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HBO Netflix Copyright

Netflix admits using pirate sites to determine what content to license

By Mark Leiser, Research Fellow

September 14, 2013 | 4 min read

Film site Netflix admits using sites like the Pirate Bay in order to determine what content is popular and worth licensing from developers and producers

A recent article about the leaking of images, screen-grabs, and videos of the yet-to-be released and highly-anticipated game, Grand Theft Auto 5, highlighted what most people describe as the ‘plague of piracy’ – how the Internet helps to facilitate copyright infringement and has changed the way content creators have to monitor and deal with the sheer volume of piracy that travels across the network.Media companies have tried multiple tactics to remove pirates from the Internet. These methods have included, but are not limited to, suing individuals for mass infringement, suing groups for mass infringement, suing individuals for single infringements, suing groups for single infringement, shutting down entire websites, and pressuring legislators to pass bills that would shut down parts of the Internet. One could be forgiven for thinking media companies and content creators would want the scourge of piracy to be eradicated from the lexicon. However, Netflix the online film company, has admitted that it uses pirate sites for researching what's popular. However, vice president of content acquisition for Netflix, Kelly Merryman, revealed this week that the company she works for routinely use piracy sites to determine what television shows the company will buy. By gauging the popularity of shows on sites like The Pirate Bay, the company is able to determine which shows are really popular and help assist in making licensing decisions. “With the purchase of series, we look at what does well on piracy sites,” said Merryman.Netflix, which just rolled out its video streaming service this week, is one of the legal alternatives to BitTorrent sites that offer media to people without paying for the opportunity to do so. Netflix CEO Reed Hastings added in a separate interview. “Certainly there’s some torrenting that goes on, and that’s true around the world, but some of that just creates the demand.”“Netflix is so much easier than torrenting. You don’t have to deal with files, you don’t have to download them and move them around. You just click and watch.”
One of the on-going aims of the company is to turn those who rely on pirate sites to consider making the switch to sites like Netflix. According to Hastings, there is evidence that BitTorrent traffic in Canada dropped 50% after Netflix started there three years ago. Critics of pirate sites often claim that downloading torrent files is “stealing” from the content creators. Others claim that downloading is a natural outcome of a failed and ideologically invalid “scarcity principle”. The scarcity principle is economic in nature and states that a limited supply of a good, coupled with a high demand for that good, results in a mismatch between the desired supply and demand equilibrium. Content creators often relied on the scarcity principle for creating their business models in the analogue era. However, with the Internet able to facilitate the transfer of an unlimited amount of copies from a source file without losing any quality of the content, others suggest piracy is a natural consequence of content creators limiting the availability of content. HBO, for example, has gone to great lengths to prevent the licensing of the hit TV show, Game of Thrones. HBO is concerned that they will lose subscribers if they release material it produces like Dexter and Games on cheaper Internet alternatives like Netflix. Netflix has built a business model on licensing mass content. And HBO has refused to license content to Netflix at any price. It may be a coincidence, but Game of Thrones is currently the most pirated television show.

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