http://www.mindjack.com/feature/piracy051305.html
May 13 , 2005 | PART ONE: HYPERDISTRIBUTION
October 18th, 2004 is the day TV died. That evening, British satellite
broadcaster SkyOne � part of NEWS Corp's BSkyB satellite broadcasting
service � ran the premiere episode of the re-visioned 70s camp classic
Battlestar Galactica. (That episode, "33," is one of the best hours of drama
ever written for television.) The production costs for Battlestar Galactica
were underwritten by two broadcast partners: SkyOne in the UK, and the SciFi
Channel in the USA. SciFi Channel programers had decided to wait until
January 2005 (a slow month for American television) to begin airing the
series, so three months would elapse between the airing of "33" in the UK,
and its airing in the US. Or so it was thought.
The average viewer of the SciFi network is young and decidedly geeky. They
are masters of media; they can find ways to get things they shouldn't have.
Thus, a few hours after airing on SkyOne, "33" was available for Internet
download. No news there.
A new peer-to-peer file sharing technology, BitTorrent, was employed to
share the quarter-gigabyte audiovisual files of "33". Unlike older forms of
internet downloading, where too many requests for the same data can clog up
internet links and send servers crashing. BitTorrent distributes files more
and more efficiently, as more people join the hunt for the data. Everyone
looking for bits of a file - say, an episode of Battlestar Galactica -
shares the pieces they've already located with anyone else who doesn't
already have that piece. Since the pieces are scattered randomly among all
the users who want the data, there's a lot of to-and-fro between the users;
rather than being a request for one copy of one file on one server, it's as
though many hundreds of hands are copying and exchanging playing cards. You
may start out holding only the Ace of Hearts, but soon enough you'll have a
full deck.
This is a form of peer-to-peer file sharing known as "swarming": all of the
peers in a swarm share the portions of the data they've already received.
And, as the Chinese proverb goes, "Many hands make light work." BitTorrent
transforms the creaky and unreliable technology of audiovisual distribution,
making it fast and hyper-efficient. BitTorrent creates the conditions for
something I've termed "hyperdistribution" - a distribution channel which is
even more efficient than broadcasting.
That has certainly been the case with Battlestar Galactica. The British
aficionados of the series provided torrents for each episode within a few
hours of each broadcast. Many fans in the US picked them up and watched
them; so did many people in Australia.
While you might assume the SciFi Channel saw a significant drop-off in
viewership as a result of this piracy, it appears to have had the reverse
effect: the series is so good that the few tens of thousands of people who
watched downloaded versions told their friends to tune in on January 14th,
and see for themselves. From its premiere, Battlestar Galactica has been the
most popular program ever to air on the SciFi Channel, and its audiences
have only grown throughout the first series. Piracy made it possible for
"word-of-mouth" to spread about Battlestar Galactica.
Just two months ago, we saw something very similar happen, again with a
beloved series, the BBC's Doctor Who. After a hiatus of almost two decades,
the BBC cast Christopher Eccelston in the role of the Doctor, and set the
show to premiere on the 24th of March. A few weeks before the air date, an
"unfinished" version of the first episode of the new series leaked onto the
internet through the BBC's production partner CBC. Hundreds of thousands of
Doctor Who fans downloaded the episode, wanting a preview of this new
version of the nearly-immortal Doctor. The BBC were publicly outraged, but
there's a strong sense that this act of piracy, while not officially
sanctioned, was unofficially encouraged by BBC. It certainly created a
groundswell of interest in the series, allowing people to "try before they
buy," and probably increased program viewership. (The episode drew 10.81
million viewers to BBC1, which is among the highest ratings Doctor Who has
ever seen.)
Audiences are technically savvy these days; they can and will find a way to
get any television programming they desire. They don't want to pay for it,
they don't want it artificially crippled with any digital rights management
technologies - they just want to watch it. Now. This is the way that half a
century of television and a decade of the Web has conditioned them to
behave. We can't really complain that audiences are simply doing as they've
been told. It is pointless to try to get them to change their behavior,
because, in essence, you're fighting against the nature of television
programming itself, the behavioral narrative which grew out of our
relationship to the technology. We all understand that this piracy is
technically illegal, technically a violation of copyright; but we're in a
hell of a bind if we're telling the audience to "sit down, shut up and do as
you're told" when it comes to television viewing. The audience won't do as
they're told: they'll do as they've been taught, and that is another story
entirely.
