Is Piracy In the Consumers' Best Interests?

moviemodel writes "Warner Home Video in China are beginning trials of 'simple pack' DVD releases at $1.50. They state they are doing this as a test to see if they can recover a market lost to pirate DVD's at 75c each. They also sell higher priced and more complete DVD sets as 'silver' and 'gold' packs. Maybe this marks the beginning of movie industry realism and long hoped for shift in business models, forced by piracy. Perhaps they can take it on as a better model for movie downloads worldwide, facing the same problem of competition from pirated movies. Is such a model viable in the long term?"

Comments

In a true open market

[Maxo-Texas]

DVD's should basically be 1.50 every where else in the world too then.

Why not here?

[guruevi]

Apparently it IS possible to sell them for such a price. Why not here? This just proves that they CAN sell for less but do not WANT to.

Re:If they're serious about it, then it is

[deep44]

Try reading the entire article summary next time. It mentions that they are trying to compete with $0.75 pirated copies.

How about quality?

[AusIV]

It's getting to the point where one advantage of pirating a movie instead of paying for it is that you can actually get a better quality product by pirating it. In an era when the high quality movie players downgrade the quality to older sources, and you can only play your DVD in certain parts of the world, a pirated DVD offers more flexibility.

The same goes for music. If you're limited as to where you can play your music for buying at an online music store, it suddenly seems more advantageous to start pirating music, so you can play it on an uncertified MP3 player or an operating system that doesn't have DRM support.

If the movie and music industries want to fight piracy, they're going to have to provide a product that is at least as good as what you can get by pirating.

Re:How about quality?

[Baron_Yam]

If I BUY a DVD, I get warnings, ads and stupid menus that I can't bypass on my standard DVD player.

If I download a ripped movie, I get the movie I want without the crap. It starts the moment I put it in the player.

Right now, I prefer downloaded movies over pressed copies because I'm actually getting a superior product.

Re:How about quality?

[torokun]

And I would prefer to have a house for free rather than pay for it, because I'd get a better deal! News flash: it's against the law. If you want to change the law, fine. If you fail to do so, have the decency to follow it.

This is all ridiculous. Ever heard of supply and demand? OF COURSE piracy is beneficial to consumers. It vastly increases the supply and reduces the real demand, so that companies have to reduce their price to compete with free illegal copies.

This is only half of the story though. We don't just care about what's beneficial to consumers, or we'd never have copyright in the first place. We care about producers too, because we know that the best way to get people to produce is to let them make money from their work.

If you all want to live in a communist country, where people believe that everyone will altruistically work for the benefit of the great motherland, you had better start looking hard, because there are only a couple of places left. People produce in the aggregate because of the benefit they gain. This is capitalism, and most countries now believe in the principle.

Once upon a time, people actually would NOT sneak in to see a movie if they didn't want to pay for it. They would have considered this dishonest. Even many of the poorest people during the depression would refuse to break a promise or act dishonestly. They had some INTEGRITY.

Slashdotters -- where is your integrity? Where is your will to be honest, to follow through on what you agree to, to do without something that it would be dishonest or illegal to take without paying for?

So the bargain is bad? The person with integrity simply says no.

Re:How about quality?

[Moridin42]

Uh.. the United States of America is kind of founded on the principle that its okay to break the law when you don't like the deal that you've been forced to accept.

I'm pretty sure that armed rebellion wasn't an acceptable practice under UK law. I'm certain that tax evasion wasn't.

Yes that is kind of an extreme comparison, but it is actually valid. Since you're making the argument that the law is the law and violating it is not acceptable. (Incidentally, this seems like a bit of a silly argument, since people everywhere, of good standing, knowingly breaks laws. Its all a matter of which ones. There's just some weird societal formula for which laws are socially acceptable to break and which aren't.)

As to the rest of what you've posted.. capitalism doesn't care about rewarding producers. Capitalism operates on the principle that all parties, consumers AND producers, are looking out solely for themselves. Efficient outcomes come to be in the face of prices. Capitalism, like pretty much all other economic schemes, is a method of distributing resources in an efficient fashion. Some systems are more efficient than others, certainly. However whether you get filthy rich or you're barely covering costs, capitalism doesn't care.

Intellectual property law isn't capitalism. It is an intervention in the market, theoretically for the public good, to prevent capitalism from operating. I'd also like to point out that both socialist and communist systems provide incentives. They just do so in different fashion.

So.. no. Consumers, none of them, need to think about 'rewarding producers.' Especially producers that have priced themselves out of the market. Not, you understand, that I'm saying media companies have priced themselves out of the market, since they obviously haven't. They're still around, and I'm pretty sure they're not losing money. They're just bemoaning their slower sales. Boo hoo, our execs can only afford 5 mansions instead of 6. Sorry, not particularly touching an emotional spot for me there.

