The question of how to deal with the piracy of music, movies, and other forms of online content isn’t likely to be solved soon. But a chapter in a soon-to-be-published book on the digital economy (pdf) by the National Bureau of Economic Research makes a compelling case for media companies speeding up efforts to get as much of their content online as possible.
The study looks at what happened in 2009, when ABC (DIS) added a chunk of TV shows to Hulu, the popular streaming-video service. The results were immediate and striking: Illegal downloads of those shows dropped almost 20 percent compared with a control group.
It makes a certain amount of sense that people wouldn’t seek out illegal copies of shows they can watch legally. More interesting is the impact that ABC’s decision seems to have had on the levels of piracy for other content. The average number of downloads of the shows added by ABC dropped 40 percent in the following month, while pirated downloads for the control group—shows on other TV networks whose availability via Hulu didn’t change—dropped 23 percent. This result supports an earlier study showing that piracy of all television shows increased after NBC removed its content from iTunes (AAPL) in 2007. Just as an initial prod to seek out illegal downloads seems to turn people toward piracy, the study suggests that finding legal alternatives quickly turns them away from it.
As a precedent, the Hulu example has its weaknesses. It happened four years ago, and lots has changed since then. The content was also made available for free, which isn’t necessarily how many media companies want to distribute their content online. It may be that making media available but charging for it would have less of an impact.
But it does seem to mirror a wider trend. Content companies are coming up with more legal ways to find media online, and at the same time file sharing is dropping off. A recent analysis of overall Internet activity by Sandvine showed that file sharing as a whole has dropped from 31 percent of traffic in 2008 to less than 10 percent today (pdf).
But piracy is only a part of the problem. Former NBC executive Jeff Zucker also worries about trading analog dollars for digital pennies (or, in his updated version, quarters.) It may be that putting television shows online is the easy part. Supporting your legacy media empire humming along on the money you earn by doing so remains a mystery.