Friday Forecast: The Normalization of Digital Piracy: A Blight on Advertisers

by Colleen Ferrier and Rick Petry on Jun 9, 2017 1:00:47 PM Consumer Behavior, Advertisements

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There’s a lot of talk about shifts in media consumption habits by generation and the implications that it has for the traditional interruptive television advertising model. We know eyeballs are shifting away from TV onto smartphones, tablets, laptops, and desktops, especially among the demographic groups under 35 years of age. We know too that more content is being streamed on a delayed or on-demand basis and that viewers are either fast forwarding past our commercials or foregoing them altogether. Cord cutting, that is the practice of cutting one’s cable company or satellite TV provider loose in favor of content distributed digitally through streaming services, has doubled in the last three years from 3% to 6% according to a recent report from Forrester Research. The group also reports that the number of likely cord-cutters has gone up from 9% in 2013 to 16% this past year. The result: more a la carte consumption of content, often sans commercials. This is no surprise, given the average monthly cable bill is now north of $103 according to Leichtman Research Group. That sum can not only get you a so-called “skinny bundle” of essential channels, but a Netflix subscription and a fair number of Redbox movie rentals. Yet, among all of this swirl, little emphasis is paid to what remains an equal if not greater threat to content providers and the advertisers who rely upon them: the piracy of digital content.

Your Friday Forecasters have observed this phenomenon first hand, and it’s a strange paradox: average, law-abiding citizens who would never think of, say, shoplifting or hotwiring a car and taking it for a joyride, have no constraints when it comes to stealing content off the Internet. The practice is especially acute among Millennials or Generation Y, also known as “digital natives.” Generally speaking, these are now young adults who were born between the mid 1980’s and the late 1990’s, and who are now in their early 20’s to early 30’s. According to an e-book from Red Points, a provider of technology solutions that combat intellectual property infringement, the normalization of digital piracy began with the advent of Napster in the 1990s and other file sharing websites which made ripping and sharing MP3 music files a thing of ease. Its corrosive impact on the music industry in incalculable, as artists now make money touring and selling $40 t-shirts instead of selling records. In our firsthand experience, we’ve experienced the following:

  • A call from our cable company alerting us to the fact that someone – namely a Millennial relation visiting our beach house – had illegally ripped a feature film off of the web using BitTorrent.
  • Another relation of the same demographic group who wants to make their living as a writer, having no problem stealing paid content and, when asked how they can rationalize ripping off the intellectual property of others when they hope to make a living off of their own, replying, “If I really want to support the artist, I pay for it.”
  • A Generation Y producer – who also makes their living off of content – illegally downloading a game in our kitchen with a doe-eyed glibness that suggested he would be a fool not to; everybody’s doing it.

According to Red Point’s findings, these behaviors are a byproduct of a generation that is more tech savvy and tech trusting than other demographic groups. This is a group that grew up getting their “news” from The Daily Show and The Colbert Report and who have relied on the Internet for everything from buying their first car to finding a mate. They are more active on social media, more prone to information sharing, and avid consumers of on-demand/streaming media. According to the Red Point report, 73% use a laptop or PC to watch media (TV or film), 36% consider Netflix their first choice for media consumption, and over 7 out of 10 of them have used a streaming service. The threat such preferences pose to traditional TV advertisers is reinforced by Torrent Freak’s report of the most pirated TV shows of 2016. Seven out of ten of the most popularly bootlegged programs are on broadcast or cable television networks that rely on an ad-supported model. The titles, along with their networks, are:

  1. Game of Thrones, HBO
  2. The Walking Dead, AMC
  3. Westworld, HBO
  4. The Flash, The CW
  5. Arrow, The CW
  6. The Big Bang Theory, CBS
  7. Vikings, History
  8. Lucifer, AMC
  9. Suits, USA Network
  10. The Grand Tour, Amazon Network

Perhaps most cautionary for traditional advertisers is this observation from Red Point, “Millennials' social norms will become the new standard by which society is measured.” In other words, while some adherence to legal compliance and a willingness to pay for content may occur as this generation matures and grows older, as an industry we shouldn’t count on it. Instead, perhaps the challenge and focus for marketers should be on figuring out how to shift from a reliance on an interruptive advertising model to one that is more participative and that relies more heavily on word-of-mouth, social media, influencers, and the like. That kind of approach – which is nothing more than another form of content sharing -- may be the only way advertisers can find buried treasure in the midst of so many pirates navigating the digital high seas.


 About the Authors

Colleen & Rick.jpgColleen Ferrier is a seasoned direct marketing expert who specializes in guiding integrated direct-to-consumer campaigns with an acute focus on ROI. Her broad experience has included management oversight of marketing, operations, media, and international distribution. The campaigns she has been instrumental in helping lead to success across her 15+ year career include Pillow Pets, Little Giant Ladder, Dream Lites, and Stompeez. Ferrier has a Bachelor of Arts in Communications from Augusta University, Georgia.

Rick Petry is a direct marketing veteran of over 25 years who has been involved with campaigns that have generated over $1 billion in sales. He provides creative services to both B2C and B2B marketing campaigns and recent projects have included Actegy/Revitive, Education Connection, GOLO, Joybird, and OYO/DoubleFlex. The author of over 200 articles on direct marketing best practices, Petry has a Bachelor of Arts in Cinema/Television from the University of Southern California and an MBA with a Concentration in Marketing and Sales from Marylhurst University.

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