17 ms·

What's interesting to me about all of this is that there's this caricature of movie pirates as not wanting to pay for anything and just being general freeloader

by JunkDNA 13y ago

What's interesting to me about all of this is that there's this caricature of movie pirates as not wanting to pay for anything and just being general freeloaders. Yet this makes it clear that people were willing to pay for this stuff. The entertainment industry has just never really been able to get their heads around how to best develop a new, sustainable business model when it's so easy to replicate content.

powertower 13y ago
The way monetization of MU content worked, is they would send the average internet user to a page that mostly hid the download link and tricked that person into clicking on the 'sign-up to download it fast' area, selling them access. This was not a business model that proved something noble about pirates, it was a criminal enterprise that for the most part, took someone else work, and sold it pennies on the dollar.
- beering 13y ago
  The download-link trickery was probably relatively ineffective, since most people only needed one download to figure out how it worked. There were a lot of people who paid for premium Megaupload accounts so they could download stuff faster and without limits. It was like the Amazon Prime of bootlegged content in some circles.
  - biggy31 13y ago
    There are billions of impressions being sold daily for advertising from hijacked users. Big $$$. Advertising revenue was secondary to premium memberships, but now paypal, visa/mc are shutting down file lockers payment processing and they are more reliant on ad revenue.
- scotty79 13y ago
  Legit sites try to trick visitors like that too.
- paulhauggis 13y ago
  This is the problem right here. It's a business model that works..if you don't have to spend $100 million dollars creating it.
- JunkDNA 13y ago
  I'm not arguing that they weren't a criminal enterprise or that movie pirates are all closet consumerists waiting to be parted with their money. However, the article says that the vast majority of mega's money came from "premium subscriptions". The subscription part is interesting to me because it implies that a not insignificant number of people were paying regularly for this "service". They can't all have been dupes who never checked their credit card statements. As to your statement about them reselling this stuff for "pennies on the dollar", I do have a major problem with creators not being compensated for their work. However, I'm also not really sure what movies and TV shows are actually worth anymore. The pricing seems totally crazy between Netflix, physical media, and iTunes. It's anyone's guess what an episode of "Breaking Bad" actually is worth. The answer is increasingly, "it depends".
- chmars 13y ago
  Sounds almost like GoDaddy … although GoDaddy is of course not considered a criminal enterprise. In the old days, shareware sites had similar business models as far as I remember.
- Patrick_Devine 13y ago
  The biggest problem with this straw man argument is that copying software is not zero sum. The movie studios do not lose exactly X dollars because there were Y downloads from Megaupload, or from any other copyright infringing site for that matter. Copying data is not the same as theft because there is no transaction cost and you haven't "deprived" anyone of any good. There is no way to prove that an infringer would have consumed that data if it hadn't been free. Sure, having users pay full price for a movie (or CD or video game, etc.) is always the most desirable outcome. What's far worse than having someone infringe upon your copyright is for your media property to be completely unwatched or unused. When you're in the entertainment business, there's absolutely nothing worse than no one caring about what you're producing. A lot of people in the are starting to figure this out; look at how successful bands like Iron Maiden (on HN today) have been. With that said, yeah, MU is pretty sleazy, but I'm not sure I would go so far as call them "criminal". They really were fulfilling a need which wasn't being delivered by the various media companies. I have no idea why movie studios can't figure out how to properly segment their market and charge different prices for different types of content delivery. The hyperbole about calling copyright infringers "pirates" and calling what they do "theft" has to stop, along with the lobbying government for draconian laws which stop reverse engineering. Provide better ways for your customers to not be copyright infringers and you'll have happier customers and more revenue.
  - bhitov 13y ago
    > straw man argument In what way is it a straw man argument? > copying software is not zero sum. This doesn't seem to contradict the parent post, nor affect its argument.
wreegab 13y ago
> "The entertainment industry has just never really been able to get their heads around how to best develop a new, sustainable business model" It's because when a new technology emerge, it often means cheaper way to do things, which means less profits. That's the part they have a problem with: less profits.
- davidw 13y ago
  I'm sure they're not happy about 'less profits', but it seems fair that what little money there is at least goes to the people who did the work to create the content, which was not happening in this case.
- rayiner 13y ago
