People tend to have a hard time discussing the two mathematical concepts of zero and infinity. It’s not hard to understand why this is, of course, with reality being a material thing and both the lack of and the infinite amount of something being somewhat foreign. And this manifests itself in all sorts of disciplines, from cosmology to spirituality to physics. And, of course, economics, particularly in the digital age where many of the axioms surrounding physicality no longer apply to digitized goods. Zero and infinity play heavy roles here, both in the discussion of free content (zero) and the concept of digital and freely copyable goods as a resource (infinity). The economic nature of these concepts have long vexed established industries, even as some of us have pointed out how efficient and useful infinite digital goods can be if properly applied.
Industry rebuttals to the economics of all of this have mostly amounted to facile derision in the form of slandering younger generations who either “just want free stuff” or “want stuff they cannot afford.” Neither makes much sense, with both claims easily disproven given statistics demonstrating how much more is spent by “pirates” than those who don’t pirate content. The truth is that, while the average citizen likely can’t speak eloquently about the economic laws at work for digital goods, they certainly can understand them intuitively. And this can be shown with piracy statistics for eBooks, which a recent study shows that eBook pirates tend to be both older and relatively affluent.
A new study, commissioned by anti-piracy company Digimarc and conducted by Nielsen, aims to shine light on eBook piracy. It was presented yesterday at The London Book Fair and aims to better understand how eBook piracy affects revenue and how publishers can prevent it.
In previous studies, it has been younger downloaders that have grabbed much of the attention, and this one is no different. Digimarc reveals that 41% of all adult pirates are aged between 18 and 29 but perhaps surprisingly, 47% fall into the 30 to 44-year-old bracket. At this point, things tail off very quickly, as the remaining ~13% are aged 45 or up. There are also some surprises when it comes to pirates’ income. Cost is often cited as a factor when justifying downloading for free, and this study has similar findings. In this case, however, richer persons are generally more likely they are to download.
With nearly half of eBook pirates falling into their thirties or forties, and the study later showing that two-thirds of eBook pirates have household incomes of at least $30k per year, and almost a third having incomes in six figures, this simply isn’t a situation that can be explained away by pointing at young poor people. So, why do older, more affluent people pirate eBooks?
I would argue it’s instinctual. Most of these people may not even be able to explain the term “marginal cost”, but by instinct they feel that something that costs nothing to reproduce ought not to require payment. Their brains do this calculation behind the scenes, not thinking about the sunk costs of initial production, nor the sweat-equity spent by the content creator. Marginal cost is the term used by economists to explain pricing laws that emerged organically through human instinct.
This isn’t to say that unauthorized downloading is somehow acceptable when eBook publishers wish against it. But it certainly does suggest that any eBook publisher, or publisher of other digital content, has a very high hill which it must roll its old business model wagon up to make it work. Human intuition is one hell of a thing to overcome. So much so, in fact, that it’s likely the better strategy is to figure out how to make that intuition and infinite digital goods a boon rather than the enemy.
Now, it’s worth noting that the price of eBooks was still a factor for those responding in the study, but not nearly the factor that convenience played.
Given the majority of pirates’ ability to pay, it comes as no surprise that convenience is the number one driver for people obtaining content from torrent sites. Cost still takes the number two position but a not inconsiderable four out of ten still believe that online retailers are lacking when it comes to content availability.
In other words, a huge amount of eBook piracy could likely be done away with immediately, if the content cost closer to what the buyer instinctually believes it ought to be and the content was at least as readily available for purchase as it is through pirated means. That really can’t be that hard for eBook publishers to understand.
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Author: Timothy Geigner