Is it worth spending half your profits "fighting piracy"?

On TechDirt, Tim Cushing follows up on a WSJ story where filmmaker/indie distributor Kathy Wolfe says that half of her profits, about $30,000, are spent sending out DMCA takedown notices to fight piracy. Wolfe has an admirably successful and long-lived business, and Cushing tries to find out how Wolfe hit on the $30,000 figure as the optimal amount to spend fighting piracy, but it seems that Wolfe's spending of half her profits are based largely on faith, and unsupported by any data she is willing to share.

Removing links may generate a few sales, but certainly not enough to offset an effort of this magnitude. Some file sharers will never purchase anything, and if they can't pirate a Wolfe film, they'll simply find something else to download. Others will purchase something after an illicit "preview." Taking away the link they might have utilized simply sends them looking for other links... or other movies. Generally speaking, a failed search for a "free" movie rarely results in the sale of the same movie.

Wolfe Video is doing the right thing by diversifying its distribution across multiple services and, even better, by running its own in-house digital rental/download platform. These efforts will do more to increase sales (and profits) than $30,000 worth of takedown notices. It's hard not to view illegal downloads as "lost sales," but entertaining that notion results in deterrence efforts that far outweigh the benefits.

The fact is that removing illegal options won't generate sales. Removing a negative ("lost sale via illegal download") doesn't create a positive ("gained[?] sale"). It simply levels off at $0. Positive efforts will tilt that scale back towards the creators. Negative efforts max out at $0, at best.

As I stated in my email to Kathy Wolfe, I have no desire to paint her as someone who tilts at windmills to the tune of $30,000/year. She strongly feels this effort needs to be made in order to protect a business she's run for over 25 years. I can completely understand that. My concern is that this effort is over-funded and a long, hard look should be taken at any connection between the takedown effort and corresponding sales fluctuations.

Could the same be accomplished at half the price? How about $10,000 per year? Or $0? I think some experimentation is called for. Back all enforcement efforts off for a few months and watch for any signs of a sales decline. If the drop is precipitous, scale the efforts up and see if the numbers respond. But rather than intensify the efforts, slowly escalate until you find a balance between deterrence and sales that works out best financially.

This is the kind of empirical business question that the piracy debate needs answered, rather than ideological claims that all piracy is bad and anything you spend fighting it (or the world spends fighting it in the form of laws) is worthwhile.

Indie Film Distributor Spends Half Her Profits Sending DMCA Takedowns, But Is It Worth It?


  1. Some times people like to make a principled stand regardless of the price. They should be free to make that choice.

    1. But that’s not the stand she’s making. She’s saying she’s only making money because of this. She should be able to support that claim.

      1. It’s kinda like the sportsmen who have lucky jock straps, or wotever. Might make a difference. Might not. But finding out is too scary for them to contemplate. 

    2. What do you mean by “principled”?  What is the principle if you don’t know why you’re doing something or if it makes any difference?

      1. “if you don’t know why you’re doing something or if it makes any difference?”

        Those are precisely the sort of people who do things “on principle”.

      2. You don’t know why she’s doing it; supposing she doesn’t know either is merely speculation based on her not wanting to answer a blogger’s questions.

        As for not knowing whether it makes any difference, ask yourself whether the WSJ, Techdirt and Boingboing would have given Kathy Wolfe publicity for spending $0 on DMCA notices.

        1. “As for not knowing whether it makes any difference, ask yourself whether the WSJ, Techdirt and Boingboing would have given Kathy Wolfe publicity for spending $0 on DMCA notices.”

          Fun theory – waste money on pointless litigation purely for PR. It’s risky, but makes sense.

  2. I’ve been thinking about this, and any option scares me silly.  I’ve been kicking around the idea of doing a free-to-distribute but pay-if-you-want choose your own adventure eBook.  The problem is that I’m a broke out-of-work wannabe writer who has a portfolio of…wait for it…NOTHING.  Brutal.  The thing is, I can’t see trying to shop something around at some obnoxious price, and I know I can’t afford to fight piracy, and I don’t want to go through some company that will take darn near everything.  Plus my authoring tools are going to be an open-source text editor and a Python script.  I’d feel weird about closing that up.

    1.  Just do it. a: you’ll have it in your portfolio, and b: you’ll never know what works till you try…
      Good luck ;)

    2.  I applied that kind of model to a musical project five years ago and it worked beyond my expectations. 

      You’ll be surprised at how many people will gladly pay for something they enjoyed and think is worthwhile.  Even so-called “pirates” will buy stuff if they think it’s worth it and they’re not getting ripped off.

