BitTorrent users spend money, too

Vuze -- the company that's trying to sell licensed, high-def videos to users of the BitTorrent file-sharing software -- has spent much of the past two years trying to persuade Hollywood that its users are customers, not thieves. So far, however, the major studios have entrusted little to Vuze beyond movie trailers and other promotional videos. Now Vuze is trying to prod Hollywood with some eye-opening data about its clientele's buying habits and purchasing power: in addition to being copyright infringers, they spend a lot of money on movies and movie-watching gear. Said Vuze CEO Gilles BianRosa, "Those users are actually Hollywood's best customers."

Yes, that's a self-serving comment. But BianRosa's assertion is supported by a survey by media consulting firm Frank N. Magid Associates of about 1,300 Internet users between the ages of 18 and 44, nearly 700 of whom use Vuze. The survey, which Vuze released late Tuesday, included the following insights about the members of the company's audience:

• They buy 34% more movie tickets, purchase 34% more DVDs and rent 24% more movies than the average Internet user.
• They tend to have more and better equipment for consuming media, including home theaters and expensive computers with large screens.
• They spend less time watching TV, more online, and far more watching downloaded or streaming video.
• They're not only early adopters, they're more likely to share their opinions online, and with more people.

BianRosa said he talks frequently with studio executives, and a common attitude is that BitTorrent users are "never going to pay for anything" and "are basically at the heart of Hollywood's problem right now." Rather than dismissing them, though, the survey shows that Hollywood should be trying to understand when and why they decide to buy content. The data tells Hollywood that Vuze's audience is ready for video delivered digitally and willing to spend heavily on programming and the means to consume it. What it doesn't reveal, at least not explicitly, is why those users buy DVDs but not the downloadable movies sold or rented by authorized outlets such as CinemaNow, iTunes or Amazon.com. 

Naturally, BianRosa has a few guesses. First, he said, the price demanded for downloadable movies is about the same as what it costs to buy or rent a physical DVD, yet the downloads don't deliver as much value. That's true in part because the DRM used on the downloadable media creates "massive friction" for consumers, making those files less portable and harder to use than discs. And  the studios' demand that online distributors pay anticipated royalties in advance cuts down on the availability of legitimate content by making it hard for many smaller outlets to get into the business, he said.

The studios' pricing strategy is dictated to some degree by their concern about cannibalizing DVD sales, which have been a critical source of revenue. But BianRosa asked, "How can there be cannibalization if there isn't distribution?" It's not a question of trading analog dollars for digital dimes, as NBC Universal CEO Jeff Zucker famously put it, because the profit margins should be better online than they are in the physical world, BianRosa said. Rather, the issue is whether Hollywood can afford not to be experimenting online with BitTorrent and other distribution platforms that millions of people are using. The studios, he said, are "hoping for a model online that will magically emerge on its own, with all the problems resolved ... and then embrace it. That's just not the way it's going to happen."

Of course, it's not fair to say the major studios are shunning the Internet just because they haven't been willing to license content to Vuze on BianRosa's terms. They're doing some significant experiments online, particularly with television programs and advertiser-supported platforms such as Hulu (which NBC Universal and News Corp. founded). They've gradually offered more movies for rent or purchase on the Net, and reduced the time lag between the DVD release and online availability. But they've not gone nearly as far as the music industry to enable fully stocked video-on-demand services online or provide the same quality and flexibility in downloadable media as they do in packaged products. And neither the record labels nor the studios has made a credible attempt yet to compete head-to-head with bootlegged goods on the distribution platforms where piracy thrives. Perhaps the Vuze survey will give Hollywood more incentive to court those users, rather than simply wishing they'd go away.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

Comments

[G.C. Hutson with Sadien, Inc.]

There is an ever growing "cold war" between content providers, and content consumers.

Copyright holders have an absolute right to get paid for their product, and distribute their product, as they deem appropriate.

However, this is a simple rule that my firm holds sovereign ...

"If you vilify your customers, they will stop being your customers."

Content providers need to explore new channels and methods of revenue generation. While consumers grow to understand that there is no such thing as "innocent piracy." It's theft. Plain and simple.

I believe most consumers understand that a provider has a right to be paid for their product.

If content providers hope to thrive in the future, they're going to have to learn that they can't hold consumers hostage, through course.