  Ordinarily, technology makes it cheaper to produce a good, allowing new producers to come on the market and undercut the entrenched companies. If we were talking about new media companies producing movies people want to watch for much lower prices using new technology, then that narrative would be applicable. But it's wholly inapplicable here, where the only thing the technology is enabling is entities like Megaupload to rip off the work of the actual producers. It's disingenuous to play the "technology reduces costs" card in this circumstance.
- marcosdumay 13y ago
  Just replace "less profit" with "snaller unitary profit". It's not even rare that the low profit options create markets that are hudreds of times larger than the original, increasing the total profits by orders of magnitude.
biggy31 13y ago
In any business, if you can leverage technology to steal something and sell it for less, you will do well. It's not just movies or music. It's anything. If I can steal laptops with no repercussions and sell it for 90% off, and its just as good as the original, I am going to do really well.
rayiner 13y ago
The whole "replication" angle is a total red-herring brought up by apologists for movie pirates. People are entitled to sell their work for the price that they can get for it, irrespective of the marginal cost of production, and should not be required to compete with entities that do not produce their own products, but simply free-ride on the work of others, being able to "sell" to consumers for the cost of distribution because they don't bear the cost of actually creating that work. Apologists for movie pirates try to paint the situation as stodgy old businesses not being able to keep up with technology. That might be the case if we were talking about Hollywood being displaced by guys with GoPro cams and a Youtube page. But that's not what's happening. The relevant technological shift isn't that it's become easier to produce content that people want. The shift has simply allowed entities like Megaupload to make money by ripping off the people who actually make the content.
- JunkDNA 13y ago
  Absolutely agree with you on the point that people are free to sell their work at whatever the market is willing to pay. I would not count myself as a piracy apologist. But I don't think you can overlook the point that changes in technology have made it hard to restrict the free movement of digital information. The ideal state for the movie industry was when you could only see things in the theaters. That was the original "software as a service" model in a sense. But the marketplace demanded to have things at home with the advent of the VCR. This created problems for controlling content that have never been fully resolved. I think it's interesting that Hollywood and the music industry have been struggling with piracy, while at the same time, the software industry (which used to suffer mightily at the hands of pirates in the early days) has developed a multitude of countermeasures. In theory, the Internet could have crushed the shrink-wrapped software market, but now we have alternatives like: - SaaS - ad-supported websites - open source software (pay for support and training) Even video games, which have always been the most heavily pirated content have developed new strategies with services that require sign-up.
- pantaril 13y ago
  <i>The whole "replication" angle is a total red-herring brought up by apologists for movie pirates. People are entitled to sell their work for the price that they can get for it, irrespective of the marginal cost of production, and should not be required to compete with entities that do not produce their own products, but simply free-ride on the work of others, being able to "sell" to consumers for the cost of distribution because they don't bear the cost of actually creating that work.</i> Megaupload and pirates in general don't steal content from anyone. They create their own copies of publicly available content. I don't understand why digital data should be treated differently then physical objects. It's like calling a carpenter, who creates a copy of some furniture that he likes and sell it, a thief. On the other hand, proponents of copyright are seriously hampering the right of everyone to use publicly available information around us for our creative efforts. This seriously limits our creative potential because it's not like creative works are created out of thin air, they are always derived from our past experiences which influenced us in some way. The proponents of copyright are standing on the shoulders of giants but they don't want anyone to further build upon their work. p.s.: before someone accuses me that i don't want creators to be paid fairly for their work - i think that some regulation is necessary which would ensure promotion of fine arts but this regulation cannot be based on artificial limits on distribution of public knowledge/culture.
Fuxy 13y ago
Yes. And it was a very crappy system at that. Trying to trick you to sign up for premium accounts, audio constantly out of sink with video, nagging you to sign up after 70 minutes to sign up. Not to mention there was no ability to search the site. Yet people were still using it. If the entertainment industry tried only a little to address the new market that was developing on the internet they could have blown mega upload out of the water but they would rater limit peoples access and not offer legit alternatives.
dangrossman 13y ago
