Why the Dallas Buyers Club Decision Sucks

Pirate flag by mudisoft. Yesterday in Australia, the Federal Court came down in favour of rights holders who can now force Internet Service Providers to hand over the identities of people who have downloaded the movie, Dallas Buyers Club.  (Let’s leave aside the irony of the film depicting an individual who illegally smuggled AIDs treatments in to Texas for sufferers.) This decision sucks, not just because it’s going to be hellishly difficult for rights holders to now take individual pirates to court to reclaim speculative ‘damages’, clogging up the courts with ridiculously small claims, but also because the entire reason for the piracy in the first place was as a result of artificial and anti-competitive market control.  Let me explain.

Yes, Australia has more pirates of content than pretty much every nation on earth. And rights holders are very annoyed that the money they’ve invested in their content is not receiving any return on their investment because their works are being downloaded and played (often with significant quality issues) for ‘free’.

But let’s just take a step back and work out exactly how this is affecting rights holders. I’m going to take the forthcoming Games of Thrones Season 5 as a content case for the Australian market to explain why piracy is conducted in the first place, and why for rights holders it’s not even close to being bad for business.

Let’s start with how much it costs to access Game of Thrones in Australia. The only source of GoT is Foxtel TV subscription or the streaming Foxtel Play service.

To get the cable version, you need to sign up to get the drama pack to get GoT at $45/month plus equipment and standard installation fees, and you are locked in on a 12 month minimum contract. So your actual minimum charge is $690 on direct debit. You do have access to all the other drama and basic channels on Foxtel, but if you’re only interested in one show you have no choice, you pay that or you don’t get it. At this rate you’re paying approximately $69/episode. Or, to think of it differently, it’s 3.5 times the cost of a cinema ticket, for content that goes half as long. And the entire DVD of Series 4 costs around $50. So you’re paying just $640 more than that for the same content when you subscribe to Foxtel cable.

But let’s look at the Foxtel Play alternative. With the streaming service, new customers can subscribe for just $30 a month for three months and then $45 a month after that. Of course you might just want to unsubscribe from the service when the series is over, so if you’re lucky you could get the whole series for $90 rather than $650, or $135 if you’re an existing or past customer. That’s more like $10 an episode, and more affordable. But it’s still between $20-$35/month more than other streaming services like Netflix and Stan. And it’s still around double the cost of the DVD box set.

In comparison, the same amount of content on film (10 episodes at 45 minutes an episode) is the equivalent of around 3 films, costing about $60 total for an adult. So the cost even at the cheapest available rate, is 1.5 times the cost of equivalent cinema tickets.

Is it any wonder Australians turn to piracy? If they could access GoT via Netflix or Stan or any other service, they probably would. At around $10-15 a month, the service is probably affordable, and for those that couldn’t afford that, consumers would probably be happy to wait for the series to come to free-to-air television, and deal with all the ads.

Only the series is not ever going to come to these platforms, because distributors get exclusive rights to the series, and they are locking out other players from delivering content. It is astonishing in an age of anti-competitive business regulation that content industries are still supported in their decidedly anti-competitive business behaviour.

And what about piracy? Is it really all that bad?

Well yes of course it could be. If everyone is doing it and the expectation is that no-one will pay for anything, then the industry doesn’t have sufficient funds to create quality programming. But for the most part, what piracy does is improve the reach and appreciation of quality content. Indeed a 2013 London School of Economics study found that music and movie industries have been largely exaggerating the impact of piracy and acknowledged that for some titles piracy has actually improved bottom lines.

Outside Game of Thrones, one of the most pirated programs of all time was Joss Whedon’s Firefly series, which was cancelled in its first season, much to the outrage of fans around the world. Let’s just look at what that piracy has produced for Firefly creators, Mutant Enemy Productions, shall we? The merchandise market for Firefly is now valued at well over US$10 billion, and the popularity of its characters is so high that the current IndieGoGo campaign for a program called Con Man (based on the Firefly actors’ experiences at Comic Con events) has reached 667% of its funding target, raking in US$2.8 million in 28 days. The original audience for Firefly was around 4.7 million viewers per episode. The global audience for Firefly content is now estimated to be around half a billion people. The vast majority of these first accessed that content via pirated versions, and subsequently many of these actually purchased legitimate content as a result. Oh yes, piracy actually helped that business. Quite a lot.

And the same may well be said for Game of Thrones. Sales of the books, DVDs and Game of Thrones-themed merchandise are booming. Piracy is helping, rather than hindering, these rights holders.

The only groups suffering from piracy are distributors of content, not the rights holders. Their anti-competitive stance in winning exclusivity of distribution is not tolerated in any other goods market and is a legacy of an era when content channels were scarce, and distributors had privileged access to public broadcast and cable channels. In my opinion, all exclusive rights contracts should be deemed anti-competitive business behaviour and scrapped.

If rights holders want to ensure maximum spread and appreciation for content, then content needs to be made more readily available in multiple distribution channels and at a cheaper rate, and there should be more merchandise, and premium content (such as interviews, storyboards and other content assets) to help boost revenue. They should NOT pursue legal intimidation to extort the ridiculous sums that distributors are seeking from pirates.

Get real, rights holders. And stop assuming piracy is harming your business. Or at the very least, show me your old VCR and audio tape collection. I’m sure I could find someone to countersue you with your rabid copying from radio and TV in the ’70s and ’80s.

Oh, and for what it’s worth, I have not pirated a copy of Dallas Buyers Club.  Sorry, Voltage Pictures.  You’re just not that interesting.

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