G.C. Hutson
Chief Executive and Senior Partner
Sadien Intellectual Property, Inc.
http://www.sadien.com

[Ric]

Their results are absolutely spot on! I am one of these consumers and nealy all they unearthed is true in my individual case and there are more joining our ranks everyday. G C above is exactly right about the cold war and the scratch that the content providers keep worrying over is going to fester into a wound that bleeds them to death. As for me and many others in the non-TV entertainment world, content providers should be kissing the feet of people like Netflix and Apple and others that remember what they forgot ... and try to cater to their customers wishes. Consumers have power and when the content providers realize this they may start down the road to betterdelivery vehicles to win consumer loyalty once again

[msbpodcast]

Dude, you just showed that you don't get what's happening.

The viewers of the schlock are NOT the customer.

The advertisers (and/or their agencies,) are.

What the networks and cable companies are selling are YOUR eyeballs, not your brains, not your spending potential, just your eyeballs.

You're just raw material. You know how well we treat raw material in this country, don't 'tcha? We slaughter it or mine it or cut it down, or pave over it.

The programs people are flogging to the networks are entirely irrelevant.

They'd run a black and white "indian head" test pattern all day long if they could sell ads around it.

That's FREE.

You don't get more profitable than that.

[Steve Fox]

I've never seen a business model where the consumers and creators fight more.
Such a mass audience you would think they would find a model to make money.
People would rather break the law than spend the amount of money requested for content. Youtube is a huge violator of copyrights but if someone could figure out how to monetize these channels the problem would be solved. DRM is not the answer

Steve Fox
Marketing Exec
http://sellsheets.com/

[Marko]

I love movies. I've purchased them on VHS, I re-bought many on DVD, and it's likely that I'll repeat this with Blu-Ray. Torrents aren't a show stopper by any means: I use torrents to discover a flick I missed out on in theaters; whenever possible, I'd still go and watch it in German, then in their original language (if there's a theater showing them). More often than not, I'm curious about the extras on disc and buy it.

So, for roughly half of the hundreds of movies I've already bought, one can add 2 visits to movie theaters (+4 with friends), 1 re-purchase (VHS to DVD, DVD to BR) and one re-sell of the older medium in garage sales. It's a habit. The availability of any (usually low-quality, monaural and stripped-of-extras) movie torrent file only increases the amount of money I spend on movies.

I for once recognized myself when I read Jon Healey's article.

[Mami]

It is untrue that all bittorrent users do not pay for movies, music,etc. I have used torrent before, but whenever I have downloaded a game, or music, or movie... I downloaded them to see them if I would like them.. and to be quite honest, I have actually PURCHASED nearly all that I intially downloaded from the torrent afterwards.. do you know why? It is just as I said, I wanted to first see test the item out to see if I like it or not.. so not all people who have used torrent are just there to download illegally and that is it.. the purchased copy always have art work, better quality, full features ( for games, etc), so I do prefer to buy them legitimately.

[PStryder]

I never pirate movies. Not for any ethical reason, but because I LIKE movies. And I want producers to keep making movies I like.

Therefore I vote with my dollar. I buy movies I like.

DRM is wrong. It's my hardware, don't cripple it, or try to tell me what I can do with it. Proprietary formats are wrong. I want to watch what I have purchased on any device, any OS, anywhere.

And criminalizing your customers is just stupid.

[Bystander]

I agree with Mami above. I think there are a lot of torrent users who end up purchasing what they download if they can get behind the product. Definitely not all of them, but then there is the question of whether they would have purchased it if the couldn't download it (the MPAA counts them as lost sales regardless.)

If I download something I really like I wind up buying it. In terms of software it's because I want access to the updates and any DLC, and to play online if that's included. For movies, I want the best quality, the extras, etc. However, I do not buy everything I download, and the reason is because I'm not impressed with the product. Games that are no fun and full of bugs, movies that are nothing but the same, re-hashed content we've all seen before fill the market. For me there is maybe a 1 in 10 chance the product is going to entertain me, and in my circle of friends that's a high percentage. Maybe the entertainment producers should look at getting up in the morning and putting in a good days work coming up with original, entertaining content that works before complaining about lack of revenue. I support the companies that do that. The rest can go bankrupt for all I care.

[JL]

The internet and peer-to-peer technology is here to stay. Rather than try (and fail) to shun peer-to-peer technology (and its users), the industry should be embracing it and exploring a new business model.