I'll finish up by saying that record companies and movie studios are providing consumers with exactly the wrong incentives. The prices are high, the hassles are really irritating, and consumers aren't as uninformed about the cost of production. Which basically means, we'll go with the option that doesn't require us to leave our house (hidden costs of fuel, wear and tear on the vehicles, time involved) and doesn't piss us off with adverts and unnecessary legal bluster. Both of which would serve to make P2P more attractive, even if you had to pay the same monetary costs. Which you don't. Its capitalism at work.

Of course

[OpenSourced]

s such a model viable in the long term?
Of course is viable. You just profit less. And even that perhaps is not true. I've been in China, where you can get absolutely anything in DVD for about 1 dollar each. In fact, it would be difficult for you to try and get a properly licensed film in China. I know I didn't found any. And there was another difference. I had friends there that had more that two thousand DVDs at home, many of which they hadn't had time to see. They simply bought on impulse, because spending 1 dollar is not something you think a lot about. Of course my friends had higher than average (for China) earnings, but in time more and more chinese families will approach that income level.

My bet is that if you had DVDs priced at 1.5$, film copyright infringement would end as we know it, and the amount of dollars spent in DVDs by the average family would grow. I cannot guess if that increase would be enough to compensate for the much-reduced margin on each DVD, but I would bet it would be better bussiness in the long term.

Add to that the release of DVDs on the same day of first screening (sell the things as people exits the cinema), and you have the film distribution model of the future. Big-screen film watching is a fundamentally different experience than DVD watching, and there is but little market cannibalising between the two of them. Film distributors should start to know that.

No more customs anxiety

[coffeechica]

Great, so the next time I travel to China I can stock up on DVDs cheaply and actually get a receipt for them so I won't have to worry about being searched at customs. A few dozens of DVDs are always a bit tricky to explain in those situations.

Can't see how this will make a difference for the Chinese consumers, though, unless there is a massive anti-piracy campaign sometime in the near future.

Only if they realize what's *REALLY* going on...

[MindPrison]

What's really going on is the effect of the public community.

OpenSource, GPL, Musicians and Bands offering their music for free MP3 download, Linux - free OS, Blender, Gimp, OpenOffice...all free software that are comparable to commercial versions are a part of a HUGE new revolution that have literally SNEAKED upon the commercial industry, and because of their own onslaught on people...threatening legal users with DRM, SpyWare and restrictions....haunting people down for just being "people" - have brought fire to this revolution.

Because of this revolution, more and more people will witch to free alternatives, and the "biggies" didnt even see it coming for all their own greed and hysteria.

The way we exchange services - will change forever.

it the economics

[fermion]

It seems to me that the price of a DVD is not set by the intrinsic value of the product, but the economics of the markets. I mean it used to be a movie cost $50 or more retail. It was not that the movie was worth that much. After all, a movie is a stale product. My the time it is released to home video it has been in the theater, pay TV, free TV, and god knows where else. The vlaue to the consumer is merely wanting a good copy of it to watch when one wants.

I think video rental changed that by showing that alot of people would buy a video if it were sold at a lower price, and the studios would reap the profit instead of the people who rented the video. In many ways the video rentals places were stealing money from the studios in the same want online piracy is, and video became priced to compete with that grey area of acquisition.

Now, when we got DVDs the studios got greedy. They jacked the price, but that was somewhat defesible becuase of the added value. What they did do is put unskippable ads, warning, etc that made the DVD less valuable. In most cases, one cannot just put a DVD in and have it play. In addition, if one just wants a movie, it can't be had. The consumer is forced to pay for the extra content. And if the consumer wants to keep the original for backup and watch a compressed version in a more convinent format, for instant putting an entire series of one DVD, that cannot be easily done.

So the economics is this. People who want the DVD product tend to pay for it. People who merely want to watch the film once tend to rent it. People who do not want the DVD product, but want the film, are just out of luck. There is simply no legal way to aquire the film without the baggage.

And so we back to the dawn of video rental. There is no legal way to acquire the product, but there are many grey areas in which the product can be aquired. So the studios are either going to ignore this demand and perhpas not maximize profit, or find a way to tap at least some of the sales. There are limits. DVD DRM is not going away, so person who do not want to deal with 10 DVD for a season are still going to download, but a $1-5 basic edition goes a long way to satisifying the basic market.

Re:Old argument

[Saeul]

Ya mean like constantly expanding the range of copyright laws so that nothing ever actually goes into the the public domain, so the free money cow never dries up?

That position is very short-sighted. It isn't "theft" to extend copyright laws. The rough analog to the copyrighted material devolving from private property to public property is Congress writing a law that causes your house to be turned over to the city after 100 years. While you almost certainly will be dead when it happens, what public good is enhanced by destroying private ownership?

