Jim Lynch: Tech Analyst and Community Manager

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The Hollywood morons (a term of loving endearment I like to use for the movie and TV industry) are still out of it when it comes to the realities of online content distribution in 2008. They seem hopelessly trapped in a 1980s perspective that they have control over their content and can decide when it will be released online.

This naive and dinosaur-ish attitude is probably already costing them a lot of money but they seem hopelessly oblivious to reality and it’s become clear to me that rampant piracy is going to force them to change the way they do business—whether they like it or not. Since they are clearly too stupid to figure all of this out, I’ve taken it upon myself to give them a roadmap and save them from themselves.

A couple weeks back, we were greeted with news that HBO had finally decided to put its shows up for sale in the iTunes store.
Time Warner Inc’s HBO cable network is expected to start selling shows on Apple Inc’s iTunes digital entertainment service, with flexible pricing—sources familiar with the discussions said on Monday.

Episodes of some HBO shows are likely to be sold at the standard price of $1.99 per episode or higher, these sources said, marking the first time Apple has agreed to sell television shows at different prices in the United States.

I’ve often wondered why HBO’s shows weren’t available there as it’s where I get most of the content I like to watch. It seemed like such a no-brainer to me that any company would want to monetize its content as much as possible by using every available point of sale online. Unfortunately for HBO, it’s far too little and far too late. Why? One word: piracy.

Piracy for the Consumers
Why is piracy such a threat to the Hollywood morons? Simple. Piracy provides what the consumer wants, when she wants it, and in the format that she wants. Before I go any further with this analysis, let me state that I don’t condone piracy or encourage it in any way, shape, or form. But it is critical to acknowledge it because it is happening and it probably does have an effect on consumers buying behavior.

So what are the pirates doing that is such a threat to HBO and other media companies?

Here’s a brief list of why the pirates are providing a higher quality product than the Hollywood morons:

Pirates provide content online almost immediately at the same time it appears on other mediums (and in some cases before it appears anywhere for sale).
Pirates seem to offer the same media as retailers like iTunes but in HD format…for free!
Pirated content contains no DRM (Digital Rights Management) and the user is free to put it on whatever computers/devices he wants.

Since there is no DRM, the user does not have to worry about ever losing access to the content he has downloaded (remember the MSN Music DRM fiasco? Consumers who bought DRM-infested music got screwed big time).

Let’s look at this in more detail. Why is it that the pirates always seem to have the content before iTunes? It’s certainly not Steve Jobs’s fault as he seems all too eager to get content up into the iTunes store as quickly as possible. It’s clearly a decision made by the content companies themselves and it gives the pirates a clear advantage over legitimate content distribution stores like iTunes.

Another problem that piracy solves is the problem of visual quality. Quite a lot of content in the iTunes store is only available in SD format but the pirates somehow manage to upload HD versions of the same content. Hmmm…HD version for free or SD versions that cost money? Which would be more appealing to the average consumer?
And another advantage that the Hollywood morons have given the pirates is that pirated content contains no DRM. DRM provides no benefit whatsoever to the consumer or to the content company. It’s just another way for paranoid executives to tell stockholders “see, we’re using DRM to try to fight piracy!” Well great but it’s not working and it’s probably driving people to the pirates instead.

Remember the MSN Music debacle? Where the DRM servers were turned off and the people who’d bought music from the MSN service were basically screwed and would not be able to transfer their music to a new computer? Well bookmark that as it has probably been noted by many consumers who might otherwise have been eager to dip their toes into the online downloadable content waters.

Will they now? Who knows but having to face the reality that the content you paid your hard earned money for is now unusable and is not going to win over any new customers.

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