EURO-MEI, UNI-MEI, etc. would only invest more time in listening to, understanding, and addressing content pirates’ and digital media consumers’ points of view, then perhaps they will succeed in reducing the risk of a 1.2m job lose crisis apparently facing the Media industry in the near future. And in doing so, I believe that they will need to loosen their planned grip on the internet and P2P file-sharing services, reduce their content’s digital format pricing points, and liberate their content from restrictive DRM constraints. Only then will a money-making digital distribution ecosystem flourish with numerous legal options for consumers to get their content from. And only then will we be able to beat content piracy.


This Is It…why Michael Jackson could have been digital media’s biggest ambassador.
November 19, 2009

The other night, I let my girlfriend convince me to see Michael Jackson’s This Is It. Not that I don’t like Michael Jackson – he was definitely one of the most talented artists of our time – it’s just that I’m not a big fan of pop music. Anyway, towards the end of the film, where MJ performs his ballad against the depletion of our rainforests and then speaks about how he adamantly disapproves of the environmental disaster, it occurs to me that perhaps no one informed Michael of the large negative impact his music sales have also had on the environment. He is the biggest selling solo artist in history – Do you know how many environmentally unfriendly vinyl, CDs, and DVDs that equates to? I couldn’t find a straight answer on the web, but I’m sure that the actual figure is astounding. Some web sources have quoted 750 million, others 850 million, but the following website has a pretty detailed break down resulting in a much lower number. Let me be conservative about this and use the 335 million music album and 13 million DVD sales figures from this site, since we will use this later on for an important calculation. Now NOTE that these figures are as-at June 18th 2009 (less than 1 week from MJ’s death). In less than one month from his death, MJ’s music sold another 9 million CDs…now putting all that together, with the continued projected sales from his death, gives us a massive number of plastic and aluminum based manufactured products…and a big impact on the environment.

Now to the point of my first ever blog: Being so environmentally conscious as he seemed in This Is It, Michael Jackson may have been open to the idea of taking a different approach to selling his music…by making both the This Is It soundtrack and movie available exclusively in digital format would have helped him make a more positive impact on the environment, something he seemed to consider as very important. Just image: No production or distribution of millions of environmentally damaging CDs and DVDs, but only the encoding and transcoding of digital files for download directly to digital devices, which could then be burned onto a disk, if desired. For most people working in the film or music industry, this notion may seem absurd, but let’s just pretend, for the sake of my blog (and the environment), that MJ would have wanted it this way…let’s imagine Michael, so environmentally aware and passionate about making a difference, insist on the ‘digital only’ distribution clause in his revised contracts. Now before you think of ways to bash this blog, let’s go through some numbers and see how many football fields of rainforest Michael Jackson could have saved if he were still alive and a digital media ambassador…

The production of DVDs/CDs:

The inherent environmental cost of producing DVDs and CDs (disks) is something that most people don’t think about. Disks are made of plastic (polycarbonate to be precise), which should be obvious, but most people don’t know that they also have a layer of aluminium sputtered onto the surface. Not only is aluminium highly toxic to produce, it also uses a large amount of energy to manufacture. Add this to the inherent environmental issues of plastic, and you have a pretty lethal item on your hands that cannot even be recycled. However, the process of printing (or decorating) the disc is one that arguably has the most potential for environmental cost. There are various different processes for this, but all involve a great deal of waste and the flushing and disposal of environmentally damaging chemicals. There are environmentally more sound options, such as digital printing, but these are not viable for large volume production jobs – And Michael Jackson’s This Is It is definitely a large volume production job!

Let’s disregard the environmental issues from the printing process for the sake of simplicity and just look at the notion of ‘embodied energy’ required in production of blank disks. Embodied energy is defined as the available energy that was used in the work of making a product. By calculating how much embodied energy is used in producing a typical DVD/CD, not looking at the printing process, one can estimate the total energy usage from the This Is It release and from Michael Jackson’s total lifetime album sales. And with this, we can estimate how many football fields (or acres) of eliminated rainforest this embodied energy equates to.

The distribution of DVDs/CDs:

This is another important element that should be included in any estimation of the environmental effects caused by the sale of a manufactured product; however, for the sake of keeping things relatively simple, I have not included this factor in my calculations. But, I welcome any contributions that would help me generate this number.

