Feb 252012

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Price is not the only cost considered when consumers choose between buying legally and pirating

When it comes to competing with piracy, one of the talking points of copyright maximalists is that content creators “can’t compete with free.” These people complain that because pirates don’t have to cover production costs, competing with them is a losing venture. What these people have not learned, despite our many attempts to teach them, is that price is not the only cost considered when consumers choose between buying legally and pirating. Over at Gamasutra, one expert blogger, Lars Doucet, has shared a very profound look at four “currencies” people consider when making such a choice.

The problem with most piracy debates is that the only “cost” they discuss is money-dollars.

This is wrong because there are at least four currencies involved here, not just one (money-dollars).

I propose the following: 

  1. ($M) Money-dollars
  2. ($T) Time-dollars
  3. ($P) Pain-in-the-butt-dollars
  4. ($I) Integrity-dollars

Lars explains what these are as follows:

For the purpose of this article Money-dollars will be denominated in USD, Time-dollars will be denominated in hours, and Pain-in-the-butt-dollars will be denominated in SI standard units of “amount-of-aspirin-I-have-to-take-after-beating-my-head-against-the-wall-for-an-hour.” Feel free to measure Integrity-dollars in Hail-Marys, or hours spent lying awake at night.

Using these new variables in the consumer decision-making process, we can see quite clearly that even though the pirates have content creators beaten on the money-dollars aspect, there are still three other currencies through which content creators can compete. So let’s take a look at these other currencies and see exactly how content creators can leverage them.

First, we have Time-dollars. This is how long it takes the consumer to get from deciding he wants the product to enjoying it. Any road block in this process increases this cost. So the goal as a content creator is to reduce that time. The easiest way to reduce the time cost is to take your content to the consumer. The internet is an amazing tool to do just that. People spend a lot of time online and use a variety of tools on it. For movie and television, people are spending their time on Netflix, Hulu and Youtube. For music, they are spending their time on Pandora, Spotify and Grooveshark. For games they spend their time on Steam, Kongregate and Impulse. These and many other places online are where the customers are. If the content is not there, they have to spend time looking for it elsewhere, thus driving up the cost in Time-dollars. If they can’t find the content they want quickly and legally, they will be more inclined to find it quickly and illegally.

Next, we have Pain-in-the-butt-dollars. This is how hard it is to get from wanting the content to enjoying the content. When most content creators attempt to compete with pirates, they often choose to battle through this currency. This is where laws like the DMCA and SOPA come in. These laws are conceived as a way to increase the $P cost of piracy. Unfortunately, by creating these laws, the $P cost of legal content has also risen. With the DMCA came the anti-circumvention clause, which prevents owners of legal content from bypassing DRM which increases the $P cost of content. We have learned repeatedly over the years that the $P cost of DRM is often far too high for legal customers and pirates have been able to bypass it, thus dropping the $P cost of the illegal offerings. If content creators truly want to compete through the $P cost, then they need to offer convenience for their paying customers. The more barriers put between the paying customer and the content, the less likely they will value the legal offering.

Finally, we have Integrity-dollars.

Read more . . .
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