The impact of piracy and P2P on book sales

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The impact of piracy (and P2P) on book sales

• An update on the piracy project
• Tools of Change Frankfurt
• October 13, 2009

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This morning

• Project history
• Why look at this now?
• Approach and publishing partners
• Primary findings to date
• Next steps for this research

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And a call to action

• After this presentation
• Find out where your titles are shared
• Look at the impact on sales
• Measure! On an ongoing basis
• Act on what you find
• On your own
• or through this effort

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Born (Wakefield, Massachusetts)
College, business school
Time Inc. weekly magazines
Catholic school education
Finally left Massachusetts
Married, kid
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Faster, better, cheaper
More kids
Started to consult
Hammond
Got a logo
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Brian How about using a co-op marketing model
to assess whether it helps or hinders paid sales?
Intrepid NYU grad student starts tracking
OReillys 2008 front list to find pirated content
OReillys editors All of our content is
pirated as soon as we publish it!
Random House joins the research, contributing
several experiments with free content
distribution
MIP 2008 Andrew Savikas and Mac Slocum wonder,
Can we measure the impact of piracy on book
sales?
Brian secretly worries that any analysis will not
have a quiet period against which to measure
baseline sales
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TOC 2009 Research paper and preliminary results
are announced
BEA 2009 Piracy and free results are updated
Add Thomas Nelson titles to the piracy research
Still consulting
Piracy research on OReilly titles
Search for more participants
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Why tell you all of this?

• You need to know me to trust me
• Trust helps you hear what I have to say
• Success (to me) a fighting chance at
  recruitment and participation

And Id like you to take action
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My point of view

• Intellectual property (IP) matters
• There are niches, and titles, for which piracy is
  a direct loss and enforcement makes sense
• There are niches, and titles, for which piracy
  may help spur paid sales
• This research is structured to find out which is
  which

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Perhaps on the rare occasion that pursuing the
right course demands an act of piracy, piracy
itself can be the right course? Governor
Swann, in Pirates of the Caribbean (itself
heavily pirated)
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Free is not new

• A long and successful history
• Galleys, ARCs, blads, sample chapters
• Digital sampling on the rise
• but only a small set of experiments using fully
  free digital content

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Book marketing growing content discovery and
access
High Discovery
Appearance on Oprah
Coop Marketing
Amazon Promotion
Museum Stores
Low Access
High Access
Over time, increase both discovery and access
Catalog BEA
Corporate Web Site
Low Discovery
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Why look at this topic now?
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Our research approach

• Collate experiments
• Segment attributes
• Identify data gaps

• Use a consistent data source (POS feeds)
• Measure pre- and post-piracy

• Populate a structured matrix
• Look at combined results

• Initial take on the impact of pirated content
• Initial impact of free

• Share the analysis
• Invite discussion
• Grow the test sample

The research is data-driven, open (without
compromising publisher data) and structured to
share knowledge.
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A value in structured testing

• A robust set of variables
• Appropriate segmentation
• Captures content characteristics
• Can collate like experiments
• Can develop and test specific hypotheses and
  track results over time

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A hands-on research project

• Wil Johnson
• Searched P2P sites for OReilly titles every day
  since fall 2008
• Built his own scraper
• Running it made his (roommates) ISP cut off
  service
• Figured out a way around it!

New York University, candidate for M.S. in
Publishing, Dec 2009
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The sample set
Since the initial working group, Thomas Nelson
has joined (August 2009), and we are expanding
the number and type of titles we are tracking.
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What we have tested
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What we found initially
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What we took away from that data

• P2P threat may be overstated
• Low incidence
• Significant lag
• The value of free is not binary

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The number of seeds peaks quickly
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The number of leeches peaks immediately and
quickly declines
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Lag time before seeding varies
Average 19 weeks
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Proposing a more nuanced model
White market
Gray market
Back channel

• Print sales
• DRM-restricted digital sales
• Trialware

• Unprotected digital sales
• Galleys, ARCs
• Free promotions

• Unauthorized duplication
• Pirated content

Our current question what impact does free
have on sales?
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Some research surprises

• Low volume of P2P seeds and leeches
• Lag time on P2P seeding
• Number and range of under the radar free
  experiments available for analysis
• Interest among trade publishers

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The piracy research continues

• Found 13 more 2008 front-list titles
• Average post-seed sales down 4.2 in the four
  weeks after seeds first seen
• Results ranged from 15.1 up to 48.7 down
• Average first seeds appeared 19 weeks after
  publication date

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Comparing the data
The spread in results made us wonder if we had
missed something in the bigger sample set.
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Where piracy may benefit

• Looked at sales patterns of pirated and
  un-pirated content
• Normed the data to a common start point
• Plotted the average sales per week for pirated
  and un-pirated titles
• Uncovered a visual correlation between piracy
  onset and unit sales

Because of different pub dates, the average time
on sale for pirated content in this sample is
shorter (35 weeks) than that for un-pirated
content (47) weeks. Comparisons at the end of
the on-sale period are not reliable.
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Average sales (weeks after pub date)
Average week at which seeded content first seen
Unreliably small sample sets
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Four-week rolling averages
Average week at which seeded content first seen
Unreliably small sample sets
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Data in what is not yet pirated
Head First books break from the linear
tradition, instead using a trajectory filled with
successes, failures and lessons The non-linear
format makes them tough to reproduce in a digital
form -- they're full of illustrations, thought
bubbles, photos, quizzes, etc.
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Three useful cautions

• Correlation isnt causality
• Larger data sets may uncover a sample skew
• What works today may not work as well at some
  future date

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Next steps

• Continue to monitor P2P activity
• Seek publishers to help fill in the test matrix
• Gather feedback
• Continue to refine the analysis

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A call to action (a reminder)

• After this presentation
• Find out where your titles are shared
• Look at the impact on sales
• Measure! On an ongoing basis
• Act on what you find
• On your own
• or through us

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For more information

• Rough Cut research paper
• Includes this research and future updates
• Also provides background on free and P2P
• http//tinyurl.com/q3v4b9
• brian.oleary_at_magellanmediapartners.com