OTT’s Piracy Paradox

In the early years of the content industry’s battle with piracy, you’d often hear this familiar refrain: If you give consumers a safe, legal, (relatively) inexpensive and user-friendly environment to consume digital media, then the incentive to pirate will dissipate.

Fast forward to 2018. The legal venues for digital content have never been more diverse or more accessibleavailable on PCs, tablets, phones, TVs and even watches. In fact, consumers are positively inundated with content options and cheaper-than-cable streaming TV services. While we may not have a la carte TV in its purest form, we have arrived at a moment where a cable TV subscription isn’t required for a large swath of viewing habits.

And piracy has, as best as we can tell, only increased.

This reality was underscored by a pair of recent studies: one by the content security firm Irdeto and the other by network company Sandvine. Irdeto found that web video piracy sites have joined peer-to-peer networks like BitTorrent in adding to the global pool of copyright infringement and pushing an uptick in pirate activity. The use of web video piracy sites is more clustered in Western Europe and the U.S., thanks to the availability of high-bandwidth Internet connections and more extensive legal action against peer-to-peer networks. But peer-to-peer thievery remains alive and well around the world. Indeed, the Sandvine study found that BitTorrent activity grew last year, particularly in the EMEA region.

The stubborn persistence of piracy presents a thorny challenge for any digital content business. The multiplying streaming services, as well as the corresponding drive for original content, has not only presented consumers with cheaper alternatives to traditional cable bundles, but also made it more difficult to get all the content you want in one place. Where once a Netflix subscription provided access to Netflix originals and a host of Disney titles, it will soon lose popular Disney fare to Disney’s own streaming service. As HBO has discovered with Game of Thrones, having a blockbuster piece of exclusive content doesn’t necessarily insulate you from piracy. Indeed, it can serve as a powerful lure to piracy.

But multiplying video subscriptions and the siphoning off of content can’t fully explain piracy’s persistence. After all, the music industry has largely aggregated its most prized content into one-stop-shop services like Spotify and Apple Music and still has been unable to stem the tide. A recent study from the International Federation of the Phonographic Industry found that while 86 percent of music customers used legal streaming services like Spotify and Apple Music, 38 percent still continue to pirate files, typically by converting YouTube videos into MP3s (a process known as “stream ripping”). Despite the prevalence and popularity of legal alternatives, the percentage of music pirates hasn’t really shifted significantly over the past several years.

The music industry’s inability to curtail piracydespite addressing almost every pain point in the acquisition and consumption of its contentleads one to the sobering conclusion: Like many forms of crime, distributed copyright infringement has become a permanent feature of the modern economy.