Lets Talk about P2P Damages, Coffee and Bulldust



Last Friday in a Swedish Court,
the four pirates were awarded four years of jail time and financial damages
against them (for running a Google search engine) of over three million
dollars.

 

In February three Thai CD Pirates were handed out jail
sentences under a year each and fined $14,200 each for pressing 306 CD-Roms per
minute of pirated content for the last three years and selling them into the
black-markets as originals . (See references below)

 

In other words for distributing over thirty million pirated
CD’s these Thailand based pirates got a sentence that looks like a joke when
compared to the Pirate Bay lads – who essentially, let me repeat myself – ran a SEARCH engine.

 

Of course this inequality in sentencing is essentially the
PR machine at work to justify the passing of legislation designed to curtail
human basic rights. (ACTA)

 

IPFI, MIPI, AFACTS, RIAA, MPAA all take delight in reporting
the damages awards handed by the courts in various file sharing cases.

The majority of these claims are based on the premise that
the downloader/uploader made “n” pieces of content available on the internet
for free that would have sold for “o” dollars retail or “p” dollars wholesale
and therefore depriving the content creators of {N x O} or {N x P}, “whatever
your Honour thinks is fair.”.

 

Unfortunately, that is not quite how this works. In real
life, it works something like this…..

 

A movie on the big cinema screen is a different experience
to watching the same on a laptop or mobile phone screen.

The special Dolby surround sound effects can not be “felt” when you are peering
intently at a 7” or 2” screen listening hard to the 8 ohm quasi stereo
“speakers”.

There are no fresh popcorn smells – nor are there any Jaffas
to roll down the stalls – and of course there is no way two people could watch
such a small screen together so the “arm-over” maneuver doesn’t work outside
the cinema.

All of these elements combine together to create a unique “experience value” that economists like to call the Hedonic value.

The basics of Hedonic value are in the measurement of consumer self justification value for the  payment of an item of perceived need. (Usually driven by advertising, marketing and lately more by social networks and peer to peer interaction.)

The hedonic value of watching a presentation on a big screen
at the movie theatre is vastly superior to reviewing the same movie on a micro
computing device. Especially if there is a couple involved. It’s a bit like the
difference between a Starbucks Coffee or, a home made powdered, instant coffee.

 

I’m a coffee addict. I drink between thirty and forty cups
of coffee per day.

 

At select establishments around the world, an Americano
(long black) coffee costs $3.75 for the small cup.

If I were to use the content industries argument, my
addiction is equal to a $150.00 per day habit.

 

I do quite often go out and have a long black coffee when
chatting with friends or holding a business meeting, however that would not be
more than three or four times a week and my total tab for that would not exceed
$20-$30 all up.

The rest of the time, I drink instant coffee. The Germans
have a good word for instant coffee, “ersatz 
kave”, which means “pretend coffee” or fake coffee.

 

I use Nescafe Expresso coffee which sells retail for a 350
gm jar for $9.00 (sometimes $7.00 on sale). I buy a 2 kg bag of sugar for
$1.65. The coffee and the sugar last me for approximately ten days,

I drink 245 cups of pretend coffee a week interspersed with
about five – seven real coffees. My total coffee budget is therefore
approximately $31.00 per week; not the $1050.00 that the content industry think
I should pay them.

 

What is different, is the price I am prepared to pay for
each alternative product. The instant cup of coffee 2 minutes after I wake up
in the morning is worth far more than the Starbucks Americana that I have to
cross the road for in a driving hail storm to get – but its hedonic value is enhanced
by the fact that I can have that ersatz coffee without shaving, dressing or
going out into the weather.

 

That first cup of coffee doesn’t in any way replace the
desire or need to have the real thing later in the day, surrounded by my peers
or colleagues in nice surroundings.

 

The two are separate, disparate and totally unrelated
experiences and worth two totally different values.

It can be argued by coffee afficianados that ersatz coffee
is a temporary fix only – a prelude to the real thing, a stop-gap, an emergency
standby, the free taste. It can equally be argued that the world would not
function as well without the ersatz coffees, which in reality actually make the
real coffee taste so much better by comparison.

 

The same can be argued successfully for movies shared on the
Internet. The “free taste” actually enhances the hedonic value of the movie experience
and leads to more movie admissions at higher prices.

 

Cinema attendance figures for the last two years indicate
that more people are going to the cinema than at any time in the last
sixty years.  Yep –  records are being broken, daily.

 

According to a recent report by Price Waterhouse, the
Ancillary markets and new technologies have revolutionized profit potential. Over the last decade, ancillary
markets have grown by over 30%. The home video market alone has grown over
200%. The combined worldwide filmed entertainment market will achieve sales of
$118.9 billion in 2009, a 7.1% compound annual growth rate (CAGR). Source: Price Waterhouse Cooper.

 

There are very few industries that can claim a 7.1% compound
annual growth. (Then again, there are very few industries that have millions of PR people working for them for free, doanloading files like mad for the ersatz taste.)

The hedonic value for consumers of attending a cinema screening
is being proven daily at the Box office in leading file sharing countries like
:

 

Headline: Slovakia,
Bulgaria, Turkey,
and Russia were
the top performing European countries for cinema attendance growth in 2008.

 

Russia saw the largest amount of increased ticket sales,
124 million, up 16% from 107 million in 2008. Turkey, however posted a jump of
almost 27%, with 38.5 million admissions.

Across Central Europe,
Slovakia
stood out with an 18.2% gain, to 3.3 million admissions, but still down
compared to a strong 2006, with 3.4 million admissions. 

Bulgarians were back up to 2.8 million admissions, a
12.1% increase, but below a five year high of 3.1 million admissions in 2004.

Poland's
3.4% rise brought a five-year high of  almost 34 million admissions

 

And:

 

Headline: Box office goes boom

According to Box Office Mojo, an online site that
crunches movie revenue data, February admissions were up more than 10 per cent
over last year, and that came on the heels of the first-ever billion-dollar
January. Compared to previous annual revenues, 2009 is tracking as Hollywood's
most lucrative year ever, with the current year-to-date box-office standing at
about $1.8 billion US — as much as a 20-per-cent increase over same-period
totals from the past three years.

 

In summary, the Content Industries claims that file sharing carried
out on P2P technologies and networks is damaging their bottom line is sheer and
utter  (warning –
expletive forthcoming
) bullshit.

 

It is akin to claiming that file sharing is stopping young
couples from going to the cinema and the lack of “over the shoulder arm maneuvers”
is leading to negative population growth.

 

In closing – if the industry’s claims that file sharing is
hurting their bottom line is based on fact, rather than self creative
litigation justification, then why during a depression are more people going to
the movies than file sharing for free ?

 

My answer is that consumers are a lot more discerning than Hollywood
and can actually taste the difference between instant coffee and real coffee.

The attention that Goverments and the Courts should give the content industry about these claims is the same attantion that Starbucks gives to Coles when the
price of Nescafe in Coles drops down to
$7.00 during sales. Nothing.

 

 

References

Three CD pirates jailed in Thailand

http://www.ifpi.com/content/section_news/20090225.html

 

Passion Helps Record Year At Global
Box-office

http://www.zeeks.com/wirestory/?story=0fc3m7kv

 

Box office, admissions rise in 2006

http://www.variety.com/article/VR1117960597.html?categoryid=13&cs=1

 

Box office goes boom

http://www.vancouversun.com/Cars/office+goes+boom/1364236/story.html

 

European cinema bounces back in 2006

http://www.obs.coe.int/about/oea/pr/mif2007.html

 

Weekend box office figures

http://www.ukfilmcouncil.org.uk/weekendboxoffice

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