Of Ponies, Portals, and Piracy: What Hasbro Can Learn From Valve

One of the nice things about being a new blogger is that I have no audience to alienate.  With that in mind, let’s talk about three things the internet is completely sick of discussing: digital piracy, “cake is a lie” jokes, and colorful cartoon equines.

Art by Blackgryph0n. Click for source.

Unless you’ve been isolated from the Global Communications Network for the last 2 1/2 years, you’re at least passingly familiar with both My Little Pony: Friendship is Magic and its unexpected following among 18-30-year-old males (and many similarly-aged females).  Full disclosure: I consider myself one of those fans.

There are several interesting facets of the Brony fandom, many of which have been discussed thoroughly by others.  I’m going to focus on one that hasn’t been discussed as much (until recently, anyway): piracy within the fandom, and what it indicates about piracy in general.

Quantifying piracy is a difficult thing to do, since the activity is inherently illicit.  So it’s hard to definitively confirm that piracy is more prevalent among the Pony fandom than others.  But the degree to which piracy is accepted in the fandom certainly suggests so.  You won’t have much trouble finding a working torrent of the series, and every single episode is almost constantly available on Youtube.  Equestria Daily, pretty much the central online hub of the fandom, regularly links to unauthorized livestreamed episodes and Youtube uploads.  Piracy is basically a generally-accepted part of the culture.

This wasn’t a major issue among members of the fandom until a few months ago, when production on an independent documentary on the phenomenon was “shut down” by the creators, who released a statement citing the fact that “the piracy within the Brony community is rampant and pervasive.”  It was later clarified that they had only decided to invest less time and material in the project than planned, rather than cancelling the production of the product outright.  But this being the internet, a massive shitstorm ensued on pretty much every Pony-centric forum and imageboard, with fingers being pointed basically everywhere.

So it seems pretty clear that piracy rates are far above-average in the Pony fandom.  Now, all else being equal, that sort of systematic difference would require an explanation (this is where my training as a scientist becomes evident).  Here’s the thing, though; all else isn’t equal.  If you had no knowledge of piracy in the fandom, and were asked to guess at its prevalence based upon other characteristics…I risk sounding self-congratulatory here, but it would probably rank fairly low (relative to similar fanbases, anyway).  Sales of the toys have continued to grow for Hasbro basically since the series started airing, so it’s not as though the fandom is averse to spending money.  One might imagine that people aren’t willing to spend money on something they can easily get for free, but even that hypothesis has some problems.  First of all, the comics released this year — easily-pirated by anyone with a scanner — have been selling well.  And in many cases, the fanbase has shown a rather thorough generosity, with a number of pony-centered charity funds established.  So if all this is true, then how do we explain the high piracy levels among Bronies?

Before I address that, let me take a slight tangent to establish something; piracy is wrong.  Not as wrong as actual theft (I may do a post on the difference later), but still wrong.  If done in sufficient numbers, it makes the production of quality content unsustainable as a business practice, for obvious reasons.  And “I only do it a little” is a cop-out, for the same reason that “I only shoplifted a 5-dollar item” is a cop-out; it only works as long as you completely ignore the consequences of many people doing that same thing.  We clear on that?  Okay, good.

Here’s an equally important point; piracy is also inevitable.  DRM is a sucker’s game; no matter how many people you have working on DRM, there are more people working on defeating your DRM.  And if even one of them succeeds, they all may as well have succeeded (see here, for one analysis).  You might — might — manage to delay the piracy for awhile if you put a ton of funding and effort into concocting some new DRM method, but even that will be cracked before too long.  Piracy cannot be stopped.

It can definitely be minimized, however, and this is where companies ought to be focusing their energies if they want to combat piracy.  And this is where Hasbro has performed abysmally.

“You mean they’ve been really lax in enforcing their copyright, right?”  Well, actually, no.  They have been, but that’s not their big mistake.  Like DRM, trying to eliminate every illicit copy of the series online is futile.

They’ve screwed up in a far more severe way.  In essence; piracy is rampant among the Pony fandom because Hasbro severely disincentivizes buying the episodes legally.

To illustrate just how poor a job Hasbro has done in this regard, allow me to make a brief appeal to authority:

“Who is this guy?” you may ask.  Well, okay; demographically-speaking, you’re probably not asking that.  But work with me here.