> The entertainment industry has just never really been able to get their heads around how to best develop a new, sustainable business model The entertainment industry seems to be doing better than ever. Did piracy actually reverse growth at any point in their history? Today you can buy new-release movies from your PC, smartphone, tablet, set-top box or smart TV and either download or stream them instantly. You can buy combo-packs in store that come with both physical discs you own and a digital download license. The download-only rights for new releases cost substantially less than discs; charging the same was a common complaint of pirates on messages boards for years (e.g. today you can buy Elysium on Amazon at $3.99 to rent, $12.99 for digital purchase, $19.99 for DVD or $27.99 for BR+Download). The digital versions are available as soon as, or even earlier than, the disc versions. Tens of thousands of movies that few would want to purchase are available on a dozen streaming services for less dollars a month than buying a single movie outright. Almost every objection to legal purchases made by pirates over the years has been answered; the studios gave us what we asked for. Their content is available at reasonable prices virtually wherever and whenever you want it, at least within their own countries (international licensing is still a mess). BitTorrent's share of US internet traffic went from 33% in 2006 to 21% in 2011 to less than 7% in 2013. I don't think that's coincidental.
- superuser2 13y ago
  A large amount of content is available, but it's mostly the second string. Movies I actually want to watch are unavailable on Netflix and Amazon because the studios won't license them for streaming. Earlier analysis of this phenomenon on HN explained it by saying that once something is on Netflix, all hopes of making money on DVD sales are gone. Hollywood wants to sell physical media because that is what it knows how to do and has always done. Therefore, movies will only be released to Netflix, Amazon, etc. if the studio is particularly forward-leaning or (more likely) evidence suggests that it's made all the money it's going to make in physical media distribution so there's no harm in offering it up for streaming. If I recall correctly, Netflix's catalog improved substantially for a good while, but then large portions of it were retracted. That's another thing that has to stop before legitimate digital distribution is "good enough" - studios need to stop pulling movies every time they feel like it. It pretty clearly demonstrates an attitude that digital distribution channels are toys to be put away at any time rather than a core component of their business.
jrockway 13y ago
The business model is so simple it makes me want to cry. Get together with the other major networks, and charge people $8 a month for unlimited DRM-free downloads. Now you get $8 a month that people were going to use to pay for pirated copies. Put an ad or two in there, if you must. (But really, do the annoyance ads cause make up for the revenue they generate? Who pauses their TV show to go buy what you just advertised?) If $8 a month isn't enough money, then skip the part where you get together with the other networks, and make your own site. Let's say you're AMC. Everyone wants to watch Breaking Bad, and you charge $1 an episode everywhere else. So make your own site that is $8 a month, and most people will get $4 (one episode a week) worth of content, and maybe check out your less popular shows and tell their friends. What's not to like? (I think what's not to like is that sales people always want the big deals. It's much easier to get Time Warner Cable to pay you XX million than to appeal to each and every consumer. But the problem is, the people you're not serving are not going to subscribe to cable to get your show, they're going to pirate it, going further and further underground each time you try to stop it.) Perhaps a deeper issue is that it's easier to find sales people to negotiate deals than it is to find engineers to code up a website that handles video downloads. If only there were already video download sites! If only there was some sort of "mega upload". If only there was some sort of "net flix". SIGH. Personally, I'm resigned to just buying the season at the end on something like Google Play. It works on my tablet and TV, and I'm only going to watch it once. But really, the DRM leaves a bad taste in my mouth. Why am I punished for being a paying customer, when the pirates can play it on whatever device they want? It boggles my mind. </rant>
- ChuckMcM 13y ago
  This is fundamentally the problem. It redefines and limits what a piece of video is "worth" going forward. That is where the push back is coming from. Disney can pull a film made in the 70's out of the vault, dust it off, and re-show it a few times to pull in a few million$ to the bottom line. But they can't do that if the movie has been available that whole time on a video streaming service. Looking at the two scenarios. a) You have a movie that has not been available to buy or watch of 10 years, but was popular at the time, you bring it out again and poof get a bit of a revenue kick. b) You have a movie that has been available on streaming services for the last 10 years, you re-issue the buyable version and get no uptake at all. Certainly not enough to justify a couple hundred thousand on a advertising it. The issue here is information economics, you can only 'add' value to a movie by making it unavailable.
forrestthewoods 13y ago
People will gladly spend $10 for unlimited access to all content ever created. Sadly that's not reasonable. Shocking I know.