Still, piracy presents us with an economic problem: how do producers get
paid for the programs they create when audiences disintermediate the
distribution channels through which producers get paid for their
programming? The economics of television production, as practiced for the
last fifty years, are very straightforward: producer (or perhaps the
producer's distributor) sells the program to a broadcaster. Broadcaster
sells commercials to advertisers. Everyone gets what they want: the producer
gets enough money to cover his costs, the broadcaster gets money to cover
his costs, the advertiser gets some attention from the audience, and the
audience gets the program.
Widespread piracy of television programming has short-circuited this
process, connecting the producer directly to the audience. As yet there are
no viable economic models connecting the television producer directly to the
audience. Industry pundits talk about audiovisual downloads through some
system like Apple's iTunes Music Store, and perhaps we'll see something like
this in the near future, but this works against the simple fact that people
do not expect to pay for television programs. People will pay for movies,
when they choose to pay for movies, but they won't pay for television
programming. Not if they can get it for free. The audience is not at all
involved in the economic value chain of television production; that's been
the rule for a half-century. It's reasonable to presume that any attempt to
change the economic behavior of the audience is doomed to failure.
Cable and satellite broadcasting presents something of an argument against
this assertion insofar as people do pay for these services. But in these
cases the audience is really purchasing choice. (Los Angeles has at least 20
broadcasters, and, despite this, has a thriving cable and satellite
broadcast market, because people want even more choice, and are willing to
pay for it.) Hyperdistribution has extended this choice to anyone with an
broadband connection � extended it well beyond any possible offering by any
cable or satellite broadcaster. Can these industries possibly compete
against the nearly infinite range of content offered on a broadband
connection?
Now we have a paradox: the invention of an incredibly powerful mechanism for
the global distribution of television programming brings with it a
fundamental challenge to the business model which pays for the creation of
the programs themselves. This is not at all BitTorrent's fault: the
technology could have come along a decade ago, and if it had, we'd have
stumbled across this paradox in the 1990s. This is a failure of the value
chain to adapt to a changing technological landscape � a technological
desynchronization between producer and audience. Once again, there's no need
to find fault: things have changed so much, and so quickly, I doubt that
anyone could have kept up. But the future is now here, and everyone in the
creative value chain from producer to audience must adapt to it.
This presentation outlines one economic model � actually more like a family
of models � which connects television producers to their audiences through
an hyperdistribution strategy, one which doesn't require any change in the
audience's economic behavior. This, I believe, is the surest path to success
for any new economic model; without audience acceptance, any model will
inevitably fail, and while this model is not guaranteed to be successful, it
seems to face fewer roadblocks to acceptance than other models which have
been proposed.
Television broadcasters owe their existence to the absence of substantially
effective competition. When you're dealing with real-world materials that
are in naturally short supply - whether diamonds, oil, or broadcasting
spectrum � a cartel can maintain and enforce its oligopoly. But when you're
working with media, which exist today as digital ephemera, bits that can be
copied and reproduced endlessly at nearly zero cost, broadcast oligopolies
are susceptible to a form of "digital arbitrage," which can hollow-out their
empires in an afternoon. Hyperdistribution techniques are more efficient
than broadcast networks for television program distribution.
Now, before you presume that this is all so much future talk, that maybe,
someday, people will be downloading television programs from the Internet,
know this: that someday has already come and gone. Per capita, Australians
are the most profligate downloaders of television programming in the entire
world, followed closely by the British. While the Americans lag behind,
they're still on the chart, in third place. The sea change has already taken
place - undoubtedly sped along by the monopoly position of the commercial
broadcasters, who, in many cases, act as barriers rather than conduits for
television programs. If a commercial broadcaster doesn't show a program, or
delays it for years, that's no longer of concern to television audiences:
they'll just download it from the Internet.
This trend is only going to accelerate with the uptake of broadband
throughout the world, progressively hollowing-out the commercial
broadcasters until they have returned to their roots: television as a live
medium. The only types of programming unsuitable for hyperdistribution are
those which are broadcast live: news, event and interactive programming, and
sport. Since these are all widely popular, it's not as though the commercial
broadcasters will collapse. But their business models will change, because
their cash cows are fleeing the paddock.
The pervasive culture of TV downloading leaves the producers of pre-produced
television programs high and dry, receiving nothing of value for their work.
But is this really true? The absolute, basic motivation of a TV producer is
not money � though money is needed for production � but to gain and hold an
audience's attention. TV producers want their programming to be watched as
widely as possible � by everyone. That's what they care about, and that's
all they care about, because, with viewers, everything else takes care of
itself: audiences equal money.