For those of you who are unaware, this is Gabe Newell, co-founder of Valve Corporation.  His company owns and runs Steam, the largest legal service for digital distribution and sale of videogames.  Valve doesn’t publish annual reports, but reported in 2010 that they had experienced 200% growth in sales that year, and over 100% growth in sales every year over the past six consecutive years.

I’m going to repeat that: over 100% sales growth.  For six consecutive years.  In what is probably one of the more piracy-prone industries on Earth (though again, hard to confirm).  With two of those years in the worst global economy since the Great Depression.  So apparently he knows what he’s talking about when it comes to thriving despite piracy.

And what does Newell think about piracy?  Well, among the gaming community, one of his on-the-record comments has almost become a mantra.  Chant with me, fellow gamers:

“Piracy is almost always a service problem and not a pricing problem. For example, if a pirate offers a product anywhere in the world, 24 x 7, purchasable from the convenience of your personal computer, and the legal provider says the product is region-locked, will come to your country 3 months after the U.S. release, and can only be purchased at a brick and mortar store, then the pirate’s service is more valuable. Most DRM solutions diminish the value of the product by either directly restricting a customer’s use or by creating uncertainty.”

As an aside, some argue that Steam is itself a form of DRM.  This is only true insofar as it makes games more difficult to pirate.  In every other respect, it essentially functions as anti-DRM, adding value to the product, rather than subtracting from it.  While games bought via Steam can’t be played outside of Steam, the software is completely free, doesn’t tie up system resources on any decent gaming PC, and there is no set limit to the number of computers a single “copy” of a game can be installed on, nor does it require an internet connection for its games to work (beyond the initial install, of course).  Valve does need to establish a much better system for appeals of TOS violations, but that is another matter (as far as this conversation goes, anyway).  The added value comes largely in the form of frequent sales, convenience of purchase, and a rudimentary social-networking system built into Steam.  Among other things, it allows you to see which games your Steam Friends are playing and join them in those games.  Not a huge deal, but it definitely adds noticeable value.

So let’s look at Hasbro’s actions in light of Newell’s manifesto.  I’ll take some mild liberties with Newell’s words and expand them to the general principles they seem to represent:

“Can only be purchased at a brick-and-mortar store”: Convenience of Purchase

The only means of purchasing digital copies of FiM episodes legally is via iTunes (EDIT: see note below the main post RE Youtube purchases).  This is itself annoying, but not a big deal.

Unless, of course, you happen to live outside the U.S.  In which case, depending upon where you live, there might be no legal way to buy digital copies of the episodes.  None.  And that is a big deal.  That isn’t all Hasbro’s fault; they have to deal with licensing restrictions from the companies broadcasting the series outside the U.S. (http://www.equestriadaily.com/2012/01/clarification-from-hasbro-about.html).  But given the sales they’re losing, they probably ought to be asking themselves whether broadcasting the show is worth it at all — perhaps it’s time for them go exclusively online in foreign distribution.

One could argue that they’d be cutting themselves off from their actual target demographic (young children) by doing so, but this is actually likely false.  Mean age of reproduction in the U.S. (for women) was 25 in 2010.  In Europe and the rest of the developed world, it tends to be a bit higher, but is usually before age 30.  If we assume that most kids watching the show are between 5 and 10, that means their parents will be largely be in their 30’s.  That age demographic is generally comfortable with the internet — watching streams with their kids or buying episodes for them is likely something they’d do.  And the older ones, who are less likely to do so, will probably have kids closer to 10 than 5, who probably use the internet themselves (hopefully supervised).  So the idea that they’d lose the kids as an audience is, at best, questionable.

“The Product is Region-Locked”: Convenience of Use

What is also a big deal is that all iTunes FiM episodes come with iTunes’ “FairPlay” software, which prevents them from being played on anything other than iTunes.  Which means that if you can’t or won’t install iTunes on your machine, you are SOL.

“Well, that’s kind of annoying”, you may be saying, “but you can just install iTunes and then only use it to watch those episodes.”  There are two primary problems with this reasoning.  The first is that people simply shouldn’t have to use a UI or software they dislike when playing their bought-and-paid-for content.  The second is that there are people for whom this isn’t practical or even possible.  “Like who?” you may ask.  Well, like me.  I run primarily Linux on my desktop, and I run exclusively Linux on my laptop.  So iTunes is not really an option for me, even if I wanted it (I don’t).  And though Linux use is pretty rare among the general population, the Pony fandom contains a high relative concentration of nerds, so Linux users are almost certainly more common there than in general.  So Hasbro leaves me with three options: 1) Pay for content I can’t fully utilize, 2) Do without their product, 3) Pirate it.