      1. Can’t emphasize this enough. Piracy is a business model problem. If someone is pirating your stuff, it means that the cost of that stuff is higher than they’re willing to pay for it. I used to pirate a lot of games, but after Steam started having crazy sales all the time that dropped the prices into the range that I consider to be valuable, I suddenly found myself not only willing to buy games, but willing to buy games that I previously pirated and actually enjoyed. It was all about bringing the cost into the range of what was appropriate to pay for the material. I don’t tend to like wasting more than 10 dollars on something that I’m not guaranteed to enjoy. You can’t spend 40-60 dollars on a game without knowing whether or not you’ll like it, so I’d rather get 4-6 games and ensure I have a few I do enjoy. Copyrighted goods are becoming harder and harder to make returns on, after all.

        1. I think the complication is that, as you say, someone pirating your stuff means the cost is higher than they’re willing to pay, but that’s *given* that they find piracy ethical and easy. There’s disagreement about the first condition, and the second condition has not always been true, and there are those who believe they can make it false once again. I think these two conditions being in question makes piracy more than just a business model problem. While I don’t think that piracy is theft, I think there’s a narrowly valid analogy between the two here: when people steal things, we think about ethics and enforcement, even though it might still be true that a different price point could have made the theft less likely. (To repeat myself, because it’s a touchy issue here: This analogy does not mean that I equate piracy with theft.)

    3. I’ve seen a few Bandcamp albums where the “pay what you want” slider goes down to zero and I still give them ten bucks if I like the music.
      It’s arguable that any digital distribution model is “pay what you want” now, since anyone who wants stuff for free will just torrent it.  Having the free option on your own site at least means people searching for it will go to you first and see the pay option too.

      I’m not sure what would be the best platform for publishing, you could try something with PayPal’s “Donate” button, let them enter zero as a minimum, and then email the book to them.
      There might be a pre-existing indie publishing site that someone could recommend, but they seem to get pretty clogged with fan-fics and poorly-written erotica, so you’d still want to have your own site to promote the book and then link to the buy page.

  3. Why do we need film “distributors” any more?

    Is she just fighting to protect her obsolete business model?  If so, then we won’t have to worry about this story much longer.  Doomed is doomed.

  4. “This is the kind of empirical business question that the piracy debate needs answered, rather than ideological claims that all piracy is bad and anything you spend fighting it (or the world spends fighting it in the form of laws) is worthwhile.”

    Yup, because that kind of empirical evidence-based policy making is so typical of our society. It’s why we have things like a drug war and 9/11 first responders who can’t get medical care.

    1. Empirical business questions cannot be satisfactorily answered, because business is competition, competition demands secrets, secrets are hungry lies, and lies are violence.  

      No matter how civil and well-ordered our banking and credit and money and markets (don’t get me wrong, I’m happy to enjoy these things, much better than serfdom), the underlying assumption is that we are competing with limitless enemies for limited resources.  

      Indeed, on a bad day, the underlying assumption is that each man has to fight for his own, or go hungry.  As my favorite college history prof, David Noble, used to say:  “It’s dog-eat-dog, and Devil take the hindmost.”  (I know, it’s a commonplace.  But he had this way of delivering it, drawing out certain syllables.)

      Against this, we have Love … which also peculiarly resistant to empirical analysis, and must be accepted on its own terms.

  5. A similar situation arose on Shark Tank (the US version of Dragon’s Den):

    Businesswoman had a product (re-usable diapers) that had been pirated by her manufacturer. She was in the act of suing the infringers and some of the sharks encouraged this approach. However, Mark Cuban thought this a bad tactic and suggested that she concentrate on out-competing the pirates.

    I think this is good advice. It can be difficult to ignore the “theft” being inflicted on you, but business-wise, it may be the right decision.

  6. To me it’s pretty simple… generally, most people are honest (I’ve read as much as 98%, but don’t have evidence to back that statistic up)… so to “chase” after dishonest folks or folks who are “stealing” is like skipping over dollar bills to pick up nickels.

    Just put more of your focus into building your business, and focusing on your paying customers.

  7. “Is it worth spending half your profits [fill in the blank] …?”

    Let us ask biologists and ecologists about various examples from their respective disciplines:  metabolic energy budgets for individuals, population and genetic models for species, and so on.  

    What kind of organisms or populations most resemble the industry in question?