This assertion seems so basic, so fundamentally essential to the economics
of television, that it's very hard to understand why anyone (other than a
broadcaster being cut out of the value chain) would get upset about piracy
of television programming. The model as practiced at present can't
effectively leverage the economic benefits of hyperdistribution, but that
model was created before hyperdistribution was technically possible. The age
of hyperdistribution demands the development of new economic models which
can harness piracy, for profit. So, let's move directly to a discussion of
one such model.
Consider Battlestar Galactica. A few weeks before the series premiered on
television, I sat down to watch the 13 episodes of the first season, all of
which I'd found on BitTorrent. Somewhere around the second or third episode
I became briefly aware of the "bug," the smallish, semi-transparent station
ID which has become the constant on-screen companion to all television
broadcasts. I was looking at the bug for SkyOne, the British satellite
broadcaster, which nestled comfortably in the upper left-hand corner of the
screen. I noted the bug, then proceeded to ignore it. But it never went
away. In episode after episode, the bug remained, a tattoo commemorating the
trip from broadcaster to audience.
Somewhere around episode seven, it hit me like a ton of bricks: I was
looking at the most valuable and most underutilized piece of real estate in
the world. The bug carried the station ID � which is fine if I'm in the UK.
But in Australia SkyOne has no meaning at all. So that message, which should
be full of meaning � full of "payload" � has been utterly misspent. It's as
if they took the finest piece of land in Sydney Harbour, say where the Opera
House resides, and decided to use it as depot for broken trains. That screen
real estate has real value, because it commands the audience's attention,
constantly if subconsciously.
What if, instead of carrying the broadcaster's station ID, the bug contained
an advertiser's payload? I decided I wanted to see what that might look
like, so I took an episode of Desperate Housewives and ran a little test,
using the logo of one of Australia's best known retailers, Myer. I placed
the advertiser's bug in the lower left-hand corner. This is probably
sufficient for a well-known retailer like Myer (or Macy's or Harrod's,
etc.): it's simply enough to remind the public that they exist - and that
there's undoubtedly a sale on.
While I thought I was being truly innovative in my thinking, I was wholly
wrong. On a recent Friday evening I sat and watched a rugby match: to my
astonishment, I found that a commercial broadcasters had already adopted
this technique. When the game went into an instant replay, the icon of an
Australian liquor distiller Bundaberg Rum did a little dance in the upper
left-hand corner of the screen. This means that the technique is already in
use, and advertisers understand its value. That's a very important point:
advertisers are ready for this.
The earliest models of both commercial radio and television developed around
the idea of program sponsorship: one sponsor per program. Over the 1950s (in
the case of television) this model evolved toward the 30-second
advertisement, which interrupted the broadcast. For the last half-century
that has proven to be an enduringly successful economic model, but that
model is now under threat from Personal Video Recorders (PVRs), which allow
a viewer to fast-forward through all advertisements, often taking them in
30-second leaps, so the audience never sees so much as a single image from
an ad. PVRs, playing into the television-taught behaviors of immediacy and
convenience, have proven immensely popular, and are not going away; instead,
they will become an integral and expected feature of the television viewing
experience. This means 30-second ads are not a part of television's future.
They're too easy to edit out of the viewing experience.
The idea of an advertising payload attached unobtrusively to the television
program has a certain appeal; it can be ignored, but it's always present.
The audience can't edit it out of the program without destroying the content
of the program. Audiences will learn accept them � so long as the
advertisements aren't too busy, distracting, or otherwise obnoxious.
(Consequently, there will be a lot of work going on in the next decade to
determine just how obnoxious such an ad can be before the audience objects
to it.)
As the advertisement-as-interruption disappears, we will see a series of
advertisements � perhaps running five minutes apiece � embedded into the
programmme itself. This is easy to achieve technically, and will be
palatable to most major advertisers. Since this evolution seems inevitable,
another question comes immediately to the fore: what's the role of the
broadcaster in this new economic value chain? Today the broadcaster
aggregates audiences, aggregates advertisers, puts commercials into the
program breaks, and makes a lot of money doing this. But � and here is the
central point I'm making today � wouldn't it be economically more efficient
for the advertiser to work directly with the program's producer to
distribute television programming directly to the audience, using
hyperdistribution?
Let me run some numbers for you, based on another set of
back-of-the-envelope calculations: If we presume that the advertiser is
going to pay at least as much as the broadcaster for hyperdistribution
rights to a program, there's a large fixed cost for the purchase of those
rights. Further, there's another fixed cost to maintain the internet servers
which "seed" the program's hyperdistribution - the internet equivalent of
broadcast transmitter operation costs. Add in a small amount for the
post-production costs incurred to affix the advertiser's payload to the
program, and we're done. Those are the entirety of the costs.