Total sales forecast for the This Is It soundtrack and movie:

Let’s assume that This Is It, the soundtrack compilation, will sell 150% more than the 2003 compilation release of Number Ones (7 million world-wide), making the forecast 17.5 million units (over its longevity) – Again, open to any feedback on this assumption from those of you who know the music industry well. Unfortunately, I don’t have access to Gfk data to get accurate global DVD sales figure, but let’s take Mamma Mia numbers for the US (6.5 million units from the-numbers.com), assume fewer European unit sales (4 million units) and let’s use a 2 million figure for the rest of the world. Equaling a total of 12.5 million units (over its longevity). Personally, I think that these are conservative estimates, but I’m open to other opinions and sources.

Estimated total embodied energy figure for the This Is It soundtrack and movie production:

From the internet, I’ve been able to gather the following information to help me with the calculation:

  • Average weight of a single DVD (with no booklet) = 120 grams.
  • Average weight of a single CD (with no booklet) = 100 grams.
  • Embodied energy cost for plastics is between 60 & 120 Mj/kg.
  • Embodied energy cost for aluminum is between 227 & 342 Mj/kg.

Assuming that one gram of aluminum is used for every CD/DVD and taking a conservative approach to the DVD/CD formats (i.e., assume only use of single DVD/CDs in sales numbers and no double unit collector editions), I’ve come up with the following conservative total embodied energy cost (not including booklet production and disk printing) for the production of DVDs and CDs:

  • 1 single CD unit: 9.3 Mj
  • 1 single DVD unit: 11 Mj

Using the above sales forecasts, I come up with the following total embodied energy costs for This Is It:

  • DVDs: 137.5m Mj
  • CDs: 162.8m Mj

Estimated number of football fields of rainforest that the This Is It release will cost our planet:

There are 300 tons of biomass per acre of tropical rainforest. Biomass is essentially biological material derived from living things, or recently living organisms such as wood, waste, and alcohol fuels. Let’s assume that 100% of all biomass within an acre of rainforest is derived from wood. I found a figure for the energy content of wood fuel (air dried with 20% moisture) on the internet of 15 Gj/ton. So, in one acre of rainforest, there are approximately 4500 Gj (or 4.5m Mj) of energy stored – consider this ‘natures’ embodied energy.

So, how many acres of rainforest would give us the combined total of 300.25m Mj of embodied energy (for DVD and CD production of This Is It)? A simple calculation yields 66.7 acres…which are approximately 74 football fields.

The production (NOTE: not including distribution) of the CDs/DVDs of the This Is It release will probably cost our planet the bare minimum equivalent of 74 football fields of tropical rainforest…now that’s a scary thought! An even scarier thought is what MJ’s music and DVD sales have already cost our planet. Take 74 football fields of rainforest and multiply that number by approximately 12 (see numbers from the 1st paragraph) and you get 888 football fields of rainforest…and this is not even considering the recent sales of Michael Jackson’s previous albums, since his death.


I would like to believe that if Michael Jackson knew of his music’s carbon footprint and that it has already cost the planet the equivalent of the destruction of at least 888 football fields of rainforest (at a bare minimum), then he would have thought hard and well about the benefits of digital entertainment. I would hope that he would have embraced the opportunity to drastically reduce his environmental footprint, by probably about 74 football fields of rainforest, with the ‘digital only’ release of his next compilation and DVD; which would have been his big global come-back concert in London, but instead has become This Is It. If someone had convinced him about the environmental benefits of digital distribution, he may very well have endorsed digital entertainment to the best of his abilities, turning into one of digital media’s biggest ambassadors.  His managers and producers wouldn’t have been too happy about the idea (clearly reducing their prospective sales and revenue forecasts); however, these same managers and producers did add that heart warming bit at the end of the This Is It film where Michael states ‘We can change…we can change’ over and over again – Perhaps they can change as well.

The more opportunities we have to endorse digital as the real future of entertainment, the sooner we will educate consumers of the benefits and ease that digital distribution can offer them, and the sooner we will make a more positive impact on our environment. As digital media services grow in numbers and improve in their usability, then consumers and advocates of digital entertainment should also grow.  We need ambassadors to the cause – actors, musicians, corporations – who can help with the education process and turn the mass entertainment consumer into a progressive digital entertainment purchaser.

Help me recruit these ambassadors…tweet, forward, publish, etc., this blog and spread the word of the environmental benefits of digital.

‘This Is It’…our chance to make a difference!