Impact Of Piracy And Free ( T O C F F)


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Content of a presentation that describes ongoing research into the impact of P2P file sharing on paid content sales.

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Impact Of Piracy And Free ( T O C F F)

  1. 1. The impact of piracy (and P2P) on book sales An update on the piracy project Tools of Change – Frankfurt October 13, 2009
  2. 2. This morning … <ul><li>Project history </li></ul><ul><li>Why look at this now? </li></ul><ul><li>Approach and publishing partners </li></ul><ul><li>Primary findings to date </li></ul><ul><li>Next steps for this research </li></ul>
  3. 3. And… a call to action <ul><li>After this presentation: </li></ul><ul><ul><li>Find out where your titles are shared </li></ul></ul><ul><ul><li>Look at the impact on sales </li></ul></ul><ul><ul><li>Measure! On an ongoing basis </li></ul></ul><ul><ul><li>Act on what you find </li></ul></ul><ul><li>On your own … </li></ul><ul><li>… or through this effort </li></ul>
  4. 4. Born (Wakefield, Massachusetts) Catholic school education College, business school Finally left Massachusetts Time Inc. weekly magazines Married, kid
  5. 5. More kids Hammond Started to consult “ Faster, better, cheaper” Got a logo
  6. 6. MIP 2008: Andrew Savikas and Mac Slocum wonder, “Can we measure the impact of piracy on book sales?” Brian: “How about using a co-op marketing model to assess whether it helps or hinders paid sales?” O’Reilly’s editors: “All of our content is pirated as soon as we publish it!” Random House joins the research, contributing several experiments with “free” content distribution Intrepid NYU grad student starts tracking O’Reilly’s 2008 front list to find pirated content Brian secretly worries that any analysis will not have a “quiet period” against which to measure baseline sales
  7. 7. TOC 2009: Research paper and preliminary results are announced Piracy research on O’Reilly titles Search for more participants BEA 2009: Piracy and “free” results are updated Still consulting … Add Thomas Nelson titles to the piracy research
  8. 8. Why tell you all of this? <ul><li>You need to know me to trust me </li></ul><ul><li>Trust helps you hear what I have to say </li></ul><ul><li>Success (to me) = a fighting chance at recruitment and participation </li></ul>And I’d like you to take action …
  9. 9. My point of view <ul><li>Intellectual property (IP) matters </li></ul><ul><li>There are niches, and titles, for which piracy is a direct loss and enforcement makes sense </li></ul><ul><li>There are niches, and titles, for which piracy may help spur paid sales </li></ul><ul><li>This research is structured to find out which is which </li></ul>
  10. 10. “ Perhaps on the rare occasion that pursuing the right course demands an act of piracy, piracy itself can be the right course?” Governor Swann, in “Pirates of the Caribbean” (itself heavily pirated)
  11. 11. “ Free” is not “new” … <ul><li>A long and successful history </li></ul><ul><li>Galleys, ARCs, blads, sample chapters </li></ul><ul><li>Digital sampling on the rise </li></ul><ul><li>… but only a small set of experiments using fully “free” digital content </li></ul>
  12. 12. Book marketing: growing content discovery and access High Discovery High Access Low Discovery Low Access Appearance on Oprah Coop Marketing Corporate Web Site Museum Stores Amazon Promotion Catalog & BEA Over time, increase both discovery and access
  13. 13. Why look at this topic now?
  14. 14. Our research approach The research is data-driven, open (without compromising publisher data) and structured to share knowledge. <ul><li>Collate experiments </li></ul><ul><li>Segment attributes </li></ul><ul><li>Identify data gaps </li></ul><ul><li>Use a consistent data source (POS feeds) </li></ul><ul><li>Measure pre- and post-piracy </li></ul><ul><li>Populate a structured matrix </li></ul><ul><li>Look at combined results </li></ul><ul><li>Initial take on the impact of pirated content </li></ul><ul><li>Initial impact of “free” </li></ul><ul><li>Share the analysis </li></ul><ul><li>Invite discussion </li></ul><ul><li>Grow the test sample </li></ul>
  15. 15. A value in structured testing … <ul><li>A robust set of variables </li></ul><ul><li>Appropriate segmentation </li></ul><ul><li>Captures content characteristics </li></ul><ul><li>Can collate like experiments </li></ul><ul><li>Can develop and test specific hypotheses and track results over time </li></ul>
  16. 16. A hands-on research project <ul><li>Wil Johnson </li></ul><ul><li>Searched P2P sites for O’Reilly titles every day since fall 2008 </li></ul><ul><li>Built his own scraper </li></ul><ul><li>Running it made his (roommate’s) ISP cut off service </li></ul><ul><li>Figured out a way around it! </li></ul>New York University, candidate for M.S. in Publishing, Dec 2009
  17. 17. The sample set Since the initial working group, Thomas Nelson has joined (August 2009), and we are expanding the number and type of titles we are tracking. O’Reilly Media Pioneered discussion of the distribution of free content Active in promoting widespread access to its content Perceived as vulnerable to a piracy threat Random House Largest U.S. publisher A wide range of book types reaching a variety of audiences Engaged in a number of experiments with “free”
