Piracy will fund legal music offer

Badredine Ladjemi

A recent report from the BI Norwegian School of Management has found that those who download music illegally are also 10 times more likely to pay for songs than those who don’t. On the same time, the percentage of french P2P users has fallen from 23% to 18% between 2008 and 2009.

In my last article : Digital content sharing: Beyond good and evil… I explained that from the business position we should not care if digital content sharing is good or bad. What matters is the revenue you can make from it. So let’s explore how revenues could be made from P2P users…

P2P will disapear soon because of a flood of trials and fees?

P2P killed by Justice?

People may think that PirateBay is now under troube since its founder has been convicted of illegal sharing.  But it has been disclosed that the judge in the trial is a member of two pro-copyright groups, including one whose membership  includes entertainment industry representatives who argued in the case.

French governments was thinking that HADOPI would defintively put an end to P2P. Instead some geeks published a tutorial explaining how to “Hijack HADOPI in 27 seconds”. There were also some documentation made for Identifying P2P users using traffic analysis. They were made to punish and block P2P users.  But what if we identify P2P users not to punish them but to collect data on them and propose them the best legal music offer service?

P2P users are the present and future legal music offers customers.

We consequently need studies to profile this type of people and adress their need.  Legal music offer websites should focus more on satisfying the P2P users and giving them the best user experience possible. Since now mainstream legal music offer havn’t been made for P2P users. They focus mainstream internet users and many of them sell DRM protected music which are targeting against, and not for, P2P users. Let’s have a look on how many people does P2P users represent nowadays.

Addressable market of P2P users. Source: Yankee Group, 2005

In a research made by Thomas Beauvisage from OrangeLabs explore the use of computer at home. He categorized massive P2P users as “Multimedia”. These users represent 15% of computer users. Another study from ipoque company on Internet for 2008/2009 shows that P2P generates most traffic in all regions and Streaming is taking over P2P users for video content. BitTorrent is still number one of all protocols, HTTP second and the proportion of eDonkey is much lower than last year.  We need more of these kind of studies! They help drawing a concrete idea of what P2P users do represent.

Another study commissioned in 2006 by the Canadian branch of the RIAA, the Canadian Record Industry Association shows that people are buying music after downloading it on P2P. Three out of four P2P users admitted to purchasing music after downloading it online, with 21 percent of P2P users saying that they have bought tracks they have also downloaded on more than 10 occasions. 25 percent admitted to purchasing previously-downloaded tracks only once or twice, while an additional 27 percent claimed to have done it less than 10 times, but more than twice. The industry has failed to recognize the marketing-like effects of P2P. It’s the role of the IT Industry to recognize revenue potential of P2P.

Pirate Bay user

A study on british youth conducted by British Music Rights and researchers at The University of Hertfordshire in 2008, shows that 80% of P2P users are prepared to engage with a legal file-sharing service, and place a considerable monetary value on it. They ask for a service that let them trial, swap, and recommend, music for arange of tariffs. And according to a poll 86% of Swedes would pay for legal P2P.

PirateBay, the famous bittorrent digital content sharing search engine, issued a study on its users. It appears that they were 54 392 french users per minute. It means, for me, that PirateBay reach an audience of almost 55 000 potential french online music buyers per minute. Imagine if just 1% of these almost 55 000 potential customers per minute turned into real ones? So my bet : advertizing for legal music offer on these P2P platform and softwares can convert a lot of pirates into customers only if the service is designed for them.

Real life initiatives

And it seems that the BBC had the same analysis. Indeed the EU and a conglomerate of major industrial players including BBC agreed to develop a next generation Peer-to-Peer (P2P) content delivery platform.

If this seems too utopic to you, I have some real life exemples. In the USA, some legal P2P services have already been launched like Qtrax. In exchange of advertising they let you search, download and preview music for free. In China, Google China Signs Big Music For Free MP3 Search Engine.

by Badredine Ladjemi