I can see it for shared works of commerce such as open source software where ALL participants agree to pool their interests for the public good. But I don't see it for art. While I'm sure the public good can be shown to be "served" by confiscating physical works of art, it still smells like theft to me. Is the case any less obvious with intellectual property that is essentially entertainment?

Starting, in China? Try Poland for years...

[Gadzinka]

That's funny... They claim, that they will start doing this in China, but in Poland, for years now, you can buy legal DVDs with papers and magazines for $2-$3, and normal commercial releases of not-so-fresh movies for $5-$6. When you factor in costs and risks associated, many people see no incentive in pirating dvds.

Meanwhile CDs with latest crappy pop music start far beyond the $20 point and -- SURPRISE!!! -- no one is buying them ;)

Robert

That sounds good BUT!

[xiphoris]

My bet is that if you had DVDs priced at 1.5$, film copyright infringement would end as we know it, and the amount of dollars spent in DVDs by the average family would grow.

That sounds good when you first hear it, until you realize that this is actually going to give the MPAA and their like even more power.

The industry globally adopts such a model, there is even less chance of independent films making decent money. Everyone has to sign with the "big labels" and take a cut of the mass-produced cookie cutter movie model.

Once you adopt the position that no one but large companies (selling hundreds of different movies for $1.50 each) can recover their costs, you destroy the independent market entirely.

Re:Huge difference between real property and IP

[the eric conspiracy]

If there were no way for us to record musical works or create movies, artists would still be able to make money through live performances, because those performances would be naturally scarce, without any government intervention. This is in contrast to the situation we have today, where music and movies are anything but scarce. They are all around us, distributed in a wide variety of forms. Yet the movie and music industry would have the government continue to enforce an arbitrary scarcity that bears no relationship to economic reality.

Movies have no direct live performance equivalents, and with live musical performance the scarcity reduces people's ability to enjoy the performance. One may note that today we have a great abundance of these recorded forms of art, in pretty high quality too. The problem is the question of cause and effect - if we remove copyright much of the economic incentive to produce this abundance would disappear, and we would likely to be facing a great decline in both abundance and quality.

One of the best examples of this is the decline of the Hong Kong film industry.

http://www.thestandard.com.hk/stdn/std/Metro/GD28A k05.html

Re:Old argument

[kfg]

Please note that I used the word "theft" somewhat sardonically, because that was the word used in the post to which I responded; however:

. . .what public good is enhanced by destroying private ownership?

You do not understand the social contract of copyrights and patents. Like, at all.

The are not private property. A temporary right of monopoly is granted insofar as that grant benefits the public good by insuring they reach the public domain; and in a timely manner.

Free speach is the primal law which "Intellectual Property" laws are subserviant to (where such free speach laws exist, which they should in all jurisdictions that are signatory to the Berne Convention, since the assumption of free speach is part of the social contract of the Berne Convention).

While I'm sure the public good can be shown to be "served" by confiscating physical works of art, it still smells like theft to me.

Because that is theft. As is taking a DVD from the store without paying for it.

Copying the work of art is not theft.

Denying the right to copy the work of art is theft from the public domain. It denies the right to possess what is legitimately your property. Back in the day when the American copyright laws were being formulated the parties who were against it and the parties that were for it both understood this explicitly.

Get the hence and read the correspondence between Jefferson and Monroe on the matter (Jefferson was Ambassador to France at the time the Constitution was drafted, which fact leaves us with a fortuitous public record of the their arguments).

KFG

Re:Less risk.

[TheMotedOne]

Because of the bonus features, of course!

"Who doesnt want to see mind numbingly repetitive out-takes and deleted scenes that no one wants to see? what about the countless hours of commentry by random nobodies.. "oh yeah this is the bit where i was in the back doing nothing important and i dropped my pen, so if you turn up the volume REALLY LOUD you can just about hear it hit the floor!"

I tend to agree with you on this point. It would seem that Joe moviegoer doesn't care at all about out-takes, deleted scenes, or commentary.

I certainly have no problem with them, as I learned more from DVD commentaries in a few months than I learned in my first year of film school.

Is such a model viable in the long term?

[Radical Rad]

Yes, this model is viable in the long term. My reasoning isn't based on how much they can make on a movie today but on how little it will cost to make a movie tomorrow. Computer generated effects have already cut the cost of making movies by reducing the number of extras, allowing production in settings that would not otherwise be possible, allowing complete "green screen" movies, and allowing completely CG movies. I feel certain that within fifteen years movies will routinely be made without human actors and the cost of production will be quite low. This will bring an explosion of creativity as hordes of amateurs try their hand at movie production.

the artist who is already getting ripped???

[fwr]

Like the artists who get paid several millions of dollars for a few months work on a film? Yea, right.

Re:It depends on quality of disc

[Vadim Makarov]

The point is, in my experience, pirates in Russia usually sell higher-quality mastered discs of the movies I want than licensed discs with the same movies. I don't know why it is so.

