The economics of piracy

I’ve been thinking more about SOPA/PIPA day or so, and throw in the mix the fact that megaupload.com has been shutdown and is now in the middle of a lawsuit for facilitating piracy.

Marco Arment has some good thoughts of what will likely happen over the next few years, or maybe even sooner.  One reason, probably the only reason in my mind, that these bills failed is because congress did something they don’t usually do.  They spelled out the laws in plain english.  Both SOPA and PIPA are acronyms that can be understood by anyone who uses a computer, and the bills themselves were the focus of attention.  Contrast that with the norm of bundling all of the provisions of a bill they are trying to pass with a more popular bill.  The next SOPA, as Marco describes, most likely won’t be named SOPA 2, or something similar.  It will be a wolf in sheep’s clothing, a trojan horse.

But if/when something passes, the question remains of whether or not it will be effective.

The more you tighten your grip, Tarkin, the more star systems will slip through your fingers. - Princess Leia

There will always be people who choose to pirate over pay.  I don’t think anyone really has a good idea whether or not  this behavior is truly is increasing or decreasing.  I’d like to take some time to discuss this “seedy underworld.”

A decade or so ago, long gone services like Napster, SoulSeek, Kazaa, Audiogalaxy and others provided one thing.  The ability to download any music you wanted without having to pay for it.  There is a reason that these services are no longer around, and that is because they were blatant stealing.  However,  they set a tone with their users that has remained long after their servers have gone cold.  A sense of entitlement.  Let me present to you what I am calling “The Millenial’s Law of the Internet.”

It states, that which I can download, I may download.

While the services listed above are no longer around, there is still Bit Torrent for those that choose the 100% free, 100% of the time route.  It isn’t rocket science to know  you can search google for any movie or tv show with the word torrent after it, and lots of links will appear.  And here we get to the economics of things.  The sites that you will see in your search results are, in one man’s opinion, the sewer of the internet.  The sites are designed for you to specifically click on ads, sign up for services that you think will enable your download, and in general fool the user into thinking they are getting something other than what they are getting.

Without realizing it, these users who are unwilling to pay anything to watch a movie, are providing money to the parties that leech off the companies that create the content.

There is another tier above the users described above.  There are people out there that are willing to pay SOMETHING, just not the amount asked to the general public.  Services like mega upload sold premium memberships for faster download speeds, and unlimited bandwidth.  Since the site has been shut down, I’ve been unable to find the cost of their premium service, but needless to say, it was less than the cost of going to the movies twice per month.

I know a fair amount of people that either subscribe to premium download services, or something similar like unlimited usenet news hosting services.  The arguments that most of them make two-fold: price and convenience.

On price, most of them are willing to pay for premium content, just not at the going rate.  A Blu-Ray movie costs over $20.  For less than that, they can download every movie that comes out that month.  The big flaw with this logic is that the money is received by the wrong party, and that is where I understand the complaint of the music and movie industries.  Companies, you could say entire industries, are created to facilitate this type of black/grey market for content distribution.

On convenience, it really comes down to the purely digital format.  Having a non-DRM digital copy of a movie means they can watch it on any of their computers, their TV, as well as their phones and tablets.  This doesn’t have to be unique to this distribution method, and that is why many people are not sympathetic to the music and movie industries.  I think this was best communicated by Nat Torkington in his response to the president’s challenge.  It was over ten years ago when I first read the Perl Cookbook that Nat wrote.  He still knows how to write.

All I can think is: we gave you the Internet. We gave you the Web. We gave you MP3 and MP4. We gave you e-commerce, micropayments, PayPal, Netflix, iTunes, Amazon, the iPad, the iPhone, the laptop, 3G, wifi–hell, you can even get online while you’re on an AIRPLANE. What the hell more do you want from us?

Then there is another tier of user.  This user isn’t a pirate at all.  They pay for all of their content.  Whether or not they are going to the movies, buying DVDs, or purchasing movies from from iTunes, they follow the rules to the letter of the law.  How are they rewarded?  I’ll focus on the movie theater experience.  According to the list from Roger Ebert, both ticket prices and refreshments are too expensive.  Imagine a world where customer’s could actually purchase refreshments at a discount at the theater, a benefit from paying the ticket price.  Wouldn’t that make more economic sense?  If you put a store front behind a barrier, reducing demand, the prices should be lower.  This doesn’t play out in practice because the theaters artificially reduce supply by prohibiting customers from bringing their own refreshments.

Customers would likely be a lot more willing to pay for an expensive movie ticket if it meant they were able to buy bucket of popcorn for 50 cents.  But instead having to pay $5 for a soda that would cost them $1 at any near by fast food restaurant, doesn’t leave them with the same taste in their mouth.

