Is internet piracy really that bad?

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October

2017

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Is internet piracy really that bad?

After a recent case in the Dutch court, Ziggo and XS4all have to block torrent      website The Piratebay once again. This was already the case in 2012 but was that block was overruled in higher court in 2014. The case is not new and the same thing has happened, and is still happening in a lot of countries for multiple so-called piracy websites. Organizations such as BREIN are filing these lawsuits to protect copyrights of several companies. Meanwhile providers defend the blocking of these websites based on freedom of speech. There is a lot of discussion about the downsides of piracy, but are there upsides too?

People in isolated countries generally have less access to mainstream series and movies. For example, if you live in Siberia and that one movie is not available on Netflix and not being shown on TV, how would you access it? You can get it sent from another country but that may not even be a possibility. The only option you would be left with is downloading the actual movie.

It gives companies reason to re-evaluate their profit model, Spotify and Netflix for example, dove in the market with a solution that solved the problem for people with low-income, such as students. This group is financially not able to buy everything, but are a big contributor to making or breaking a series in terms of popularity. All the extra publicity generated from this group might give the series an even bigger boost and may even increase total sales instead of lowering it.

The market of multimedia is still very much ruled by large companies such as HBO and Warner Bros. Piracy has brought more access to this market and its artists. You might even say that it actually stimulates smaller series and artists- file sharing, giving them more chance to breakthrough. Soundcloud and YouTube for example, made it possible for lots of small and unknown artists to share their content and generate revenue outside of big labels.

Series are more popular than ever, whether illegally downloaded, watched via Netflix or on TV, watching series and the term binge watching are quite popular these days. Cinemas are doing better than ever (MPAA, 2015). While most people view downloads as missed income for companies or artists. They might stimulate other parts of the market, such as merchandise.

While these reasons may not reflect the reality perfectly, I can say that piracy has disrupted the market multiple times, forcing them to innovate and change with current times. It also puts a dent into large company domination of the market. I think these changes are good for the general health of the market. Is calling piracy a necessary evil justified? You decide. We’ll have to see how the market evolves.

https://www.nrc.nl/nieuws/2017/09/22/xs4all-en-ziggo-moeten-the-pirate-bay-voorlopig-blokkeren-a1574474

https://www.mpaa.org/wp-content/uploads/2016/04/MPAA-Theatrical-Market-Statistics-2015_Final.pdf

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Cybersecurity budget increases, option or need?

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October

2017

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Just yesterday, the Dutch negotiators came to an agreement on leading the country. One of the most interesting things mentioned in the agreement is the increase in the budget for cybersecurity. An increase to 95 million euros in the upcoming years seems necessary, but is it really?

With the increase of the digital economy, digital risks have grown, too. Examples such as the Wannacry ransomware and Cloudbleed hack come to mind. Both hacks have direct on impact on both businesses as private citizens. These risks imply large costs for companies when they actually happen, far surpassing the cost for prevention. But there are large government risks too. In the US, 198 million voter records going back more than 10 years were publicly accessible, exposing a large cybersecurity risk. Closer to our borders we can identify the Macron campaign hack. Hackers dumped 9GB of emails from the party of Macron to undermine his run for the presidency. While these risks may not imply large costs in euros, they imply large social value.

Cybersecurity has been increasingly in the news for the last years and large companies seem to be increasingly aware of the threats. Average security budgets for companies are growing: Where a lot of companies in 2014 spent an average of 4-6% of their IT budget on security, in 2016 this number has grown to an average of 8-10% of this (meanwhile) increased budget. This budget varies based on the industry a company is in. With financial services leading at 12%, IT services sitting at 7% and education only at a mere 1-3%(Sans, 2016).

What about governments? Do they go with the trend of spending on cybersecurity? According to SANS Institute governments on average do spend 7% of their digital budget on cybersecurity, too. Looking at the increase in the upcoming Dutch cybersecurity budget, the table below shows what the spending for the leading countries in cybersecurity may look like based on a percentage of GDP. The Netherlands will grow to a 5th place internationally, following just behind the UK, France, Denmark and Australia. The US is leading the cybersecurity market by a large margin, mostly driven by its high spending on military (HCSS, 2016).

Spending on

Cybersecurity risks will keep growing as the digital economy is taking a bigger part of the total economy each year. For governments, elections and citizen private information are issues to be more aware of. As the Internet of Things is growing, so do the risks going arm in arm with this. The Netherlands seems to realize the risks with this new agreement, showing Europe and the world that they should too.

