Online Book Piracy: Threat, Opportunity or Both?By Matt Steinmetz
The threat of piracy continues to worry book publishers, who are wary of losing sales as more content becomes available in digital forms. But Magellan Media, led by Brian O'Leary, has developed a research approach that is helping publishers including O'Reilly Media and Thomas Nelson better understand the real effects piracy is having on their book sales, while empowering them to make more informed decisions on how to handle digital content. O'Leary will be leading a much-anticipated session at the upcoming Publishing Business Conference & Expo (PBC), titled "A Close-up Look at the Effects of Online Piracy on Book Sales," and scheduled for Monday, March 8 at the New York Marriott Marquis Times Square. This week he agreed to give Publishing Business Insider readers a preview of his findings.
INSIDER: What's the most common misperception about piracy?
BRIAN O'LEARY: Generally, people view each instance of piracy—content uploaded on a file-sharing site, for example—as equivalent to a lost sale. While there are markets and products for which this may be true (expensive software, for example), there is little evidence to confirm that the people who download pirated content are likely to have bought the content through legitimate means.
INSIDER: How did that misperception influence the research at Magellan?
O'LEARY: Well, in designing our research, we decided early on that tracking the instance of piracy would be useful if we could link it to data that would let us correlate piracy with paid sales. Tracking how often things are uploaded or downloaded is useful as a rough proxy for demand, but it really doesn't tell you how piracy affected paid sales. So we have focused on front-list books, tracked when they first appear on BitTorrent sites, and then compared the sales of those books before and after piracy occurs.
INSIDER: What have you found so far?
O'LEARY: The biggest "aha" moment occurred when we tracked pirated and un-pirated titles against a common pub date. Both sets of titles showed similar growth in sales in the first few weeks after a book is published, followed by a decline after peak.
The primary difference between sales of pirated and un-pirated content appeared in weeks 19 through 25, when sales for pirated content peaked a second time at a level higher than that seen in the first, sell-in period. This second peak followed the time (19 weeks) at which the average pirated O'Reilly front-list title was first seeded on a P2P [peer-to-peer] site.
In presenting the data, we stress that this is correlation, not causality, but the difference in the sales profile is notable and persists even when using rolling averages.
INSIDER: Have there been any other surprises?
O'LEARY: On Torrent sites, the lag between pub date and first instance of piracy for O'Reilly titles has averaged 19 weeks. We've been studying Thomas Nelson front-list titles since August and have yet to find a pirated version. The lag between publication and piracy is much longer than we would have expected.
INSIDER: Why do you think there is such a lag?
O'LEARY: We don't know. One hypothesis: Reading books digitally is still a relatively rare practice, so other media (movies, music, television) are more likely to be pirated quickly. Of course, e-readers are growing in both number and popularity. That's one of the reasons we wanted to track the impact of piracy now–to better understand what the effect of e-readers might be down the road. You can't do that without a research baseline.
INSIDER: Are there other studies that are comparable to yours?
O'LEARY: I am sure there are, but we have not found them yet. To do this work well, we've focused on trying to stay on top of a small but growing set of books. I think the topic is important, but it is largely unfunded research at this point. Expanding the data sets by partnering with others or acquiring sustained funding would be a service to both publishers and authors, no matter where the data leads us.
INSIDER: What's your take on the recent research by Attributor?
O'LEARY: Well, data is data, and to the extent that Attributor has captured the instances of piracy, it's helpful information. After the firm released the results of their study, I was pretty skeptical, largely because they conflated the research with an unproven estimate of how much piracy "costs" publishers. That approach blocks effective discussion of the impact of piracy and shifts the debate to answer a single question: "What can we do to stop piracy?" If seeded content helps a publisher sell books, "stopping piracy" is the last thing you'd want to do.
INSIDER: How do you think publishers should think about piracy?
O'LEARY: This may seem flip, but I think they should think first about reading. What encourages people to want to learn about a book? How can authors and publishers foster greater comfort with a buying decision that requires hours of active engagement after the book is bought?
We live in a world in which we "know" books well by the time they are published, but even the avid reader often needs more information before buying the book. We often don't really understand how various marketing approaches succeed. I see piracy, much like galleys and ARCs [advanced reading copies], as a tool to lower the barriers to awareness and trial of something new, and I'm trying to gather data to test that hypothesis.
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