The Economics of TV Piracy

SyFy’s Craig Engler has been blogging over at Boing Boing of late, discussing all things television. He’s got two recent posts which are IMO very much worth reading:

Why You Can’t Watch Every Show Online For Free


Why Watching TV Online Doesn’t Help Ratings

The most fundamental point here is that television in the United States is completely, cripplingly dependent on broadcast advertising revenue, the value of which is basically dictated by Nielsen ratings. Does legal online viewing do anything? Not really, says Engler, who intimates that it’s nearly profitless and done more as a semi-charitable act towards viewers than anything else.

If you’re not part of a Nielsen household, your television viewing habits have basically zero market effect, and what you do really doesn’t matter.

In my household, we pay for cable – and a tiny amount of that monthly bill goes to support each and every one of the hundreds of channel we get. We’re not a Nielsen household, though – so if we watch, let’s say, NCIS, on television, we have zero effect on NCIS’ ratings, or the amount of money CBS or anyone else makes.

If we miss NCIS, and download a “pirated” copy off the internet later, nobody anywhere actually loses any money. We have not “hurt” the show’s ratings or ad revenue in any way whatsoever. We pay for cable, so we’ve paid to see the show, technically speaking. How we choose to do that really doesn’t affect CBS in any way whatsoever.

Now, obviously things are different if we download the entire third season, say, in lieu of buying a DVD box set; there piracy really does have a measurable economic impact.

With a few exceptions, though, we don’t keep downloaded copies of shows around for long, however. (The hard drive attached to our TV is just 40GB, and the computer we use to download TV has just a 200GB drive.) If it’s really worth keeping, we buy a DVD when it becomes available. If not, we don’t.

We’re television “pirates”, but our “piracy” has absolutely zero economic impact, because they in no way affect Nielsen ratings or, by proxy, advertising revenue for any of the shows we watch.

The advertisers may or may not get short shrift, depending on your point of view, but it’s no different than if we used a DVR. Or watched the show when it re-airs at some god-awful hour early the next morning. (Have you ever seen the ads that run on television in the wee hours of the morning? I don’t want to go to business college, thanks, I don’t need en erectile-dysfunction drug, I don’t go to casinos, and and I don’t have mesothelioma, nor does anyone in the house, so the chance of us spending any hard-earned money as a result of a commercial at those hours is… zero.)

The global nature of the internet has eclipsed the nationalistic nature of television licensing; this is a good thing for the “pirates”, because they get to see shows they would otherwise have next-to-zero chance of ever seeing “legally”. I regularly download a couple of Australian television programs, which I am of course not paying for in any way whatsoever, and this is a true example of outright piracy, I admit. But again – and let’s please leave aside the moral arguments about getting “something” for “nothing” – the economic impact of this piracy is zero; Australian and UK advertisers have no interest in having their ads shown to members of my household anyway. Oooh, Boot’s is having a sale on facial cream? Whooptey-freaking-doo, a fat lot of good that does me here in Minnesota, eh wot? In several instances – as with the Aussie drama Sea Patrol – I’ve actually imported DVDs from Australia, and watch them on a nifty region-free DVD player. (It’s also available on Hulu, though this is a recent development.) In other instances – Rescue: Special Ops and Bang Goes the Theory, a delightfully bad BBC Mythbusters ripoff – DVDs don’t actually appear to be available, so it appears to be, shucks darn, literally impossible to view a show, in the US, legally.

If television ratings changed to become actually meaningful, it’d be a different story entirely, obviously. And I’m sure there are people who don’t have cable, or whatever, and download shows off the internet, and I reckon their economic impact is (barely) measurable but essentially negligible when all is said and done. (Do the math; we pay about $40/month for basic-ish cable – actually satellite, but whatever – and get somewhere north of 300 channels, all of whom are getting a tiny, tiny amount of our $40. I don’t know whether every channel gets the same amount or not, but if half our bill goes to the stations – a rate I figure highly unlikely – then each channel would get around seven cents per subscriber per month. If 100,000 people who don’t pay for a cable channel download a show that aired there, they’ve collectively screwed over the network to a tune of, what, seven thousand freaking dollars over the course of a month? Even if I’m off by an order or two of magnitude either way, the amounts are still statistically insignificant.)

Obviously, all this is not true of other forms of piracy, like music or books or software, where there is a real and obvious economic effect. But until the global television industry adapts to a new model of advertising and statistics-generation which actually takes everyone and their habits into account, 99% of television “piracy”, however much the networks might yell, costs them near enough to nothing as to make no difference.

Published in: Geekiness, General | on May 18th, 2010| 2 Comments »

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  1. On 5/18/2010 at 6:42 pm Ben Said:

    Did you see us on Bang Goes the Theory? S01E06, I think.

    The host was a bit of a twit, and I’m glad I kicked them out in the afternoon. All the stuff they were insistent on getting video of they didn’t use at all.

  2. On 5/18/2010 at 6:50 pm Nemo Said:

    I probably did, but I don’t remember it. (I might have missed that one, though.) I’ll have to see if a copy is still available online “somewhere”.

    “All the stuff they were insistent on getting video of they didn’t use at all.” Welcome to the wide world of TV production. 😛