It will be interesting to see what happens over the next few years.  It looks like people are mobilizing.  The key to how this plays out will be what do people do now, before the next SOPA is drafted and voted on in congress.  If the answer is wait, and protest when it comes up for vote, then nothing will change.  Chris Dodd couldn’t win when he tried to run for president, so he’s trying to be one of the next most powerful people in the country.

Something to think about this weekend: Kill Hollywood

Think about this.

The people who run it are so mean and so politically connected that they could do a lot of damage to civil liberties and the world economy on the way down. It would therefore be a good thing if competitors hastened their demise.

Over and over I have heard Hollywood executives repeat the doctrine: “We don’t want to make the same mistakes that the music industry made.”  But when asked what that meant in terms of what they would do differently, they had no answers.  You can say the music industry was blissfully ignorant about music downloads, and were therefore blind-sided by services like Napster, and if it wasn’t for the iTunes store, they would be a lot worse off today.

But what about the movie industry?  They had a decade of warnings.  They didn’t do anything, and now their approach is to try and take away freedom from people that have no interest in pirating their content.

Think about this over the weekend.  Five years from know what will entertainment look like?  Spending $50 for a movie ticket and popcorn, or something completely different but equally if not more entertaining?

App of the year 2011: HBO GO


Normally I would wait until the end of the year to award the best app.  But I have no doubt that HBO GO will not be beat.  So without further ado:

HBO GOHBO GO is an iPhone and iPad app that provides streaming video of HBO content.  Not only only can you watch the current movies that are running on HBO, but you also get every episode of every season of every HBO original series.  This is an amazing step for HBO to embrace mobile in such a strong way.  EVERY EPISODE. Do you want to watch Junior shoot Tony?  Do you want to see Wild Bill get shot?  Do you want to see Omar stick up a Barksdale joint?  Do you want to see prisoner penis?  Kenny Powers? The sky is the limit.  No ceilings.

 

The process of setting things up is really easy as well.  Just put in your login with your cable provider or satellite dish company.  The app does a nice job of organizing all of the shows and content into categories.

 

There really isn’y much else to say at this point, because what makes this app so amazing is the enormous volume of content available.  It would have been easy for HBO to only release the current season of their current shows, but instead they opened up the vault.   This is a huge statement by HBO that it takes mobile consumption of their content very seriously.

The one feature that would be absolutely killer, and is hopefully coming in the near future, is AirPlay support.  While it’s great to watch a movie or show on an iPad, or an iPhone when on the go, it would also be great to send the content to my TV via the AppleTV and watch things on the larger screen.  When the iPad first launched, ABC player was the app to beat for it’s large selection of content.  HBO GO makes that looks infinitesimal in comparison.  Now let’s just hope we get some AirPlay support.

Guest Post: How to unwire your home

This is a guest post from my friend Wayne. It originally appeared on his Tumblr. Used here with his permission.

Music in Every Room

I had been waiting to share my home entertainment workflow until I had everything perfect, but as anyone who’s dabbled in this area before knows, it is a revolving door of improvements and upgrades. Eva and I recently moved upstairs, to a bigger apartment with a 2nd bedroom. Our old apartment was small enough that I didn’t need a total wireless solution: I could leave a Mac mini hooked up to the TV directly, with a set of wireless speakers in the bedroom, and all was well. The move upstairs gave me an extra bedroom that had to be wired for sound, and the purchase of a new couch meant the Mac mini could no longer live in the living room next to the home entertainment unit due to space constraints.

After a few purchases and some relatively easy hacks, I was able to get the house wired (or unwired, if you will) for audio and video. See the flowchart below for the basic set up of my entertainment system.

http://i54.tinypic.com/2qi4qcx.jpg

The Mac mini with an attached Drobo hosts all the media files (emps and videos). iOS devices are used as remotes to stream audio to the remote speakers, or video to the AppleTV via Plex. The iOS devices can also stream video from the Mac Mini via the Plex iOS app. For traditional DVD playback, the Xbox 360 serves up 5.1 Dolby surround through the AV receiver. The AppleTV or 360 can both handle Netflix duties (I prefer the AppleTV, as the interface is more user friendly.)

To cover the details, we’ll start upstairs with the brains of the system, the Mac mini.

The Mac mini is hooked up to a Drobo, a storage unit that houses all media files (avi, mp4, mp3, etc). iTunes serves as a hub for mp3 files, while Plex serves as a hub for video files. I’ve been meaning to implement a version automated TV and movie downloads through a combination of Usenet, SABnzbd+ and Sick Beard. Once I get to that, I can post a rundown. But until then, it’s Netflix DVD ripping, etc.

