Pitfalls of Download Scam Sites

A recent article published by the Iowa State Daily draws attention to rogue download sites masquerading as helpful services.  "Touch Textbooks", they say, is actually an off-shore site that makes its money off of the $49 sign up fee they charge students for unlimited access to their catalog.

"The site is self-proclaimed 'verified by Visa' and 'safe and secure.'

There are even reviews listed on blogs and other consumer websites

claiming the legitimacy of Touch Textbooks, but do not be fooled."

What's wrong with this picture?  While the service seems attractive to students used to paying hundreds of dollars for college textbooks, the site actually contains PDF versions of far fewer than the millions of e-books they proclaim, and none of the publishers (much less the authors) receive any compensation for the revenue it generates.

A quick Google search brings up many forum posts touting this site:  Some of these posts have received quick replies, such as:

"Since college text books are copyrighted material, there is no way the copyright holder is going to allow them to be downloaded for free. If someone is indeed downloading text books, it's because they're pirating them. In other words, it's illegal. My advice; don't do it."

How is Bitmenu different?  Our publishers must identify themselves and be subject to take-down requests.  Our Terms of Use, which each Bitmenu Seller must approve, explicitly states that each Seller must have the rights to distribute the works they upload into the Bitmenu System.  Furthermore, when a buyer purchases through the system, the purchase they confirm at either PayPal or Amazon Payments goes directly to that Seller's account.  A copyright holder that believes some material used by a publisher in the Bitmenu system infringes on their copyrights is directed to our DMCA policy and can also claim fraud with the payment processor. 

Copyrights Under Scrutiny

The recent non-vote on new anti-piracy legislation has touched a nerve helped in large part by some of the most visible sites on the internet flexing their muscle.  The RIAA was given space in the New York Times to express their views and that piece has generated hundreds of responses, including one of our own.

The general tone of the comments reflects the shifting sentiments regarding how creative works are distributed and consumed, and who should pay.

Mechanisms like Bitmenu are designed to exchange payment for content delivery to any device via any service.  We think creative artists and rights-holders will make their money embracing creative packaging for their fans.  Many casual fans might share a piece of the package but a healthy audience will seek out and pay for the authentic product in all its richness.

Our comment on the New York Times piece, What Wikipedia Won't Tell You:

The old saying was: "Never pick a fight with someone who buys his ink by the barrel". It meant that those who controlled the means of production held all power. In media, all rights to copy works went to them.

Times haven't changed that much. Who creates the copy of a web page, movie or song for each user? It's not the author of the page or the musician or filmmaker. It is the site that automatically delivers content, ads, social graph elements and everything else, all neatly packaged for whatever device the user is viewing at the time.

In this scenario, the creative work is the site itself, and the content is merely useful as a mechanism to draw an audience that is of interest to advertisers, who pay for the privilege of being included in the dynamics of the page generation process.

Artists and rights-holders who wish to derive some benefit beyond considering "piracy as the next radio" as suggested by Neil Young would be well served to establish easy to use mechanisms for users to purchase and consume their works.

UPDATE:  The New Yorker has published a humorous look at the issue. 

Neil Young Calls for High Fidelity Music Distribution

Musicians who want to deliver superior recording performance are saddled with "lowest common denominator" services.  In a fascinating interview, Neil Young describes his mission to "rescue music" from the poor-quality MP3 files most services provide.  Since iTunes, Amazon, YouTube and other popular services automatically downgrade audio quality, what Neil is talking about requires a different path to market.

Here's a snip from the Verge, when he referred to Steve Jobs as one rich guy who preferred listening to his music on vinyl:

Young is calling for a new digital ecosystem of high quality music files and he believes that Jobs would have gotten there had he lived long enough. On the distribution side, Young isn't particularly concerned with the effects of piracy on artists, he's more concerned that the files that are being shared are of such low quality:

"It doesn't affect me because I look at the internet as the new radio. I look at the radio as gone. [...] Piracy is the new radio. That's how music gets around. [...] That's the radio. If you really want to hear it, let's make it available, let them hear it, let them hear the 95 percent of it."