  8. The implicit logic here troubles me. I’m on board with copyright reform. But let’s assume, for the sake of argument, that piracy is unethical until the law is reformed. Then the suggestion here would seem to be, “We the consumers are unethically pirating your work to the extent that it’s uneconomical for you to fight it. Therefore it’s up to you to stop fighting it.” But if it’s unethical to pirate, then isn’t it up to the pirates to stop acting unethically? Of course this hinges on the ethics of piracy. But doesn’t that imply that the discussion should be about the ethics of piracy, rather than the economics of fighting it?

    1.  I don’t know about the ethics of it, but I have a business that sells video downloads and I am not going to spend any money or time chasing pirates – which is futile and pointless.  I spend my time making better product and doing my best to to be attractive to customers.

      There may be a point, when the business has reached a certain scale, when it would be financially worthwhile to devote some time to combating piracy.  At that point I intend to just be happy that my business has reached that scale, because then I would be a rare condition known as ‘not broke’.

      1. Assuming your and this post’s premise — that fighting piracy is unprofitable — I don’t see the point of being upset about this news, unless it’s to make the troubling argument in my hypothetical quote above. Here’s why:

        Case 1 — piracy is unethical: Why would we complain that she’s spending her own money in a just cause, whether with that intent or not?

        Case 2 — piracy is ethical: She’s fighting the bad fight, and losing tons of money as a result. Isn’t that a good outcome?

        1. I am inclined to agree that piracy is unethical, sure.  And if people want to tilt at windmills then I have no problem with that, as long as they don’t hurt anyone.

          On top of that, it is her business to run as she wishes, just as mine is my own.  In my experience, it is not worth the time or money to chase pirates – my time is better spent creating content to sell to the honest people.  Her experience may be different, I hope it is and she isn’t just wasting money she could spend on beer.

          1. Yours sounds like a happy approach. And I’ll try to keep in mind the question you suggest, for various decisions in life: “Could this money be better spent on beer?”

        2. I don’t care about piracy, but i do care about legislation which impacts the open Internet. Cases like this are used to sway public and legislator perception in favor of terrible laws.

          If, going back to your earlier post, we could convince all of the pirates to quit it and instead lobby in a positive, constructive way, I’d be all for that, but that isn’t reasonable in reality. So, instead, there’s the economic argument, which seems both practical _and_ better for the world.

    2. well, no. there is not (necessarily) any such “implicit logic” at all. here is another possible “implicit logic”:

      1. the state automatically grants an absolute monopoly on a non-fungible good (creative works).

      2. therefore, the only existing counterforce is piracy.

      which is right? who knows. neither of us has really derived this from axioms.

      1. I agree that the “implicit logic” may not really be there, but I may have been unclear about what sort of implicit logic I meant. What I meant is, I’m assuming that Cory posted this because he believes the answer to whether fighting piracy is profitable might bolster the case for liberalizing copyright law, and then I’m making an assumption about what the logic behind that connection might be. Either assumption could be wrong.

        1. or it might support the case for more top-down copyright enforcement since individual actors in the marketplace can’t afford to do it themselves. this is the reason we have police; people got tired of spending money on bodyguards.

          i think Cory was just saying it would be a useful datapoint for everyone, which it would be. Cory would presumably use the data to argue against more copyright, others would argue the opposite; meanwhile artists of all types can make more informed decisions.

          life isn’t quite as zero-sum as you think, and copyright law wasn’t handed down on stone tablets.

          1. That makes sense. I’m not sure where you get the idea that I think life is zero-sum or that copyright law is immutable.

          2. it was unwarranted. you did pose breaking the law as being unethical as a hypothetical, after all.

            i interpreted the consumer’s piracy ultimatum against creators as a bit unrealistically antagonistic. consumers aren’t really a coherent agent by definition; that’s why capitalism works against them.

    3. Let’s presume, for the sake of argument, that I’m right and you’re wrong.

      Hey, this is easy. I can win all the arguments.

      1. That’s not how assuming things for the sake of argument works, and I was not reasoning as though it were.

      2. You’re missing a splendid opportunity to use the phrase “begging the question” in its technically correct sense.

  9. As someone wiser than I once said, “Piracy is not the enemy; obscurity is.”

    Since piracy actually helps eliminate obscurity, it is not the enemy that some content creators think it to be.

    1. True, but Cory’s mention of ideology is on the money.  You don’t spend half your profits on enforcement because of a solid business analysis.  You do it because you’re mad.  Wolfe is probably saying to herself, “how dare they steal from me?”

      And the money spent on enforcement doesn’t feel like it was stolen from her – but maybe it was.

