Wednesday, June 13, 2007
It is better to be a pirate than to join the navy", said Steve Jobs, when rallying the troops who originally designed the first Macintosh. Twenty years later it seems odd that the same Mr. Jobs has done more to stem the flow of pirated material over the Internet than any single person. Apple and the iTunes Music Store dragged the record industry into the new market of the Internet. Before iTunes, music on the Internet was "shared" illegally through peer-to-peer networks such as Kazza and Limewire. Nobody believed that people would buy music on the net when the same files were available free of charge. One Billion songs later and iTunes is a word synonymous with success.
Now, a new network called BitTorrent has become the online pirates favourite weapon of choice. Its favourite download? Television shows.
Television networks see this as pure theft. They argue that shows downloaded illegally are hurting ratings in Australia and are responsible for lost revenue in advertising. They also claim that people will not download television at a price when free versions exist all over the web. Hmmm, doesn't that sound familiar?
First, some history. BitTorrent was created by Bram Cohen, as a way of distributing large files over the Internet, without burdening the original host with bandwidth costs. BitTorrent works by dividing the files into small chunks, where every user is simultaneously downloading a file while they upload to other users. This software was originally created to help distribute Linux builds, but quickly became overcome by "pirates" searching for TV shows, games, movies and all manner of digital wares.
BitTorrent was first considered to be a threat to the movie industry. In an excellent Wired interview in 2005 with the BitTorrent's creator, this threat was highlighted by the Motion Picture Association of America, who began suing individuals downloading movies, in order to, as the MPAA's anti-piracy chief John Malcolm put it, "avoid the fate of the music industry." But the reality is that most movies available on BitTorrent are usually bad quality, they are shot on low definition cameras at a cinema, and include people walking in front of the lens, talking and generally being annoying etc. Shows broadcast on television on the other hand are generally ripped from a Tivo like device, are easily comparable with broadcast images, are ad free, and available almost immediately.
When Wired Magazine asked Bram Cohen if he would use BitTorrent if he hadn't invented it, he replied "I don't know. There's upholding the principle. And there's being the only knuckle-head left who's upholding the principle." Asked later if he thought his invention will lead to the downfall of cinema and television, he replied: "Take this new platform and mine it for gold... Hollywood, which squawked about VHS, figured out how to make billions off video rentals." Traditional media shareholders are always scared of new forms of distribution which threaten their stranglehold on an established market. It's why the RIAA sued people who used file sharing networks to download songs. Its also why the MPAA started suing BitTorrent users. But creators of content need to realise that suing their customers is not the answer. For some reason, customers don't like being sued.
To take John Malcolm's analogy further, I would hope the television industry will "avoid the fate of the music industry", by not waiting till they have turned a generation into pirates before offering other options for free to air TV fans to watch the shows they love. Treat people like thieves and that's what they'll become.
A Nation of Pirates
BitTorrent usage in Australia is the worst kept secret on the Internet. Technology and television forums across Australia are filled with posts about “watching the latest episode of (insert show here) on a recent trip to America." My ISP says BitTorrent accounts for about 45% of its Internet traffic. Channel BT, as it is known, is the new reality.
Even The Bleeding Edge, Fairfax newspaper’s technology blog, has written many guides for setting up BitTorrent for the downloading of "Linux distributions". Fairfax, as a content producer and a major media player, can not be seen as supporting piracy. Yet they have even skirted the issue by suggesting "a friend of theirs" has used BitTorrent to catch up on missed episodes of Desperate Housewives. Missed episodes? Or new episodes that haven't aired in Australia?
According to piracy tracking site Envisional’s recent studies, Australians are the greatest BitTorrent users per capita in the world. Despite making up only 0.3 % of the world’s population, Australians account for 20% of BitTorrent traffic. This is only set to increase as more and more Australians begin to use broadband. In 2005 only 30% of Australians connected to the Internet had a broadband connection, by 2006, it was 51%. Critical mass of broadband has been achieved. This point is crucial in understanding "Channel BitTorrent's" sudden rise in Australia. An hour long television show is roughly 350MB, which would take around 14 hours to download on a dial up connection. A standard MP3 is about 3MB, or 12 minutes. It is for this simple reason, the size of the files in question, that music was the first battleground of Internet piracy. High speed Internet means television is the next major battleground.