In order to take advantage of wireless music throughout the house, iTunes is the center for all the emps. iTunes remains open all the time, and emps are accessed using the Remote app on any iOS device or through screen sharing via laptops. One can then use the Remote app to stream music to individual or multiple speakers wired with Airport Expresses or AppleTVs. Unfortunately, this implementation relies heavily on iOS devices and airport expresses strewn throughout the apartment (ie. not a solution for teamDroid). Also, it’s worth noting that while home sharing in iTunes allows videos to be shared across a network, accessing them in iTunes with large libraries brings the whole operation to a standstill. It becomes laggy to the point of unusable. Plex is a much more graceful solution.

For those that don’t know, Plex Media Center is a media player that organizes and plays any media file from your computer to your TV. Connect a computer with Plex to your home entertainment system and navigate the Plex UI to play whatever media is on your machine. Use your Harmony remote, apple remote, or iOS decive as a remote and it will automatically scan your files, add artwork, ratings, theme music, summaries, and a suite of other details and present them to you in the above format. The UI is highly customizable so one can fool around with it until it’s to your liking. For wireless playback of videos, Plex Media Server (running as a background process) will stream your content to any device with a Plex client (iOS currently, Android soon) or use your Plex client device as a remote. In my setup, I have 2 iPhones, a jailbroken AppleTV, and an iPad that act as my Plex clients. The Plex client has a great UI and works with little to no lag. You can even configure Plex to serve up media over 3G or remote WiFi with little to no loss in quality if the bandwidth is available.

To avoid having the computer run 24/7 or the annoyance of it going to sleep all the time, I’m running an Airport Extreme base station with Wake on Wireless enabled on the Mac Mini. This allows me to wake the computer from sleep via the Remote app and/or the Plex iOS app, so I don’t have to go upstairs and move the mouse every time I want to stream content. It’s these little things that make the implementation of the system shine.

The Living Room


Home Theater specs
Spectre 42” 1080i HDTV (badly needs upgrading)
Sony AV Receiver STR DG810
Xbox 360 Arcade 4GB
AppleTV 2G
Polk Monitor40 Bookshelf Loudspeakers (R and L)
Polk CS1 Center Channel Speaker
Satellite Surround Speakers
Budget Subwoofer

I jailbroke my Apple TV in order to install the Plex client. This allows me to keep the Mac Mini upstairs, away from the TV, while streaming content to the TV via the Plex Media Server. Plex shows up as its own dropdown menu on the AppleTV, and comprises nearly 90% of my AppleTV usage. The only compromise to the Apple TV jailbreak is no plugins, which are scheduled to come to the Plex Apple TV client soon.

The Airplay features on the ATV allow music to be streamed over the home theater system through the AV unit, to the Polk speakers.

Upgrades:
Besides the obvious TV upgrade needed, I plan on upgrading the subwoofer to HSU Research’s STF-2 or VTF-1, which can anchor the entire system. But being on the 2nd floor of a building with no form of sound isolation means this upgrade will have to wait until we have our own house with no neighbors to disturb. Also, the front left and right speakers will be replaced with tower speakers, Polk Monitor 60s, moving the Monitor 40 bookshelf speakers to the surround position.

The Dining Room


Two Audioengine A5 speakers rest above the cupboards, attached in the rear to an Airport Express. These speakers are the best solution for powered speakers with adequate bass response. They are versatile in that they are portable, and can fill a medium-sized room with great sound. Paired with a subwoofer, they sound even better. This is also a good solution for parties when people want to congregate where there is no music. Music in every room, suckers.

The Bedroom


Two Audioengine A2 speakers rest on the dresser. They are the smaller sibling to the A5 and still pack great sound, and adequate bass for their size. They are also hooked up to an Airport Express and enable Airplay connectivity. These are small enough to blend in with the bedroom décor and not mess up the feng shui of the room (no electronics in the bedroom, boys).

Conclusion

Overall, this setup is close to perfect, given today’s technology. I can think of improvements that will likely come (ie. Airplay-enabled devices that eliminate the need for multiple Airport Expresses, a third-party Plex app on the ATV, support for 5.1 surround sound through Plex, etc)
I will expand upon certain aspects of the setup in future posts: I’d like to dedicate a section to jailbreaking the AppleTV and adding Plex, which is an easy way to avoid the high costs of building a HTPC. AppleTV and Plex are all one really needs, and are extremely affordable, even entry level. I’d also like to talk more about the living room and the benefits of a high-quality AV receiver and 5.1 surround sound. It truly changes the experience of watching movies at home. For anyone rocking a large flat panel HD display without a decent AV receiver paired with it — you are doing yourself a disservice.

Viva FPT.