Re:Old argument

[bigpicture]

Before the last 5 years or so there was not any affordable effective way for the masses to digitally copy or transmit. So in that respect the Movie and recoding companies had the monopoly on the means to record. And that is all copyright is, it was a royal decree that only the favourite buddies had a right to have a printing press.

In case you hadn't noticed those days are gone, adjustments are required. People have new unique ideas every day, other people copy them, that is how economic and social progress is made. Even when they study chimp communities, this also happens this way.

This requires some revision of thinking, that the RIAA cannot seem to grasp. Their FUD is still theft. How if someone buys a blank CD and copies information onto it, does that information belong to a recording company? If none of that existed in the first place, and since the content cannot exist without the containing media, the theft definition is a long stretch. It is the concept that only a privileged few have the right to copy that needs to be revisited.

Because much as I try to grasp this concept it eludes me. If the content cannot exist without the media that it resides in, and cannot be accessed without the playback technology, why do the inventors, creators and owners of this technology not have the same rights as the creators of the content. Because the content is nothing without this technology. And if this technology did not exist it would still all be pay for admission to stage theatre, and live bands. How come only the content creators get a special privilege, and not also the technology creators that makes it even possible?

Do the recording companies license the recording equipment, and pay a license fee to the manufacturers for each copy that they make? Or do they buy this equipment and own it the same as Joe citizen?

They're already selling them cheap elsewhere

[CaptainVoid]

They're already selling them cheap elsewhere I am in Latvia right now on a Fulbright. One of the "big" supermarkets in Riga sells DVDs for 1-2 lats. (1 lat = $1.75). I only get Latvian and Russian cable so I will take what I can get. Typical movies like: "The Chronicles of Riddick," "Underworld," "Resident Evil," etc. are one Lat.

Latvia is an EU country so these are clearly NOT pirated. Of course the per capita income is lower than in the US but higher than China by far (no real piracy problem of course), the price is very reasonable locally since a movie, the opera, etc is about 10 Lats. I almost never buy DVDs in the U.S. because the price is not worth paying for a movie that might suck. I do not go to movies for the same reason. My local public library has a great selection of CDs risk free, however, and you can buy a whole season of something good (B5, CSI, etc.) for 40 bucks.

Anyway, I have bought dozens of them since I arrived. The last time I bought a video in the U.S. was at least five ago. Since I can get used videos for five bucks in many places (or free at the library), why should I give the industry a penny more? Now they can make something from me -- since the prices are reasonable.

As many have pointed out here, if they lowered the price (like that booze in the mini bar in the hotel), many people who do not buy would start buying and piracy would be pointless. Same principle as the boneheads who bitched about outlawing smoking in bars and then discovered that the young people and bar crowd still goes out but now so do the non smokers. Go figure.

[Somehow I posted this earlier to the wrong story -- one I never even read. Sorry.]

Spot on

[Migraineman]

Man, you're making me feel old ... I've witnessed 40 of those 50 years. BTW, your description of the situaiton as Breach of Contract is very well worded.

That said, I feel like I'm in the same exact situation. I've expressed my dissatisfaction with the Sonny Bono Indefinite Copyright Extension nastiness. The retro-active part makes me particularly furious ... that's the piece I consider to be the material breach. More specifically, the original copyright terms formed a valid contract - the three requisite parts were satisfied (offer, acceptance, and consideration.) The "consideration" in this case is an exchange of a short-term monopoly for public-domain status at the end of that term. Disregarding the offer and acceptance aspects of the retroactive extension, there's only benefit for the copyright holders and none for the public. The copyright extension act therefore fails the consideration test, and is not a valid contract. The public already had the "revert to public-domain" element in the original contract. The extension offers benefit to the copyright holder in exchange for ... what? (hint: nothing.)

I've used the term "breach of contract" in many discussions. Is it possible to file a class-action lawsuit against Congress for Breach of Contract?

I'm quite certain that the lawyers would have a field day with that. The original contract was negotiated by representatives of the people, and I'm also quite certain that they'd argue that the terms of said contract were re-negotiated by representatives of the people. The whole "representation" thing creates a nasty grey area - we citizens aren't allowed to opt-out of laws we don't like.

In the words of Ed Howdershelt: "There are four boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order."

Looks like we're exhausted the first two ... are we up to number three already?

Re:Old argument

[Jackie_Chan_Fan]

People who steal are very good at talking people into thinking that what they did is OK

Thats no more true than "People make excuses for their choices in life" It has nothing to do with theft.

What a theif can do is be honest and explain why the had to steal...

Also there is a big problem in this country where most people think criminals are just murderers, drug dealers and online pirates.

Most people fail to realize that the most severe forms of crime are at the corperate white collar level. Ask a Criminology professor.