Michael Smith and Rahul Telang are professors at Carnegie Mellon University’s Heinz College of information technology and public policy. Their biggest claim to fame here has been their 2012 summary of research on the economic effects of copyright infringement on the media industry, which showed that the vast majority of peer-reviewed studies found harm from piracy. (Mike Smith presented this at the Digital Book World conference in NYC in early 2013.) They’ve kept that work up to date and now say that there are 25 such studies, 22 of which claim economic harm.
My response to Smith and Telang’s 2012 study was an article that said this: Let’s not quibble with the details of the individual studies. Instead, let’s just all agree that piracy is a problem for the media industry and move on to a discussion of what can be done about it. That article has gotten — by a huge margin — the most views and most comments of any on this blog.
“Let’s agree and move on” is one of the main themes of Smith and Telang’s excellent new book Streaming, Sharing, Stealing: Big Data and the Future of Entertainment (MIT Press). Despite the words “sharing” and “stealing” in the title, the book isn’t really about copyright infringement or file-sharing. Instead, it’s about the broader challenges that traditional media companies face in the digital age and the advantages that companies like Netflix and Amazon have over them.
Piracy is only one of several factors that pose challenges for traditional media companies nowadays. The book doesn’t say much about legal or technological remedies to online infringement. Instead it says that a sure way to reduce piracy is to make legal content easier to access and to remove some of the mechanisms that make content more valuable through “scarcity.”
This assertion has appeared in print many times — see for example Jonathan Zittrain’s The Future of the Internet–And How to Stop It, or any of hundreds of posts on TechDirt or BoingBoing. But Smith and Telang back up their assertions with hard data. They found, for example, that a 10-day delay in the release of a DVD in a given country correlates with a 2-3% reduction in DVD sales in that country; that when NBC removed its video content from iTunes, the result was an 11.2% increase in demand for pirated NBC content; and conversely that when ABC made nine series available on Hulu, piracy decreased by 19%.
Smith and Telang’s research has evolved over the past few years from studies about the economic effects of piracy to the value of data to the entertainment industry. Accordingly, the value of data is the central theme of this book. Smith and Telang run a think tank called the Initiative for Digital Entertainment Analytics (IDEA), which sits within Carnegie Mellon’s Heinz College. They’re constantly on the lookout for media companies to engage them to analyze data on viewership (or listenership or readership) for clues on how to improve their content and offerings.
Streaming, Sharing, Stealing overflows with examples of this. They include hip-hop violinist Lindsey Stirling’s use of YouTube analytic data to build an audience that led to big-selling albums and a successful world tour; J.K. Rowling’s Pottermore website as the exclusive source of Harry Potter e-books, which brings Rowling data that Amazon won’t share (as well as more revenue); Warner Music Group’s use of customer data from music-recognition service Shazam to drive A&R decisions; how Harrah’s casino made use of customer data to overtake its bigger Las Vegas rivals; and many others involving media companies that they can’t name for confidentiality reasons.
At the same time, Smith and Telang show how when it comes to data, the Netflixes and Amazons of the world have major advantages over traditional media companies. The best-known example of this is Netflix’s success with its original TV programming, starting with House of Cards. Netflix’s highly detailed data on user viewing behavior indicated that a political thriller series with certain attributes was likely to be a hit. Its lack of need to adhere to a weekly program schedule meant that it could produce an entire series of episodes and make them available for binge-watching at once without having to worry about offending an audience in a single opening episode. The result has been a series that (at this writing) has garnered 46 Emmy nominations and 6 wins as well as lavish praise from critics.
The big problem for traditional media companies, of course, is that Netflix and its direct competitors have access to data about content across all studios and networks. Not only does each studio/network only have access to data about its own content, but distributors like Netflix and Amazon refuse to share their data with studios and networks. The same is true for book publishers and Amazon; record labels and Apple, Spotify, Google, and Pandora; and so on. Although it’s hard to see how individual studios, publishers, or record labels can surmount this disadvantage, Smith and Telang keep finding ways to use data in beneficial ways.
This book’s biggest value is in its hard-nosed objectivity. Although Smith and Telang are clearly “rooting” for content producers, they say many things in this book that big media executives surely don’t want to hear — such as that they can no longer afford to make decisions about content on gut feel; they have to make content more easily accessible and less “scarce” to lessen the impact of piracy; and they can’t sell content directly to the public because no one cares about the publisher’s name on a book, a label’s name on a record, or a network’s name on a TV show. Smith and Telang aren’t media industry shills, nor are they out to sell media companies on technology solutions, data services, or big consulting contracts. They’re out to create publishable peer-reviewed research for themselves and their students, and they both have tenure already.
All this makes Streaming, Sharing, Stealing a landmark book. By taking the “let’s agree and move on” stance that it does, this is the first important post-copyright-wars book on the media business.
Mike Smith and Rahul Telang will be keynoting our next Copyright and Technology conference on January 24, 2017. Watch this space for more details on that.