by JunkDNA 13y ago

powertower 13y ago

The way monetization of MU content worked, is they would send the average internet user to a page that mostly hid the download link and tricked that person into clicking on the 'sign-up to download it fast' area, selling them access. This was not a business model that proved something noble about pirates, it was a criminal enterprise that for the most part, took someone else work, and sold it pennies on the dollar.

beering 13y ago
The download-link trickery was probably relatively ineffective, since most people only needed one download to figure out how it worked. There were a lot of people who paid for premium Megaupload accounts so they could download stuff faster and without limits. It was like the Amazon Prime of bootlegged content in some circles.
- biggy31 13y ago
  There are billions of impressions being sold daily for advertising from hijacked users. Big $$$. Advertising revenue was secondary to premium memberships, but now paypal, visa/mc are shutting down file lockers payment processing and they are more reliant on ad revenue.
scotty79 13y ago
Legit sites try to trick visitors like that too.
paulhauggis 13y ago
This is the problem right here. It's a business model that works..if you don't have to spend $100 million dollars creating it.
JunkDNA 13y ago
I'm not arguing that they weren't a criminal enterprise or that movie pirates are all closet consumerists waiting to be parted with their money. However, the article says that the vast majority of mega's money came from "premium subscriptions". The subscription part is interesting to me because it implies that a not insignificant number of people were paying regularly for this "service". They can't all have been dupes who never checked their credit card statements. As to your statement about them reselling this stuff for "pennies on the dollar", I do have a major problem with creators not being compensated for their work. However, I'm also not really sure what movies and TV shows are actually worth anymore. The pricing seems totally crazy between Netflix, physical media, and iTunes. It's anyone's guess what an episode of "Breaking Bad" actually is worth. The answer is increasingly, "it depends".
chmars 13y ago
Sounds almost like GoDaddy … although GoDaddy is of course not considered a criminal enterprise. In the old days, shareware sites had similar business models as far as I remember.
Patrick_Devine 13y ago
The biggest problem with this straw man argument is that copying software is not zero sum. The movie studios do not lose exactly X dollars because there were Y downloads from Megaupload, or from any other copyright infringing site for that matter. Copying data is not the same as theft because there is no transaction cost and you haven't "deprived" anyone of any good. There is no way to prove that an infringer would have consumed that data if it hadn't been free. Sure, having users pay full price for a movie (or CD or video game, etc.) is always the most desirable outcome. What's far worse than having someone infringe upon your copyright is for your media property to be completely unwatched or unused. When you're in the entertainment business, there's absolutely nothing worse than no one caring about what you're producing. A lot of people in the are starting to figure this out; look at how successful bands like Iron Maiden (on HN today) have been. With that said, yeah, MU is pretty sleazy, but I'm not sure I would go so far as call them "criminal". They really were fulfilling a need which wasn't being delivered by the various media companies. I have no idea why movie studios can't figure out how to properly segment their market and charge different prices for different types of content delivery. The hyperbole about calling copyright infringers "pirates" and calling what they do "theft" has to stop, along with the lobbying government for draconian laws which stop reverse engineering. Provide better ways for your customers to not be copyright infringers and you'll have happier customers and more revenue.
- bhitov 13y ago
  > straw man argument In what way is it a straw man argument? > copying software is not zero sum. This doesn't seem to contradict the parent post, nor affect its argument.

wreegab 13y ago

> "The entertainment industry has just never really been able to get their heads around how to best develop a new, sustainable business model" It's because when a new technology emerge, it often means cheaper way to do things, which means less profits. That's the part they have a problem with: less profits.