Entertainment industry firms are just going to have to realize the old ways no longer apply, stop clinging to the past. If a consumer wants content on demand and for a reasonable price, then that is what the entertainment industry should be focusing on. If consumers, particularly we digital natives born 1985 and on, are inclined and accustomed to online technology as the primary distribution platform, then that is what the entertainment industry should be focusing on. I'm sure I could go on with this, but one thing is clear: Big Entertainment cannot change the 21st century--it has arrived. It cannot change the next generation of consumer in that century--we have arrived. All it can do is change itself. The sooner all these baby boomer executives figure that out, the better off all of us will be.

[David Jones]

I first download full film and then if I like it, I go to the shops and buy the legit DVD. I am always "legalising" my CD collection. Good film? I buy it on DVD, bad film? I just delete it. Wanna know how many DVD's I got? Over 3,000. Copied from Net? 88 so far. And when I'll go to the shop, I'll take my list of 88 films and buy the legit copy DVD. Then the copied film goes bye-byes :-)))

[David Jones]

I download and preview a film and then if it is any good, I go to the shop and buy the DVD or Blu-Ray. If it's no good, I just delete it. Simple. How many DVD's I got at home, legit ones? Over 3,500. Nuff said.

[GG]

Two words for you people
ARTEMIS ETERNAL
http://www.youtube.com/watch?v=SBXOwWC48PM&fmt=22

[jake hollywood]

I am an avid user of VUSE. I am also a law abiding citizen. i use vuse to see and hear entertainment that i will soon buy after i have had the chance to expieriance the media. everything that i like, that i have downloaded, i have bought. vuse is a great way to figure out if you want to buy the entertainment once it comes out.

[DHS]

I am a big torrent user, mainly Vuze. I am a big Pirate Bay (and other) user. I have, at the last count, nearly 1,500 'pirated' titles. I am told that I am costing hundreds of billions of dollars of losses, causing unemployment, bankrupting the media industry, taking money from the mouths of starving actors and supporting the Mafia. I was probably responsible for Hurricane Catrina as well.
Total rubbish. Why?
Simple. I downlaod because it is free. Probably half of what I download I don't watch, it is downloaded from habit. Hardly any (if any at all) are lost sales, as I would not have bought the DVD at the ridiculous prices asked for them. However, quite ofton I cannot find what I want. One season from a series is not available; so I go and buy it, just so that I have the full collection. Without a shred of doubt, I buy more due to having pirated films than I would have otherwise.
At least until fairly recently. Due to the constant threats (empty threats, but threats none-the-less, and ones I am starting to take personally) from Hollywood about how they deserve to make obscene profits for producing, mostly, total rubbish, and nobody has the right to complain about them, nobody has the right to obtain 'their' material at anything other than their prices, and their total refusal to see anything other than dollar-signs at every turn, I now do not buy DVDs at all. I have not bought a DVD I need for about a year. I rent them. I am a member of a very good, and cheap, DVD delivery service. I pay them, and it works out at about 50p (30 US cents) per film I take, as I make sure I take the absolute maximum number I can each month, all the ones that I cannot get on Pirate Bay, and then, guess what? I copy them direct, add them to my collection, and am more than happy that I have paid about 2% of what I would have if I had bought the DVD.
The idiot CEO's at Hollywood are, by their attitude, their fear of what they don't control, and their pure greed, losing several hundred pounds a year from me alone, and I have certainly been encouraging friends to do the same.
Is this going to bankrupt Hollywood and stop films being made? Hardly. They will still make obscene profits for themselves. But as they have made it clear that they consider me to be an enemy, I am quite happy for them to make their profits without my help.

[Monbo]

The problem as others alluded to (sorry, didn't read all the comments) is that the industry people who are complaining are wanting to get paid for the same old crap. Shoddy work is not profitable. More people might see it now because of torrents and those involved in the production go "Their downloads are cutting into our profits!" but they simply aren't. If it wasn't free, people would just go "Why bother". The problem is the lazy people who have spent too long making poor movies, shows, etc. and who blame their ineptitude on the fact that people can get their product for free. There are plenty of movies I've downloaded and not even bothered to watch because they are SO bad. They're just looking for a scapegoat to cover up their incompetence. If you need more evidence of the scapegoating, just look at the many online sales success stories like iTunes, Xbox Live Marketplace and their competitors. People will pay for media at a reasonable price and always have.