 

https://www.nu.nl/internet/4957952/tientallen-miljoenen-extra-cybersecurity-nieuwe-regering.html

Click to access HCSS-Dutch-Investments-in-ICT.pdf

https://financieel-management.nl/artikel/wereldwijde-uitgaven-cybersecurity-72-miljard-euro

https://www.sans.org/reading-room/whitepapers/analyst/security-spending-trends-36697

Top 3 Leading Cybersecurity Countries

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Blog Post IS group 40

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October

2017

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Blog Post – Group 40 – Platform mediated markets – Resale ticket market

TicketSwap, many of you might have heard of it, or even ‘swapped’ your tickets on it. TicketSwap is a classic form of a platform, reshaping the market of ticket selling. We got a user selling his ticket, and a user buying it, the mark-up? You guessed it, goes to TicketSwap. However, this application is just a small part of a way bigger market of platforms in the event industry. We call this market the ticket reselling industry, as it contains both professional companies and individuals.

Ticket reselling has already been present since the 19th century. People known as ‘scalpers’ sold large amount of train tickets, stolen or gotten somewhere else, to unexpected people. This grew into scalpers showing up in lobbies of events selling unsold tickets from the brokers’ offices or even offering fake tickets to unexpected buyers. Nowadays, large events mostly ‘sell’ their tickets using an intermediary that positions itself as a ‘seller, or scalper’ on a platform, which can be their own selling website, too. These companies ask big-markups, driving prices of tickets. However, since 2008, more and more platforms like TicketSwap have emerged. The primary market of live music and sports events generated over 20 billion dollars per year in the United States that year. While the reselling market ‘just’ reached 3 billion (Mulpuru, 2008). Only last year, this number has grown to 8.5 billion dollars For popular concerts, resale market value are now sometimes as high as 37%, with 46% of the resale activity being generated by consumers both psychically and on platforms (Leslie and Sorensen, 2014). This new form of ticket scalping generated controversy and evokes strong reactions from both consumers and the primary sellers. We can take Ticketmaster for example, they tried to prevent the resale of tickets by influencing ticket legislation.

The consumers in this industry are often passionate and driven (Boylea & Chioub, 2012). You just want to get that ticket for that concert you wanna go to so badly. Where you normally would go to a licensed office, the new platforms started connecting consumers with each other. This change takes advance of the intransparency in pricing and has created large online marketplaces where all kinds of tickets are offered. The absence of legislation in this market only accelerated this change. The whole market was on the one hand being disrupted by shoving the intersection between demand and supply back to its natural place (Boylea & Chioub, 2012).. On the other hand we see disruption by start-ups that are offering other solutions such as converting physical tickets into electronic tickets, and platforms that let event organizers create, promote and collect payment for their events. Accepting high fees as an event organizer is no longer the norm, choice in reselling options is bigger than ever, directly benefiting the consumer (Inc, 2015).

So how do we move forward from here? As said, legislation is still a big factor to look at. To fully stop the mass buying of tickets just for the point of reselling them for a higher price, we need legislation to restrict bots for example. On the other hand governments need to directly innovate with the platforms to prevent mass buying (GSMA, 2016). Another benefit of this cooperation would be innovation in better utilize of trusted mobile and financial platforms. This way, identities can be secured for digital ticketing and transaction tracking. Major players will keep trying to defend their market shares and reputation. By investing in digital innovation, governments are also directly closing avenues for exploitation and abuse of fans, creating a healthy secondary ticket sale market.

By: Victor Huysmans, Lars de Rooij, Brend Fianen & Koen van Vreeswijk

 

References:

Melissa Boylea and Lesley Chioub, The Effect of Ticket Resale Laws on Consumption and Production in Performing Arts Markets, Eastern Economic Journal (2012) 38, 210–222

Leslie and Sorensen, Resale and Rent-Seeking: An Application to Ticket Markets, Review of Economic Studies (2014) 81, 266–300

Mulpuru, The Future of Online Secondary Ticketing. Technical report, Forrester Research, (2008)

TicketNews. (2017). Guest Commentary: The Future of Ticket Scalping Laws. [online] Available at: https://www.ticketnews.com/guest-commentary-the-future-of-ticket-scalping-laws/ [Accessed 6 Oct. 2017].

Inc.com. (2017). The Next Industry Ripe for Disruption: Event Ticketing. [online] Available at: https://www.inc.com/antonio-neves/the-next-industry-ripe-for-disruption-event-ticketing.html [Accessed 6 Oct. 2017].

Digital Commerce. (2017). Secondary Ticketing Industry – an Appetite for Disruption? | Digital Commerce. [online] Available at: https://www.gsma.com/digitalcommerce/secondary-ticketing-industry-appetite-disruption [Accessed 6 Oct. 2017].

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