In short, I am trying to buy their product, and they are actively preventing me from doing so.  In what possible universe could that be good business practice?

“Just buy it and then torrent it,” I hear several people say.  And while this may be the best of several bad options, it also has some serious problems.  The obvious one is that in torrenting the product, I am enabling others who are torrenting it without purchasing it.  But more importantly, by buying the product, I’m rewarding iTunes and Hasbro for using bad practice.  I am telling them, “this anti-consumer practice works, and you should continue doing it.”  And I don’t know if I’m willing to do that.  This is, incidentally, one of the weird things about a market economy.  Purchasing decisions take on a moral dimension, because they (en masse) determine what practices ultimately prevail.  I’m not sure whether that’s a good or bad thing, but it’s something to be aware of.

So in this case, it seems the only solution is to wait for the DVD release.  Unfortunately, that brings us to:

“Will come to your country 3 months after the U.S. release”: Timeliness

The Season 1 finale aired on May 6, 2011.  The Season 1 DVD was released on December 4, 2012.  That is a period of 19 months.  Compare that to less than 4 months between the Season 1 finale and DVD release for Lost — which was back in 2005.  Even Game of Thrones, widely criticized for poor availability (and correspondingly, also widely-pirated), only had half that wait, at nine months.  FiM’s second season DVD gap was 11 months, which is certainly better, but still rather absurd.

In fairness to Hasbro, this part of the problem is not all their fault.  There was no way they could predict that the series would explode the way it did, and it obviously takes much longer to get a large-scale DVD release up and running than to get digital distribution going.  But it doesn’t seem like this situation is improving much.  We’re three months past the Season 3 finale, and we still don’t have any word on when the DVD will be released.  Which means it’s probably still going to be quite a while, maybe even another year-long wait.  So “waiting for the DVD release” means waiting quite a long time.  In fact, it means waiting an unreasonably long time.

To illustrate the net effect of all these bad business decisions, let’s examine the situation of two fans of the show, one of whom wants to pay for the content, and one of whom wants to pirate it.  The paying customer must either accept an inferior product of severely limited use, or wait at least a year before they can pay for the product.  And that’s the best-case scenario — many fans, depending upon where they live, just can’t purchase the product.  Meanwhile, the pirate gets the product, in Newell’s words “anywhere in the world, 24 x 7, purchasable from the convenience of [their] personal computer”.

At this point, the absurdity of the situation should be clear; you have someone who could rip you off, who has chosen not to at significant cost to them, and you are actively punishing them for it.  In this situation, how could piracy not be rampant?  At some point, many of those paying customers will conclude that your unwillingness to provide your product in a convenient, timely fashion is not their concern, and they will pirate it.  They won’t be right, but they sure-as-hell won’t be completely wrong, either.

Credit where credit is due: Hasbro made the series available via Netflix in April 2012, but while this alleviates the problem, it doesn’t solve it.  Netflix is only accessible via an internet connection, so if you want to take your episodes on the road with you, or are just going to have unreliable internet for awhile, you’re SOL — unless, of course, you pirate them.

Now, it’s possible that Hasbro simply gives zero fucks about the sales of the actual episodes, instead choosing to view the series as a means to sell the physical toys.  This is actually a reasonable stance to take, and given how lax they’ve been about enforcing copyright, it may be the one they’re taking.  But if that is the case, why bundle the official episodes with DRM in the first place?

On its own, a company making poor decisions about distributing its show is annoying, but fairly insubstantial in the greater scheme of things.  However, policies like this can have negative effects that most people may not consider.  To illustrate one of them, I’ll turn to Lawrence Lessig, the internet’s favorite lawyer (which, admittedly, is kind of like being England’s favorite French person, but that’s beside the point).  In his book Free Culture (which is a free legal download that you should totally read, by the way), he makes an excellent and little-mentioned point on draconian copyright laws:

“We pride ourselves on our ‘free society,’ but an endless array of ordinary behavior is regulated within our society.  And as a result, a huge proportion of Americans regularly violate at least some law.  This state of affairs is not without consequence…[E]ach year law schools admit thousands of students who have illegally downloaded music, illegally consumed alcohol and sometimes drugs, illegally worked without paying taxes, illegally driven cars.  These are kids for whom behaving illegally is increasingly the norm…Generations of Americans…can’t live their lives both normally and legally, since “normally” entails a certain degree of illegality.”