  10. I pondered this in the coverage on TD and I will ponder it again as Wolfe has not been forthcoming with information.

    What if there is a demand that you fight ‘piracy’ coming from your partners?
    If your not protecting your content we won’t offer it on VOD.
    If you look at many of the companies making bank in the ‘piracy war’ most of them have clear connections to the **AA’s or their global subsidiaries.
    What if the war is about letting those that perpetuate it existing are profiting.
    What reason would they have for ending the insanity of a decades long war that seems pointless when viewed from the outside?

    If you abandon the idea that the **AA’s are just tone deaf and think more law and control will solve it and consider the option that escalating the war keeps making them money do their actions seem more logical?

    1.  Could be something to that.  If so, she needs to find new partners or distributors or whatever.

      At this point, big content distributors are a nice thing, but hardly necessary.  Using her math, the business nets $60K in profits/year.  I have no idea her distribution model or arrangements, but surely she could make a decent percentage of that without being prostrate to people who demand she spend half her profits fighting piracy to save a few pennies.

      1. But if you want to offer content on VOD the big players control almost the entire market for cable.

        The other problems with trying something new is the cartels membership has basically endless cash reserves to put you out of business and will keep you in court forever.

        The market has been segmented into the hands of the big players and trying to be disruptive is scary and dangerous. 

        It seems wrong to charge half the going price and end up making more money, and convincing the players that it isn’t a few isolated cases where this works is what is needed.

  11. I humbly submit a correction to the post’s title:

    Is it worth spending half your “profits” “fighting” “piracy”?

    1. The adoption of copyright and patent in the United States was, at the very least, debated by the founding fathers. The extent and depth of the debate can be questioned but it wasn’t totally obvious.

      I doubt there’s ever been a constitutional debate about whether to allow, you know, outright burglary. At least in the past millennium.

      1. The United States was founded on piracy, well patent fraud atleast.

        That’s where the word Yank comes from, it was dutch slang for pirate in refrence to all the european patents the US broke in pursuite of starting up it’s industrie. Same goes for Hollywood, they diden’t want to pay the license fees for camera technology so they moved to where they thought they could get away with it.
        Things that start in illegality often move to succesfull legal buisiness. Hip Hop music (sampling, remixing), grafiitiy culture, pirate radio stations, cable televission to name a few others.

        Piracy tends to occur where ever there is a hole in the market not served via legal means and then expands to it’s own legal business.

        1. well, yeah. countries screwing over other countries is a time-honored tradition. i was talking about what they let their peons get away with.

    2. “piracy is bad” is an ideological claim?

      Since piracy used to refer to activities involves cannons, swords, sodomy, rape and murder, everything about “piracy is bad” is semantic, ideological warfare.

      1. Nice point.  To even use the word piracy to describe file-sharing is to accept the corporatist agenda.

    3. Theft is sometimes a grey area (The legend of Robin Hood, for example, the man stealing bread from the wealthy to feed his starving children, arguably even taxes).

      But that’s not super-relevant, since no one here is talking about depriving anyone of anything they possess. In other words, theft can occasionally be a gray area, and the topic we are actually discussing, Intellectual Property Infringement and unauthorized copying of Copyrighted works, can DEFINITELY be a gray area as to whether or not it is “bad”.

      This is why we have laws like Fair Use that acknowledge this grey area, or even areas where it is clearly white, and say “We realize infringement is not always bad, and we want to encourage the good, so we will make exceptions”.

    4. When the record labels were caught committing commercial copyright ‘piracy’ in Canada, had they faced the same punishments they enshrined in law against regular people the amount owed would have been billions.  They settled for 50ish Million and one label sued an insurance carrier to make them over their share.

      It sure as hell seems ideological when they claim its horrible and destroying the world except when they are doing it.

  12. If we take the view that copyright piracy is theft (which I don’t), then it’s like a shop dealing with people pilfering from the shelves. Those people are unlikely to buy otherwise, and the shop tries to stop it because of the principle, to discourage others, and to get some of the money back ( viz. civil recovery schemes used by Tesco and others in the UK). 

    If we take the view that copyright piracy is copyright infringement, then it’s like a stadium dealing with people standing on a ladder to watch a game. You can make the walls higher, and you may get a few people paying to watch. You’d be better off spending your time going after the people renting out the ladders (assuming people don’t bring their own), but there’s still the principle of stopping people getting something they are not entitled to for free. 

    What some stadiums used to do was let people in at half time for free or at a discount – maybe that’s a model that could be used?

  13. Confusing social liberalism (i.e. LGBT issues) with economic or intellectual liberalism (e.g. copyright reform, freedom of information) is the major folly of our time.

    The Log Cabin Republicans ought to dissuade people of this notion, but somehow, modern urban liberals are prey to an all-too-common cognitive dissonance issue here.

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