Studios 1- Pirates minus $ 2.8 million

I woke up this morning at 5:00 a.m., a hour late for a conference call about the verdict in Sweden in the Pirate Bay criminal action. I pulled out my trusty blackberry and there it was. Email after email announcing the content industry victory. The four defendants were found guilty of contribution to criminal copyright infringement, i.e the uploading by users of unauthorized copyrighted works (movies and music) to Pirate Bay. The total damages award was about 28 million SEK (Swedish Krona), the bulk of the damages attributable to Hollywood motion pictures. The record industry, ironically, got a relatively modest damage award notwithstanding their much more vocal and visible presence in the trial as the "bad guys" going after the jolly pirates who after all are only giving people what they want--stuff for free that you would otherwise have to pay for it you got it legally.

Some websites are already predicting that the torrents will still flow on other sites like Mininova. Others have noted that this verdict does not shut down Pirate Bay because it does not include an injunction. I find one recurring argument in blogs particularly amusing in a gallows humor sort of way. The argument goes--studios and record companies are at fault when people steal from them on the internet because the content owners have not adapted their business models to the reality of the internet--i.e. stuff is free (for the most part). That argument ignores that it is wrong to take content for free when you know the owner expects to be paid. People do not steal DVDs from stores but feel perfectly comfortable taking the movie on the internet. Why is it the studios' fault that people steal movies on the internet? Also, business models are changing. Movies are available on the internet --both for a price and for free. TV shows too. See also http://www.youtube.com/crackle. Studios are not the record industry which released unencrypted CDs that could be ripped to the internet and handheld devices without foreseeing how damaging that would be to their hard goods business.

So bottom line--the studios are wrong because they do not give their product away for free. Having talked to some of our finance people, we might as well be.