This is all just a manifestation of supply and demand. You supply crap and there's no demand. Supply gold and we may download it to see it but we'll buy it when the quality becomes apparent to us.

that's about right, the downloaders "never going to pay for anything" will definitely pay for something worth it

[_]

The reason They complain is because most of you aren't running the numbers right. They want to make money of the cheap crappy stuff they make (cost them less made them = profit to good costly work). If downloading wasn't around, they would be making money like hell out of the crap people pay to watch and didn't like. This is what I feel is the truth about their demands. The truth is, through out the years technology help consumers filter out the crap from the good stuff that make it worth supporting a specific company, or creator of the content. Our turn has hit the media world over the other goods and products supplied to us through out the years. We now have a way to stop wasting money but Hollywood only sees a decrease in revenues rather then an opportunity to change the industry and continue to make profit from new methods of distributing their goods. Humans like things to be easy, if getting the movie/song becomes easy and seems reasonably priced, more people will buy it over choosing the risks involved with illegally attaining it. Simply said, put it on the net, the world will have it at their finger tips. Put a good looking price and you'll make tons more then originally thought. Hell even out of the country people will pay to watch a movie in a different language just because it's not out on their area.

More people having access to it equals more revenue. Nothing beats the World Wide Web at that.

[Dodger]

GC Hutson is spouting the sane nonsense the whole system is spouting, and they really need to stop trying to convince people of this lie:

"...While consumers grow to understand that there is no such thing as 'innocent piracy.' It's theft. Plain and simple."

No, it's not. Various media industries say this over and over, but we aren't swallowing the lie.

If someone had a magic "real thing copier" and scanned it in the window of my car and made themselves a duplicate of my stereo, I wouldn't give a damn at all. However, if they broke in and yanked my stereo out, I would. That's the difference. That's theft. Theft means the victim is out something.

Unauthorised distribution does not leave the victim out anything, it simply leaves the victim with the vague sense they didn't get paid when they reckon they should have.

If you are going to compare it to anything, compare it to sneaking into the movies through the back door. Unauthorised access. Not larceny.

IP piracy may not be legal, and we can go back and forth on the ethicality, but it is not theft, should not be called theft, and every time one of you people in the industry calls it theft, we take you less and less seriously.

The "you wouldn't steal a purse" video clip put on the beginning of many DVDs is one of the most ridiculed pieces of nonsense propaganda ever recorded.

We aren't falling for it. We aren't swallowing it. It is NOT theft. The people who do it are not thieves. It's a different crime.

Or hell, why not just go for the gold. If you're going to use the Nazi "repeated lie" propaganda approach, why not go for the "big lie":

"There is no such thing as 'innocent piracy.' It's murder. Plain and simple."

It's just as stupid, but your propaganda-lie predecessors proved that when it's ridiculous enough, somehow people believe it more.

Here's another thought:

"Content providers need to understand that there is no such thing as 'innocent tripe.' Every time they release a movie, album, or program that is not up to scratch, but which an isolated consumer cannot know what they are in for except through the advertising, which if course will proclaim its beauty and perfection and for some odd reason overuse the phrase 'a triumph', and take the money of that individual to deliver something they are unsatisfied with and yet have the unique protection of being one of only three industries that do not have to refund an unsatisfied customer (the other two being 'government' and 'religion'). It's theft. Plain and simple."

The media need to understand that the times have changed. For the better for the world, even if not for the best for their industry. It's not just a

"Copyright holders have an absolute right to get paid for their product," you say. I don't agree that that right is in any way absolute. If I go into a restaurant and do not get what I ordered, or if I think it's terrible, I get a refund or the item taken off the bill -- and the restaurant is *still out time and ingredients*. They have more to lose. If I buy a new hard drive and it will not work with my computer, I can return it, even if they did nothing wrong, just because it doesn't work in my particular circumstance. They cannot just seal up that box, because now it's used. If I buy a pair of trousers and I decide they are not comfortable I can take them back to the store for a full refund.

But if I buy a DVD, and the movie is crap, the store will not accept it for return.

Torrents, P2P, and so on are simply the consumer's revenge. Deal with it, and change your entire paradigm, or you will, quite simply, lose, because everything is, quite simply, different now.

[Blake]

The torrents I usually download are the ones that have content that is not available in my market. Sometimes its a really old game that is no longer purchasable, other times it's shows that are in other languages where the only translations are from users that do the translations for free. Even when such shows are released in my language I sometimes still do not want to buy it because the voice acting is absolutely horrible. If it is a quality product then I will go buy it. If it is not, they do not deserve my money. A format I would like to see adopted is video game producers releasing a demo of a game in torrent format.