In other words, when you make normal behavior illegal, you don’t prevent that behavior.  What you do instead is normalize illegality.  As it turns out, the same thing is true when you make illegal behavior necessary.  Let us imagine that we lived in a world in which every new episode of FiM was livestreamed (with ads) simultaneously with its TV broadcast, DRM-free digital downloads were available worldwide for a reasonable price ($2-3 per episode), and season DVDs were released 4-6 months after the end of the season.  I strongly suspect piracy levels would be far, far below the present ones, for all the reasons listed previously.  At that point, asking for a torrent link on a forum might get one flamed or banned, depending upon the forum.

But that sort of culture can’t take hold, because piracy is the only convenient way — in many cases, the only way, period — for a huge mass of the fanbase to access the show.  Instead, a culture in which piracy is the norm arises, and that attitude will expand to piracy in general.  And that will have consequences for works other than FiM.

Which brings us back to the subject of the Bronies documentary and the FUBAR surrounding its “cancellation.”  The doc had its own distribution problems, which probably led some people to torrent it.  But more important was the fact that piracy had become normalized in the Pony fandom, pretty much out of necessity.  This means that not only was everyone familiar with the usual channels of piracy, but piracy had lost much of the stigma associated with it.  As a result, people were a lot less likely to think twice about pirating the work, a lot less likely to consider the consequences for the creators, and a lot less likely to discourage others from pirating it.  How much of a difference did that make?  I can’t say for sure, but I’d bet a large one.

DRM doesn’t work, and is probably a net loss for the publisher — that’s old news.  But what is often missed is this: intrusive DRM and bad distribution practices normalize piracy by making it necessary in order to access the work in question.  And that normalization of piracy isn’t restricted to that product.  When you push people toward piracy, it doesn’t just hurt your product — there can be collateral damage to other works as well.  That’s something we should definitely consider when we have the “DRM debate.”

[POST-SCRIPT NOTE: After writing most of this post, I learned that Hasbro started selling episodes on their Youtube store In January 2013.  This is certainly good, but a) it’s not available in many countries, and b) it took them over 2 years to do it — a lot of the piracy culture was ingrained by then.]

EDIT 2013-05-16: Fixed some formatting issues and changed the first graphic.

This entry was posted in My Little Pony: Friendship is Magic, Nerd Culture and tagged , , , . Bookmark the permalink.

8 Responses to Of Ponies, Portals, and Piracy: What Hasbro Can Learn From Valve

  1. Fou says:

    Thanks for that really interesting reflection!

  2. kcpwnsgman says:

    the Brony doc issues with distribution were as follows:
    1. Price was kind of expensive at $12 at launch. (prices are now better, with rental options)
    2. The site had a limit to the number of streams and downloads (while this was still much higher than other sites, it still felt like I lost something when I had to cancel and re-download).
    3. There was only one site to buy from (now there are many sites, to buy or rent from) which downloaded very slowly. (I started the SD 480p download and it didn’t finish until many hours later)
    4. Torrents were quicker and easier, a 1080p version would download and be higher quality than the version streamed or downloaded through the only content site at the time (legal options are now the quicker and easier option)

  3. dogman15 says:

    I really really really want someone at Hasbro who cares and can make a difference to read this.

  4. Leen says:

    Great article. Spot on. Thank you.

  5. Zach says:

    Interesting article. Personally, I pirated all of the episodes and went back and bought them all through Google Play when they became available (since that was the most available method for me).

    I can’t help but wonder about piracy levels for Equestria Girls in relation to the rest of the series, since Hasbro: 1) Made the DVD/Blu-Ray available available very shortly after the movie aired, and 2) Provided a free digital download for anyone who bought the Blu-Ray. One would theorize that piracy would still be rampant, but (as suggested here) the increased legal availability may have caused more bronies to purchase it legally.

  6. Anonymous says:

    funny enough, until I read this article I didn’t even know you COULD purchase episodes outside of DVD’s.

    • dogman15 says:

      That’s actually really surprising. iTunes was one of the first places Hasbro started selling episodes digitally. You didn’t know about that? I can understand not knowing about Hasbro selling on Google Play/YouTube, but surely you once heard that the show is on Netflix streaming? (Except that’s not exactly purchasing.)

  7. Pingback: Old Pony posts archive | The Pony's Litterbox

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