While there is no other option available, could it be that illegal downloading of television will only increase? In 2006, with broadband adoption growing Australia, piracy was blamed for the drop in viewers of the early episodes of the two hit imports of 2005, Lost, and Desperate Housewives. Yet by the end of 2006, Desperate Housewives was actually rating better than it had in 2005. What can be gleaned from the implications of these ratings? Its hard to say, because comprehensive research has not been made in Australia that addresses BitTorrent's effect on ratings. My guess would be that the drop in ratings at the start of 2006 were from fans of the the show who had already downloaded the new episodes that Channel Seven were showing. The later peak in viewership could be due to the buzz the downloaders (and new fans) of the show had created. Is it possible that for every viewer the networks lose to BitTorrent, they gain three more from the 'water cooler" effect?
It sounds far fetched, but is it really? Battlestar Galactica is the show that defined BitTorrent. Battlestar debuted in the U.K. in October 2004, but was delayed in the U.S. by the Sci Fi Network until January 2005. That didn't stop the geeks in U.K hitting the Internet and proclaiming Battlestar as the best new show in a decade, and uploading Battlestar on the relatively new network. When it finally debuted in the US, the word of mouth created by those who had BitTorrented the show meant that Battlestar became the most watched show in The Sci Fi Channel’s history. This is a fascinating example because usually Americans, as the world largest producer of television, are normally the first audience in the world to watch new programs.
It seems that consumers downloading episodes of a series via BitTorrent create demand and are extremely loyal viewers. Downloading a torrent takes a bit of effort, first to discover new shows, then to locate the files and join a swarm. It is not something most people with small download limits and low Internet speeds can do on a whim. It also seems to me that BitTorrent increases sales of a series on DVD. How many people do you know with DVD box sets of Arrested Development, Firefly, The Sopranos, or Lost? Ok, now how many of those people discovered these shows via television or via the Internet?
Where BitTorrent is having major effects is on the serialised television shows, such as Prison Break, Lost, and Battlestar Galactica, that reward loyal viewers with in-jokes and gradual plot development. Show like Law and Order and CSI are safer, because it really doesn’t matter if you miss an episode. Miss an episode of Battlestar Galactica, Prison Break, or Lost, and you could quickly find yourself, well, lost.
We are entering a new phase in television where TV and the Internet converge. America, as one of the strongest producers of television content in the world, has been able to embrace the new albeit slowly, embrace this new reality. The major US networks offer downloads of their most popular shows the day after they have screened, at a small price through iTunes or Xbox Live, or free through streaming (ads included) on their websites. Neither service is available outside of the U.S.
The question is, would the average punter be prepared to pay a nominal fee for an episode that is guaranteed to be downloaded at the highest speed possible, or use a free BitTorrent service whose speed is subject to the activity of "the swarm", and could contain viruses. The US iTunes store suggests the answer is yes. Also, if a new method like iTunes becomes adopted by the majority, it will actually hurt Internet piracy by removing people from the "swarm", therefore slowing down torrent speeds. Sure, there will always be piracy on the Internet, because there was always piracy before the Internet. It is human nature. But iTunes has proven over a billion times around the world that when you give people the opportunity to do the right thing, more often than not they will.
So what can be done in Australia? Australian TV needs to adopt the current situation that is proving successful in the US, where episodes are available for streaming immediately after they have screened, or downloaded commercial free for a small price through iTunes. This would obviously require new contracts to be written between our local networks and the US studios to include the Australian rights to stream video on the Internet along with free to air broadcast rights. Tougher still would be working out who was entitled to any profits from sales made through iTunes, the Australia rights holders, or the US producers, or both. I don't pretend to know the deals that could be made, this is something for the lawyers to work out. Either way, this can only happen when Australian TV starts airing episodes as close to there original air dates as possible, and it is in the interest of our networks to make this happen as soon as possible.
Australian television networks need to embrace the new reality of the global market, to understand that consumers are no longer prepared to wait months on end for their favourite shows to be screened, when they don't have to. We are sick of finding out who killed Laura Palmer or who shot Mr. Burns months before we finally see the episode screened on free to air. Who in Australia would be prepared to wait for a new episode of Prison Break to appear on Yahoo7, if it was freely available 9 months earlier on channel BT? Fans of a show called Prison Break probably have a looser ethical compass than most!
Australian television networks could never "catch up" with the US schedule, because the US launches most shows in September, and traditionally Australia's Low Ratings period starts in November. So What? Most US shows reach a mid season climax for the November sweeps, then take a 'hiatus' over the Christmas season, only to return by mid February. That seems to coincide nicely with the Australian Summer, doesn't it? Another argument was that Australians benefit from the delay it takes imported shows to reach our shores, because it allows our commercial networks to screen a full series without these long interruptions. Anyone swayed by this argument needs to look at any Green Guide to read fans angry with our networks cutting up a series, playing episodes out of order, playing weeks of repeats of hit shows to 'stretch out' a season, playing 'fake' season cliff-hangers. The list goes on...
