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?