davidw 13y ago
I'm sure they're not happy about 'less profits', but it seems fair that what little money there is at least goes to the people who did the work to create the content, which was not happening in this case.
rayiner 13y ago
Ordinarily, technology makes it cheaper to produce a good, allowing new producers to come on the market and undercut the entrenched companies. If we were talking about new media companies producing movies people want to watch for much lower prices using new technology, then that narrative would be applicable. But it's wholly inapplicable here, where the only thing the technology is enabling is entities like Megaupload to rip off the work of the actual producers. It's disingenuous to play the "technology reduces costs" card in this circumstance.
marcosdumay 13y ago
Just replace "less profit" with "snaller unitary profit". It's not even rare that the low profit options create markets that are hudreds of times larger than the original, increasing the total profits by orders of magnitude.

biggy31 13y ago

In any business, if you can leverage technology to steal something and sell it for less, you will do well. It's not just movies or music. It's anything. If I can steal laptops with no repercussions and sell it for 90% off, and its just as good as the original, I am going to do really well.

rayiner 13y ago

The whole "replication" angle is a total red-herring brought up by apologists for movie pirates. People are entitled to sell their work for the price that they can get for it, irrespective of the marginal cost of production, and should not be required to compete with entities that do not produce their own products, but simply free-ride on the work of others, being able to "sell" to consumers for the cost of distribution because they don't bear the cost of actually creating that work. Apologists for movie pirates try to paint the situation as stodgy old businesses not being able to keep up with technology. That might be the case if we were talking about Hollywood being displaced by guys with GoPro cams and a Youtube page. But that's not what's happening. The relevant technological shift isn't that it's become easier to produce content that people want. The shift has simply allowed entities like Megaupload to make money by ripping off the people who actually make the content.

JunkDNA 13y ago
Absolutely agree with you on the point that people are free to sell their work at whatever the market is willing to pay. I would not count myself as a piracy apologist. But I don't think you can overlook the point that changes in technology have made it hard to restrict the free movement of digital information. The ideal state for the movie industry was when you could only see things in the theaters. That was the original "software as a service" model in a sense. But the marketplace demanded to have things at home with the advent of the VCR. This created problems for controlling content that have never been fully resolved. I think it's interesting that Hollywood and the music industry have been struggling with piracy, while at the same time, the software industry (which used to suffer mightily at the hands of pirates in the early days) has developed a multitude of countermeasures. In theory, the Internet could have crushed the shrink-wrapped software market, but now we have alternatives like: - SaaS - ad-supported websites - open source software (pay for support and training) Even video games, which have always been the most heavily pirated content have developed new strategies with services that require sign-up.
pantaril 13y ago
<i>The whole "replication" angle is a total red-herring brought up by apologists for movie pirates. People are entitled to sell their work for the price that they can get for it, irrespective of the marginal cost of production, and should not be required to compete with entities that do not produce their own products, but simply free-ride on the work of others, being able to "sell" to consumers for the cost of distribution because they don't bear the cost of actually creating that work.</i> Megaupload and pirates in general don't steal content from anyone. They create their own copies of publicly available content. I don't understand why digital data should be treated differently then physical objects. It's like calling a carpenter, who creates a copy of some furniture that he likes and sell it, a thief. On the other hand, proponents of copyright are seriously hampering the right of everyone to use publicly available information around us for our creative efforts. This seriously limits our creative potential because it's not like creative works are created out of thin air, they are always derived from our past experiences which influenced us in some way. The proponents of copyright are standing on the shoulders of giants but they don't want anyone to further build upon their work. p.s.: before someone accuses me that i don't want creators to be paid fairly for their work - i think that some regulation is necessary which would ensure promotion of fine arts but this regulation cannot be based on artificial limits on distribution of public knowledge/culture.

Fuxy 13y ago

Yes. And it was a very crappy system at that. Trying to trick you to sign up for premium accounts, audio constantly out of sink with video, nagging you to sign up after 70 minutes to sign up. Not to mention there was no ability to search the site. Yet people were still using it. If the entertainment industry tried only a little to address the new market that was developing on the internet they could have blown mega upload out of the water but they would rater limit peoples access and not offer legit alternatives.

