Evidence Shows You Can, In Fact Compete with Free.

Evidence Shows You Can, In Fact, ‘Compete’ With ‘Free’ http://bit.ly/aTRffo

Modplan points us to a recent talk given by professor Michael D. Smith at Google. Smith is fromCarnegie Mellon and is discussing some of his recent papers, such as one on whether or not “piracy” acts as promotion for movies and another one on how digital sales, when set up right, don’t actually cannibalize other sales. That latter one debunks the silly claim from Jeff Zucker and many others that they’re “trading analog dollars for digital pennies.”

If you can’t compete with “free”, you probably can’t compete in a digital era. This article is a pretty thorough debunking of the myth that you can’t compete with free, and highlights the importance of meeting customer needs, rather than your own needs.

One bit of research involved the natural experiment that happened when NBC Universal, due to a contract dispute with Apple, removed its TV shows from iTunes for almost a year before putting them back. So, what happened when the content got pulled? Well, first, piracy rates increased — and not just in absolute numbers. The research compared piracy rates against the other major TV networks, and found that the rates tracked almost exactly prior to the content getting pulled from iTunes… but the second it got pulled, NBC piracy rates were noticeably higher than the other networks. In other words, not offering consumers a way to buy your content legitimately increase unauthorized access. No shock there, but nice to see the data to support that. Specifically, the data found that the “demand” for unauthorized versions increased by 11%.