I found a pair of unrelated stories concerning Russia and piracy today in my Google Reader trawl that make for an interesting juxtaposition.
On Publishing Perspectives, Daniel Kalder interviews Sergey Anuriev, the CEO of Russian e-publisher Litres.ru. At the time the company was founded in 2007, there was no legitimate e-book business in Russia—it was “a 100% pirate market.” But at the time it launched, new legislation had founded new civil courts in Russia, which made it easier to fight piracy.
At the moment, the Russian e-book market is still very small, and Anuriev estimates that still 90% of the e-books consumed in Russia are pirate editions. But Litres is working to change that, signing arrangements with major Russian publishing houses to make their works available electronically. As a result, Litres has 60 to 70% of the legal e-book market in Russia.
Even though the Russian e-book market is still 1% or less of the overall book market, e-readers are still very widespread in Russia—and they may have an advantage over Russian print bookstores.
SA: We get business from all over Russia . . . You see, there is a very undeveloped “paper book” network in Russia. There are only 3,000-4,000 bookstores in the country, and most of those are in Moscow and Saint Petersburg and European Russia. In Siberia and the Far East there are very few bookshops. Meanwhile those bookshops do not have a good selection and so people have to read e-books. Everywhere in Russia people know about e-readers, why they should buy them, how to use them. They know that with the poor choice available outside Moscow, it is often the only way to get a book. Currently many people choose pirate resources, but in two years I expect the business will be about 70% legal.
At the moment, Litres is trying to fight piracy by low pricing. Currently it prices e-books at $3, 1/3 the cost of a paper book. It is hoping to increase its prices gradually until eventually it charges 75 to 100% of the print book cost. “The issue is very closely connected with piracy—remove the pirates and we will increase our prices,” Anuriev says. (Though from the perspective of a consumer, I would expect Russians who like to buy e-books would hope that piracy never goes away.) Publishing Perspectives has a separate discussion on whether low price is an effective way of fighting piracy.
The other story has to do with video game distributor Valve, and Valve founder Gabe Newell’s participation on a panel at a technology conference. During the panel, Newell talked about how Valve expanded its Steam electronic game distribution network into Russia. Newel reiterated what he has said before: Fighting piracy is not a matter of price or anti-piracy technology, but rather of giving consumers a better service than pirates do.
Newell: […] For example, Russia. You say, oh, we’re going to enter Russia, people say, you’re doomed, they’ll pirate everything in Russia. Russia now outside of Germany is our largest continental European market.
Ed Fries: That’s incredible. That’s in dollars?
Newell: That’s in dollars, yes. Whenever I talk about how much money we make it’s always dollar-denominated. All of our products are sold in local currency. But the point was, the people who are telling you that Russians pirate everything are the people who wait six months to localize their product into Russia. … So that, as far as we’re concerned, is asked and answered. It doesn’t take much in terms of providing a better service to make pirates a non-issue.
In other words, by providing the Russian product right away, rather than letting Russians have to wait for it while other parts of the world got it, he cut piracy by giving them the opportunity to buy right away instead of having to pirate it.
(Newell then gets into some surprising results of pricing experimentation (though this part isn’t strictly related to Russia), through which Valve determined that running huge sales on its products increases gross revenue at the time of the sale—but it also increases revenue after the sale is over. The sale wasn’t just “moving revenue forward from the future” in which people who would have bought it later cheaper bought it now cheaper instead, and it wasn’t cannibalizing its full-price sales. “Essentially, your audience, the people who bought the game, were more effective than traditional promotional tools.”)
This comes at a time when Russia is seeking entry into the World Trade Organization, amid accusations of not doing enough to enforce intellectual property rights. A Moscow couple was recently charged with distributing more than 30 pirated movies over the Internet, in Russia’s first major Internet movie piracy case. (Found via Techdirt.)
But even if Russia does crack down on piracy, it may be savvy marketeers such as Valve and Litres who bring about the most change, simply by providing legitimate services and making them more attractive to consumers.
How shocking – piracy went down when somebody entered the market and actually started selling legal copies of books. Completely unexpected result, certainly to those people in traditional publishing who both cry about piracy and are adamant about refusing to sell books to people with IP addresses they don’t like.
These truths are axiomatic:
– Piracy is a function of availability and affordability
– Ordinary people who obtain mass marketed intellectual property for non-profit use by pirating are NEVER guilty
If a mass marketed intellectual property is available globally at the same time, through a channel that is as easy to use as 3-clicks-to-buy and at a price that would allow 60% of the world’s population to buy it out of their leisure budget, THEN piracy would be reduced so severely that it would collapse (the top level pirating groups that make content available to lower and lower pirates until finally it reaches ordinary people would not be able to sustain themselves because ordinary people driving the demand would just use the legal channel out of commodity).
The current generation of content sellers must die before this can happen. The economic models used by these people are so disconnected from the new global reality made possible by the Internet that they are trapped. The speed with which they can change is not enough to ensure their survival and so they use their power to preserve the status quo. It’s natural, they want to live the only way they know how.
The BIG question is how far the legislative oppression will go. It’s not hard to imagine an armed conflict between China and US sparked by industrial copyright / patents. Or localized civil war in European countries, especially in the eastern block, if the police starts taking citizens to prison to serve the intellectual property sellers from US / UK / France / Germany. It would be foolish by the authorities to dismiss these possibilities and assume people will just “take it” laying down.