The advertiser is looking to lower costs in advertising; if those
advertisers are paying between $250,000 and $500,000 for thirty seconds of
advertising (in the United States), just a handful of advertisements would
cover hyperdistribution costs. It's a numbers game: if enough viewers watch
a hyperdistributed television program, it is cheaper for advertisers to work
with producers, and handle the distribution themselves. Furthermore, if the
program is widely popular, it is far, far cheaper to do so. In other words,
the higher your ratings, the cheaper the advertising. That's precisely the
reverse of broadcast television, and one big reason that advertisers will
find this model so appealing.
Although no formal surveys have been conducted, it's reasonable to assert
that at least four percent of Australians, two percent of Britons, and one
percent of Americans are already using broadband hyperdistribution to get
some percentage of their TV programs. Based on my own research, I have found
television downloading to be widespread among men 18 to 25 years old,
precisely the demographic most coveted by advertisers. In other words, the
prime audience is already there, already waiting and already willing to
receive. All that remains is to put the components of this new value chain
into operation.
Post-Script: The Swarm Manifesto
I spent the last week touring around Australia's two biggest cities, with
one message on my mind, repeated to anyone within earshot: the audience has
taken control. I used many stories, from "This Land's" epidemic spread
across the net last fall, to the ascendance of Wikipedia, introducing and
reinforcing one idea: the audience is starting to exhibit a truly unique
emergent quality - swarming.
Predicted a decade ago by Kevin Kelley in Out of Control, we've finally
caught up with the future. We have protocols which allow us to swarm our
data (BitTorrent). We have websites which allow us to swarm our knowledge
(Wikipedia). We will no doubt soon have some evolution of social networks
which will allow us to swarm our understanding.
The battle continues unabated. Today the MPAA shut down the six most obvious
TV torrent sites on the Internet. It's true. You go to their web pages, only
to find that they've been pwned.
And yet, as I type this, I am getting a torrent from one of these sites,
even though the BitTorrent tracker, the one central, fixed and therefore
vulnerable element in the system, is down, down, down. This shouldn't be
happening. Yet it is. With the latest and greatest update to Azureus, a
popular BitTorrent application, the torrent trackers themselves have been
given over to the swarm.
1. What's new in Azureus 2.3.0.0
1.1 Distributed Database
Azureus now has a distributed, decentralised database that can be used
to track decentralised torrents. This permits both "trackerless" torrents
and the maintenance of swarms where the tracker has become unavailable or
where the torrent was removed from the tracker.
They can't say they didn't see this coming. Back in December, when the MPAA
shut down Suprnova.org, they could see they'd stumbled into a hornet's nest.
Highlighting the centralized tracker - the weakness of BitTorrent - gave the
whole swarm of hackers all the inspiration they needed to set to work on the
problem. I predicted this in Out of Control: The Sequel back on the 20th of
December - but that really wasn't much of a feat. Anyone who'd been watching
the progression of P2P networks could see the truth of it.
And while I was writing these paragraphs, I got an email from my diligent
and intelligent graduate student, inviting me to participate in the beta
program for an oddly familiar piece of software:
Outfoxed is the implementation side of my master's thesis at the
University of Osnabr�ck, Germany. The thesis title is Trusted Metadata
Distribution Using Social Networks. In a nutshell, I'm exploring ways for
you to use your network of trusted friends to determine what's good, bad,
and dangerous on the internet. Outfoxed does this by adding functionality to
the Firefox web browser. Coding began on Dec 27th, 2004.
That's very odd, because the author began coding Outfoxed the same day I
began writing hyperpeople, a book which discusses what happens once
applications like Outfoxed - media swarms - become part of daily life. It
looks as though we are opening into the swarming of understanding right on
time.
Two predictions so recently made, and so recently come true. You know what
this means? I am no longer a futurist. I am a presentist. Everyone else is
simply living in the past.
# # # # #
Mark Pesce is the creator of the Virtual Reality Modeling Language (VRML) -
the first 3D interface to the internet - and the founder of the Interactive
Media Program at USC's School of Cinema-Television. In 2000, Ballantine
Books published Pesce's The Playful World: How Technology is Transforming
our Imagination, which explored the world of interactivity through a
detailed examination of the Furby, LEGO�s Mindstorms and the Playstation 2.
In late 2003, Pesce was invited to the Australian Film Television and Radio
School, with a mandate to redesign the curriculum to incorporate the new
opportunities offered by interactive media.
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