  18. 18. What we have tested … Monitoring P2P (O’Reilly) Sample set for peer-to-peer piracy Monitored three BitTorrent sites; only one (PirateBay) had more than a handful of O’Reilly titles posted Tracked activity of seeds (uploads) and leeches (downloads) for any 2008 O’Reilly front list titles found on these sites Testing free (Random House) Free PDF downloads (three for 1 day, one for 3 days, one for three weeks) Free PDF excerpt (3 weeks) Free ebook download (1 day) Free PDF, MP3 and ebook downloads (3 weeks)
  19. 19. What we found initially … Monitoring P2P (O’Reilly) 8 titles that were posted O’Reilly front list in 4Q 2008 Average post-seed sales were 6.5% higher in the four weeks after Ranged from 18.2% up to 33.1% down Low seed and leech volume Average first seeds appeared 20 weeks after publication date Testing free (Random House) 8 titles, 12 formats tested in the first half of 2008 Sales up 19.1% during promotional period Sales up 6.5% during promotional and post-promotional periods Ranged from 155% up to 74% down
  20. 20. What we took away from that data <ul><li>P2P “threat” may be overstated </li></ul><ul><ul><li>Low incidence </li></ul></ul><ul><ul><li>Significant lag </li></ul></ul><ul><li>The value of “free” is not binary </li></ul>
  21. 21. The number of seeds peaks quickly
  22. 22. The number of leeches peaks immediately and quickly declines
  23. 23. Lag time before seeding varies Average = 19 weeks
  24. 24. Proposing a more nuanced model “ White” market “ Gray” market “ Back channel” <ul><li>Print sales </li></ul><ul><li>DRM-restricted digital sales </li></ul><ul><li>“ Trialware” </li></ul><ul><li>Unprotected digital sales </li></ul><ul><li>Galleys, ARCs </li></ul><ul><li>“ Free” promotions </li></ul><ul><li>Unauthorized duplication </li></ul><ul><li>Pirated content </li></ul>Our current question: what impact does “free” have on sales?
  25. 25. Some research surprises… <ul><li>Low volume of P2P seeds and leeches </li></ul><ul><li>Lag time on P2P seeding </li></ul><ul><li>Number and range of “under the radar” free experiments available for analysis </li></ul><ul><li>Interest among trade publishers </li></ul>
  26. 26. The piracy research continues … <ul><li>Found 13 more 2008 front-list titles </li></ul><ul><li>Average post-seed sales down 4.2% in the four weeks after seeds first seen </li></ul><ul><li>Results ranged from 15.1% up to 48.7% down </li></ul><ul><li>Average first seeds appeared 19 weeks after publication date </li></ul>
  27. 27. Comparing the data… The spread in results made us wonder if we had missed something in the bigger sample set. Measure First sample P2P to date Titles 8 21 Post-seed change in sales +6.5% -4.2% Biggest gain +18.1% +15.1% Largest loss -33.1% -48.7% Lag before piracy 20 weeks 19 weeks
  28. 28. Where piracy may benefit … <ul><li>Looked at sales patterns of pirated and un-pirated content </li></ul><ul><li>“ Normed” the data to a common start point </li></ul><ul><li>Plotted the average sales per week for pirated and un-pirated titles </li></ul><ul><li>Uncovered a visual correlation between piracy onset and unit sales </li></ul>Because of different pub dates, the average time on sale for pirated content in this sample is shorter (35 weeks) than that for un-pirated content (47) weeks. Comparisons at the end of the on-sale period are not reliable.
  29. 29. Average sales (weeks after pub date) Average week at which seeded content first seen Unreliably small sample sets
  30. 30. Four-week rolling averages Average week at which seeded content first seen Unreliably small sample sets
  31. 31. Data in what is not yet pirated… “ Head First books break from the linear tradition, instead using a trajectory filled with successes, failures and lessons… The non-linear format makes them tough to reproduce in a digital form -- they're full of illustrations, thought bubbles, photos, quizzes, etc.” Series Examples Head First HF Servlets and JSP HF C Sharp HF PHP and MySQL HF Ajax Other Photoshop Elements 7 Programming .Net 3.5 Real World Haskell Windows Server 2008 Learning Python
  32. 32. Three useful cautions <ul><li>Correlation isn’t causality </li></ul><ul><li>Larger data sets may uncover a sample skew </li></ul><ul><li>What works today may not work as well at some future date </li></ul>
  33. 33. Next steps <ul><li>Continue to monitor P2P activity </li></ul><ul><li>Seek publishers to help fill in the test matrix </li></ul><ul><li>Gather feedback </li></ul><ul><li>Continue to refine the analysis </li></ul>
  34. 34. A call to action (a reminder) <ul><li>After this presentation: </li></ul><ul><ul><li>Find out where your titles are shared </li></ul></ul><ul><ul><li>Look at the impact on sales </li></ul></ul><ul><ul><li>Measure! On an ongoing basis </li></ul></ul><ul><ul><li>Act on what you find </li></ul></ul><ul><li>On your own … </li></ul><ul><li>… or through us </li></ul>
  35. 35. For more information <ul><li>“ Rough Cut” research paper </li></ul><ul><ul><li>Includes this research and future updates </li></ul></ul><ul><ul><li>Also provides background on free and P2P </li></ul></ul><ul><ul><li> </li></ul></ul><ul><li>[email_address] </li></ul>