Month: October 2013

The internet, over the past couple of days, I believe has received its new fad: Bitcoins. Bitcoins are currency much like the Canadian Dollar or the British Pound. However, it solely exists in the digital world and can only be used on the internet.  This technology, much like government issued currency, has become popular among criminals as well as regular people. One question that has always been on my mind over the recent years has always been: How has this currency become so popular? Usually for anything to become popular, someone has to have promoted the product in some way. Yet, in the roughly five and a half years that this currency has gone into existence, it has not promoted itself in any way, shape, or form.  This is not only a phenomenon that is unique to Bitcoins but also products like the Tesla Model S, a line of cars that runs solely on electricity.  These products have all become extremely popular without any promotion.

Under the traditional marketing model, a company needs to use the 4 P’s in order to get a product out there.  However, I think these products were able to gain a large amount of users solely by providing a good product. Consider Bitcoins for a moment.  This currency has offered many benefits over other means of electronic transactions. For example, this currency is completely anonymous transactions as every individual user is identified by a code. Furthermore, only 21 million of these coins could possibly exist, which reduces the possibility of currency conversion. As a result, these features essentially allowed the product to market itself without any promotion.

As early as 2004, the MPAA (Motion Pictures Association of America) has claimed that online media piracy has caused substantial damage to their industry. Here, this infographic suggests that American movie studios lose up to $25 billion per year as a result of online piracy.  To counter this loss, media associations like the MPAA, IFPI, and RIAA has spent a combined of $200 billion in 2009 to counter piracy. In addition, these billion dollar associations have tried to pressure the government enact new laws such as SOPA that aims at censorship of the internet.  Furthermore, according to the RIAA, anyone caught with pirated material can face up to $250,000 in penalities and 5 years in prison.

So…. the big question for me right now is: Is all this really necessary? As a poor university student, I am willing to contend that many people who pirate belong to a poorer demographic. That means stopping people from pirating will not actually increase your sales since these piraters will be too poor to afford your product anyways. Personally I see pirating as a means of marketing and there is a great deal of evidence to support that. For example, The UK communications regulator OFCOM published a study with 4,400 internet users which showed that 75% of piraters are in fact “hybrids” (people that pirate and purchase legal media content). The study further suggested that this demographic of internet users spend almost three times more on legal media content as those who do not pirate. In addition, a study at Columbia University shows that most internet piraters also pay for legal media content. Furthermore, another study at the London School of Economics demonstrates that despite of the concerns of online piracy; Hollywood movies achieved global box office sales amounting to US$35 billion in 2012, which is 6% greater than 2011 numbers.

Through these statistics, I think it is evident that giant media companies are way too worried about the negative aspects of online piracy. So for all the big Hollywood execs and producers that are reading this: instead of considering online media piracy as a means of revenue loss, think of it as a marketing expenditure.