The Economy of Pirated Content Views

Despite a growth of legal channels for watching shows online, the volume of pirated content, pirated movies, TV shows, music, books and video games is growing rapidly. Pirated content viewers are largely condemned for stealing, as its assumed that they engage in copyright infringement. From a moral standpoint, it’s easy to argue that producing or viewing pirated content is disrespectful to the authors or brands that create it. But financially, do brands really make less money because of pirated content consumption? Morality aside, maybe that’s another story.

According to a study called “Sizing the Piracy Universe” from NetNames, both the number of internet users who regularly pirate content and the amount of bandwidth consumed from pirated content increased significantly between 2010 and 2013, and the internet-based infringement continues to grow at a rapid pace.

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In history, companies and governments have never stopped trying to uproot piracy.

Many pirated content consumers use cyberlocker, a third-party file sharing service, to download and upload movies and music. In January 2012, the Hong Kong-based MegaUpload was closed and sites associated with Megaupload were shut down by the United State Department of Justice for copyright infringement. From 2011 to 2013, thanks to international law enforcement efforts, the number of cyberlocker use dropped 8%. Worldwide, even countries like China, which is notorious for culture copyright violations, also issued regulations trying to uproot pirated and unauthorized content and shut down several major peer-to-peer file distribution hubs, including VeryCD and BtChina.

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However, in the US, bills like SOPA (Stop Online Piracy Act) and PIPA (Protect IP Act) died in Congress in 2012 after massive opposition (actually led by Google, with help from Wikipedia) in the name of protecting internet freedom.

There’s been several major pirate channels to open up to fill the demand.

For sites like YouTube, a hotbed for users to generate mash-ups (mix of copyright content by fair use) also have a blurred line in copyright infringement. And that’s another story in terms of whether the content is pirated or fair use. In addition, BitTorrent websites with its peer-to-peer distribution system still exist, survive and even thrive with never-decreased need for free content.

The Pirate Bay is a more infamous one. Established in 2001 by a Swedish anti-copyright organization and start web service in 2003, today’s Pirate Bay website provides access to all around the world.

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The Pirate Bay was outlawed multiple times, once move the server to Netherland, and has been involved in as well as bring users many lawsuit cases in its history. For example, in 2009, Stockholm district court sentenced four founders of The Pirate Bay to one year in prison each and handed out a total of $3.6 million in fines. In 2006 the US government pressured the Swedish government and threatened to blacklist the Swedes within the World Trade Organization if Sweden did not deal with the website.

Legitimate services, including Netflix and Amazon.com, are affected by pirated content views. The financial loss results from customers turning to pirate websites for free content. Recently, a 27-year-old New York man was accused of uploading Ultimate Fighting Championship content to The Pirate Bay and Kickass Torrents which were worth more than $32.2 million. The man, Steven Messina, had uploaded 141 UFC presentations to those file-sharing sites under the name of “Secludedly,” and provided a PayPal donation link to keep his business.

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The world seems to be showing little tolerance towards piracy. However, are brands like Netflix, Amazon, and even the UFC losing as much money from piracy as they claim?

Despite assumptions about how “bad” piracy can be, some argue that piracy loss can actually convert to revenue opportunities. According to a recent study conducted by Verance Corporation, an estimated 94% of American consumers viewing pirated movies are also buying legitimate copies of content. Namely, most of consumers in the US viewing pirated movies are actually “dual consumers.”

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The survey identifies six distinct categories of consumers of pirated movies:  “Occasionals” or “dual consumers” who prefer to watch legitimate copies but will view pirated content if possible, and  “Convenience Streamers” who are mostly avid movie viewers with a preference for viewing via streaming. When subscription services fail and pirate channels are available, they will turn to the more convenient option.

There’s more. There’s the “No Big Deals” who see no harm to watch pirated content, but still willing to spend money for theater experience; “Content Enthusiasts” who tend to allocate a portion of their budgets to legitimate movies; “Cost Sensitives” who buy legitimate copies based on moral considerations; and “Library Builders” who collects both legitimate and pirated copies in order to build a collect that can be viewed through multiple devices.

In all categories, there are no individuals who strictly depend on pirated content and never pay for it. The study found that people “steal” not because they cannot afford legitimate copies, but because pirated content is convenient.

Although it can be considered immoral to view pirated content, from the perspective of copyright holders, including major and independent studios, content providers and content retailers, sometimes piracy loss actually can be converted to revenue opportunities.

Even if pirated content is illegal and immoral, it does not mean it translates into brands losing money. In a circuitous way, they might even get revenue opportunities out of this behavior. Then, is this one of the reasons brands turning a blind eye to pirated content consumption? Maybe yes, but don’t say it out loud.