dangrossman 13y ago

> The entertainment industry has just never really been able to get their heads around how to best develop a new, sustainable business model The entertainment industry seems to be doing better than ever. Did piracy actually reverse growth at any point in their history? Today you can buy new-release movies from your PC, smartphone, tablet, set-top box or smart TV and either download or stream them instantly. You can buy combo-packs in store that come with both physical discs you own and a digital download license. The download-only rights for new releases cost substantially less than discs; charging the same was a common complaint of pirates on messages boards for years (e.g. today you can buy Elysium on Amazon at $3.99 to rent, $12.99 for digital purchase, $19.99 for DVD or $27.99 for BR+Download). The digital versions are available as soon as, or even earlier than, the disc versions. Tens of thousands of movies that few would want to purchase are available on a dozen streaming services for less dollars a month than buying a single movie outright. Almost every objection to legal purchases made by pirates over the years has been answered; the studios gave us what we asked for. Their content is available at reasonable prices virtually wherever and whenever you want it, at least within their own countries (international licensing is still a mess). BitTorrent's share of US internet traffic went from 33% in 2006 to 21% in 2011 to less than 7% in 2013. I don't think that's coincidental.

superuser2 13y ago
A large amount of content is available, but it's mostly the second string. Movies I actually want to watch are unavailable on Netflix and Amazon because the studios won't license them for streaming. Earlier analysis of this phenomenon on HN explained it by saying that once something is on Netflix, all hopes of making money on DVD sales are gone. Hollywood wants to sell physical media because that is what it knows how to do and has always done. Therefore, movies will only be released to Netflix, Amazon, etc. if the studio is particularly forward-leaning or (more likely) evidence suggests that it's made all the money it's going to make in physical media distribution so there's no harm in offering it up for streaming. If I recall correctly, Netflix's catalog improved substantially for a good while, but then large portions of it were retracted. That's another thing that has to stop before legitimate digital distribution is "good enough" - studios need to stop pulling movies every time they feel like it. It pretty clearly demonstrates an attitude that digital distribution channels are toys to be put away at any time rather than a core component of their business.

jrockway 13y ago

The business model is so simple it makes me want to cry. Get together with the other major networks, and charge people $8 a month for unlimited DRM-free downloads. Now you get $8 a month that people were going to use to pay for pirated copies. Put an ad or two in there, if you must. (But really, do the annoyance ads cause make up for the revenue they generate? Who pauses their TV show to go buy what you just advertised?) If $8 a month isn't enough money, then skip the part where you get together with the other networks, and make your own site. Let's say you're AMC. Everyone wants to watch Breaking Bad, and you charge $1 an episode everywhere else. So make your own site that is $8 a month, and most people will get $4 (one episode a week) worth of content, and maybe check out your less popular shows and tell their friends. What's not to like? (I think what's not to like is that sales people always want the big deals. It's much easier to get Time Warner Cable to pay you XX million than to appeal to each and every consumer. But the problem is, the people you're not serving are not going to subscribe to cable to get your show, they're going to pirate it, going further and further underground each time you try to stop it.) Perhaps a deeper issue is that it's easier to find sales people to negotiate deals than it is to find engineers to code up a website that handles video downloads. If only there were already video download sites! If only there was some sort of "mega upload". If only there was some sort of "net flix". SIGH. Personally, I'm resigned to just buying the season at the end on something like Google Play. It works on my tablet and TV, and I'm only going to watch it once. But really, the DRM leaves a bad taste in my mouth. Why am I punished for being a paying customer, when the pirates can play it on whatever device they want? It boggles my mind. </rant>

ChuckMcM 13y ago
This is fundamentally the problem. It redefines and limits what a piece of video is "worth" going forward. That is where the push back is coming from. Disney can pull a film made in the 70's out of the vault, dust it off, and re-show it a few times to pull in a few million$ to the bottom line. But they can't do that if the movie has been available that whole time on a video streaming service. Looking at the two scenarios. a) You have a movie that has not been available to buy or watch of 10 years, but was popular at the time, you bring it out again and poof get a bit of a revenue kick. b) You have a movie that has been available on streaming services for the last 10 years, you re-issue the buyable version and get no uptake at all. Certainly not enough to justify a couple hundred thousand on a advertising it. The issue here is information economics, you can only 'add' value to a movie by making it unavailable.

forrestthewoods 13y ago

People will gladly spend $10 for unlimited access to all content ever created. Sadly that's not reasonable. Shocking I know.