The truth, as these complaints show, is Australian Commercial television has little respect for its viewers. Seven, Nine And Ten have turned exploitation into an art form. They all rely heavily on expensive US hits that are cheaper to import than locally produced drama. Waiting months on end to debut a show allows them get a clear idea what imports will win or lose, so they can decide what to spend there marketing dollars on. Local content regulations (which ensures that 55% of prime time television is locally produced) are seen as a commercial burden, rather than important to the culture of Australia. The locally produced "hits" in this county are generally cheaper imitations of international reality formats, such as Big Brother, Australian Idol and The Biggest Loser. This cosy situation has made Australian television the most profitable in the world. But how much longer can this go on?
Hollywood had to deal with this global reality a few years earlier. Traditionally Hollywood films have had a ‘staggered’ release around the globe. For example, a blockbuster film released in the U.S. for the Thanksgiving weekend (America’s highest grossing box office weekend) would be delayed in Australia until Boxing Day (our biggest movie going day). Online piracy destroyed this model, as pirated copies of films were distributed to eager fans who chose instant gratification over image quality. By 2003, all major Hollywood films were released simultaneously across the globe. Hollywood realised that giving consumers what they want, when they want, was better than holding out for the traditional schedules that had worked so long in the pre-Internet era. Again, doesn't this sound familiar?
Lets look at BitTorrent's numbers again. The U.S, with a population of 300 million people, account for 7% of BitTorrent traffic. Australia, with only 20 million people, accounts for 20% of all traffic. Is this really a surprise, when U.S audiences are offered a legal option to watch their favourite TV shows via the Internet. CBS recently announced that the shows they offered as downloads or via streaming, had better ratings and more loyal fans. Surely the remarkable rise in ratings of The Daily Show and The Colbert Report can be attributed to their cult status on YouTube.
This doesn't just effect TV from the US. Tony Martin joked that the ABC delayed screening Ricky Gervias' Extras, because they wanted to wait until everyone who wanted to watch the show had either downloaded the series or bought the DVDs. Funnily enough, I heard this on the podcast of Get This. Why? Because I hate the music and advertisements Triple M plays, and I would rather download a Nickleback free version of the show than to listen to it live. In fact, I doubt I would have ever heard Get This had it not been released as a podcast. I think Tony Martin is Australia's greatest comedian, but I never listened to him while he was only available via Triple M. Even Roy and H.G., who are on a network whose music I enjoy, I still download as a podcast rather than listen to live. Why? Because I prefer to listen to them on Monday morning than Sunday afternoon. It is the simple fact that the Internet generation expects time shifting. Despite this, Get This is able to wrap their podcasts in sponsorship. And I am happy to hear their advertisements if it means I can listen to Tony Martin whenever I want.
Channel Ten seems to understand this new reality, screening new episodes of the O.C and Jericho soon after they have screened in the USA. They have also started selling episodes of locally produced “David Tench” and “Tripping Over” through Bigpond.com, for those who may have missed an episode. It is interesting to note that Channel Ten targets a younger audience, those who are Internet savvy, and may be willing to source their favourite shows through “non-traditional” channels. Ten have also released "best bits" podcasts of Thank God You're Here and The Ronnie Johns Half Hour, and rather than hurt the ratings, Thank God Your Here has actually been the highest rating show of 2006. Channel Seven can fill its schedule with "Encore Presentations" of Lost or Desperate Housewives, but that's really not the answer. What are the people that miss the encore presentation going to do? Or those who miss the first four episodes?
The key here is iTunes. Apple's juggernaut now owns 88% of the legal download market worldwide, thanks to the success of the iPod. If legal television downloads are to overtake BitTorrent usage in Australia, those shows need to be available through iTunes. It is, to date, the only successful business model that is cross platform.
The End of The World As We Know It
I really don't believe that BitTorrent will negatively effect Australian TV network ratings any time soon. In fact, for the time being I think us geeks will actually help network television by providing shows like Heroes a word of mouth buzz that no slick marketing campaign could ever hope to create. But television networks need to think closely about their long term future. Every angry fan that turns to channel BitTorrent for their latest fix of Lost will be much harder to coax back to free to air television down the track. The longer a viewer becomes used to BitTorrent - free to watch, on demand and without ads, they will be harder to convince that what they are doing is wrong. And every time a network representative defends this situation with word like "anyone using BitTorrent is simply impatient or a thief" offends a massive group of extremely loyal television fans. When BitTorrent finally starts to negatively effect network television ratings, it maybe too late. Treat people like thieves and that's what they become.