Could ebook piracy boost sales?

Piracy is the bane of the digital content business, whichever way you look at it. If it didn’t happen, content producers wouldn’t spend so much time and effort pursuing it in a fashion that is almost as ethically dubious as the act itself. And if producers didn’t go to such lengths to protect their content, it’s likely piracy would be less of a problem.

Content publishers, be they music producers, movie studios, newspaper companies or book publishers, all seem to be virtually unanimous in their view that piracy is bad for business. These industries, via industry organisations like the RIAA, have spent millions of dollars trying to pursue illegal downloaders and ‘educate‘ people that piracy is bad through advertising.

Despite all this, people continue to pirate content. This in itself proves nothing except that people are greedy and willing to go to great lengths to get free stuff. Ethical problems aside, however, there is mounting evidence that piracy might actually encourage sales of certain digital products.

In a recent interview with Forbes Magazine (titled ‘Steal This E-Book’) Tim O’Reilly, founder and CEO of O’Reilly Media, explained this argument:

… let’s say that if by putting DRM in it I sell 10,000 copies and I make my money, and if by having no DRM 100,000 copies go into circulation and I still sell 10,000 copies. Which of those is the better outcome? I think having 100,000 in circulation and selling 10,000 is way better than having just the 10,000 that are paid for and nobody else benefits.

The argument is basically this: the people who pirate content are not necessarily customers who were it otherwise would have paid money for what they downloaded. Given this, content producers can’t count each pirated download as a lost sale. If this is the case, in what way should content producers consider piracy?

Are content consumers who are not paying for content adding value? O’Reilly would argue they are. Utilising social networks and good old fashioned word of mouth, people who read pirated content help sell ebooks, in much the same way lending books and secondhand book stores help sales of paper books.

O’Reilly is not saying that piracy never hurts content producers, however. He argues that the damage is mostly focused on people (in this case authors) who have a ‘very desirable product’. We’re talking big name authors here who sell hundreds of thousands (if not millions) of copies. O’Reilly has actually written a paper about this called ‘Piracy is Progressive Taxation’, in which he posits that the trade-off from making content more available and visible is that the most desirable products are pirated more often (in the same way that tax brackets should – in theory at least – take more from the wealthy than the poor).

In a similar way, the exposure that you get from free content actually helps drive visibility and awareness for people who are unknown. So we’ve always sort of taken the approach that on balance it’s OK, and we’ve also taken the approach that it’s more important to establish social norms around payment. The way that you do that is by honoring people and respecting how they act, people pay us because they know that if we don’t get paid we don’t do what we do.

This business model seems quite flawed to the kind of publisher who stresses out every time one of their author’s books is discovered on a filesharing website. But there’s more than a grain of truth to it. Books in particular have always been a product that has subsisted on passion: passion from its producers (be they authors or publishers), passion from its sellers and passion from its consumers.

At the very least this issue deserves re-evaluation. Particularly at the low-end of publishing, as book publishers face increasing cuts to their midlist and more authors are dropped. In the case of these authors, at the very least, publishers and agents need to be forward thinking about piracy. As O’Reilly says: “If people wanted 10,000 pirated copies of a book, the publisher and the author would be very, very well off. If 10,000 people are willing to pirate it, there’s a very large number willing to pay for it.”