Is Affordable Care Act Affordable?

The Patient Protection and Affordable Care Act, commonly known as Affordable Care Act (ACA) or “Obamacare,” is a revolutionary regulation aimed to change the landscape of American healthcare system.

The two major changes under ACA include expanding the number of subsidies available to people with lower income, and also providing insurance to people regardless of their pre-existing conditions. The Obama government wishes to enroll more people into the healthcare system through the establishment of ACA, and thus cover the deficit the government has been spending on healthcare industry. However, is it really going to work? Probably not.

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If we take a closer look at how ACA works, we will be able to see the problem. The fundamental principal of Affordable Care Act is to use the money from young and healthy people to pay for the bill of unhealthy or elder people who have higher medical costs. Hence, the health insurance company should enroll younger demographics to balance the risk pool. According to a research conducted by California Association of Health Plans, people in their 20s will experience an increase in premiums by 33% under Affordable Care Act, whereas elder people will see an decrease in their cost of premiums. Now, here comes the question, will young and healthy people who only spend a small amount of money every year on visiting hospitals or doctors be willing to pay more for health insurance? Moreover, will they be able to pay that amount of money since they just start to live on their own? I guess most young people will find that hard.

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In fact, although the health plan premiums for young people grow by over 30%, the benefits under ACA also increase by 42%, which means the health company is able to provide members with better services and networks. However, it seems that young people don’t care much about the benefits. According to a survey conducted by USC Annenberg students, the issue that concerns young people the most is the cost of health insurance. They use the word “expansive” frequently to describe the healthcare system. And most people admit that it’s the high cost of insurance that prevent them from enrolling in it.

2Some people may argue that there are subsidies available for young people with limited income. Yes, there are. But the truth is, for those who earn a little more than the poverty line, it’s hard for them to choose whether to earn more with no subsidy or to earn less with a small amount of subsidy. More importantly, for those healthy people who usually don’t have health problem, they would rather end up with paying penalties instead of purchasing health insurance, which is far more expansive than the penalty.

All in all, the Affordable Care Act alone couldn’t make the healthcare system operate better. If the government tries to enroll more young people, they should definitely invest more on educating younger demographics the importance of purchasing health insurance. As long as people feel the necessity of doing so, they will be willing to purchase the health insurance initiatively.

EDM The Music Of Millenials

I woke up Monday morning (after Halloween weekend), waking up to check social media and experience just for a brief moment, through the small window held in the palm of your hand, the events that took place this past weekend. In previous years, this Monday social media feed had been filled with pictures and videos of friends in their Halloween costumes and the various parties they went to. However, this Monday morning was filled with pictures of all my friends at music festivals. The two major music festivals that occurred this past weekend were Escape All Hallows Eve hosted by Insomniac and HARD Day of the Dead hosted by Hard. The presence of music festivals has been felt since the days of Woodstock, however the frequency of music festivals has risen dramatically in the past few years and its economic effects have not gone unnoticed.

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The biggest Electronic Dance Music Festival on the west coast takes place in the middle of June in the infamous city of Las Vegas. This event that attracts over 345,000 festival goers for 3 days is called Electric Daisy Carnival or EDC. Mixjunkies.com reports that “since moving to Las Vegas in 2011, Insomniac has helped generate more than $621 million for the Las Vegas economy. Tickets sales report that festival goers come from all 50 states as well as 48 international countries.

How does EDC create so much revenue? Well people need places to stay, food to eat, gambling to be done, and day clubbing before the event actually happens. EDC actually creates $20.2 million dollars in tax revenue for Clark County. This graphic puts all the expenses into perspective.

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EDC is not the only major music festival that generates this much revenue. The four biggest music festivals in the world include EDC, Ultra in Miami, Tomorrow Land in Belgium, and Tomorrow World in Atlanta. Insomniac has also seen how successful EDC is and has hosted EDC is several different locations such as EDC Puerto Rico, EDC Orlando, EDC UK, and EDC Mexico.

With the rise of the internet, the amount of DJ’s that have entered the scene has exponentially grown. As DJ Shadow stated in 2012, “we are living in a musical renaissance.” Baby boomers grew up with rock and roll, Gen X’ers had hip hop and punk rock, the millennials have EDM or electric dance music. Calvin Harris, the highest paid DJ names by Forbes, racked in a whopping 66 million over that past 12 months. The age od EDM has taken over radio stations like KissFM and countless music festivals will continue to emerge in the coming years.