In other words, let the world share MP3s all they want, but also make available high fidelity versions (he mentions that pro-quality 24bit/192kHz files compare nicely to vinyl records or tape masters). MP3s typically have only 5% of the data of such high quality files.  Neil says the download might take 30 minutes but for some people, and for the artists themselves, this is worth paying for.

We couldn't agree more and stand ready to support any artist to deliver large, high-quality music to those who appreciate the difference.

MegaUpload and Social Distribution

The recent FBI take-down of the internet's largest "file sharing" site, with over 150 million users, has sent shock waves through the media world.  Other cyber-locker sites might possibly be closed and some have voluntarily shut off services.  MegaUpload paid users to upload files in bulk without asking questions, and then offered downloaders more responsiveness and bandwidth as a paid subscription service.  Some estimate the service earned over $40 million last year.

The media world is being turned upside down by services that charge for access but do not pay rights holders.  These services make downloading content easy, without requiring registration, through any browser to any device.  Given the success of the Louis CK experiment (see earlier post), simply requiring a reasonable fee prior to download could go a long way towards making such service irrelevant?

UPDATE:  3/2/2012

Kim Dotcom, MegaUpload's founder and the key player in this story, has been released on bail and promises to fight for the company that has been taken away from him.

As described by the transcript:  He has two main defenses: firstly that the site is far too large for him to police individual instances of piracy, and secondly that competitors like Mediafire and Fileserve provide the exact same service. Dotcom also claims that neither the MPAA nor any movie studios ever contacted him or his site before taking legal action.

"It's all about being direct" - Louis CK

It's being called a "milestone" event.  Last Saturday, comedian Louis CK released a special offer through his web site.  He posted 81 tweets that day, engaging everyone who said something about what he was up to, and another 23 tweets over the next week.  His Reddit thread created thousands of comments.

His offer:  for $5, anyone could download a live performance, could burn their own DVDs, watch it on any device, no app required.  Famously, he appealed to torrent freaks to not steal his work, and after four days he issued a statement about "the experiment".

He explained in later interviews that he wanted to make his performance more affordable. By selling direct he could rely on his own voice to reach his audience.  He even let people download DVD cover art so they could create their own DVDs (scrub to 2 minutes into this video to see him pitch the deal to Jay Leno).

What's at play here is an entirely new cost structure that puts unprecedented powers into the hands of media creators.  Louis CK's 788,000 twitter followers spread his message so effectively he sold 160,000 units within 5 days.  He declared a profit of $200,000 after only four days and others have analysed his costs.  At the same time his twitter following grew by over 10% to 828,000.

The purchase and delivery system used for this experiment holds some remarkable similarities to the Bitmenu design.  It does not require users to create an account or supply financial information.  Buyers can download their file immediately after their purchase goes through.

We expect this experiment to generate more tests and to ultimately alter how media creators bring their work to market.  Some are calling it the "Louis C.K. Window":

"The new twist here is the way his experiment changes video “windows” — which determine when shows and movies show up on different outlets. By going direct-to-fan first, C.K. doesn’t shut off his chance to end up working the Big Media Companies... he’s just making them wait. So the people who really love him can get it right away, and he can capture almost all of that value in the transaction."

In the words of Louis CK:

"Please bear in mind that I am not a company or a corporation. I'm just some guy. I paid for the production and posting of this video with my own money. I would like to be able to post more material to the fans in this way, which makes it cheaper for the buyer and more pleasant for me. So, please help me keep this being a good idea. I can't stop you from torrenting; all I can do is politely ask you to pay your five little dollars, enjoy the video, and let other people find it in the same way."

UPDATE:

On December 21, Louis CK posted another statement along with a screen shot of his PayPal balance:  One million dollars.  He will donate as much to charity as he keeps for himself.

His twitter following has grown to over 890,000.

From his statement:

"hi. So it's been about 12 days since the thing started and yesterday we hit the crazy number. One million dollars. That's a lot of money. Really too much money. I've never had a million dollars all of a sudden. and since we're all sharing this experience and since it's really your money, I wanted to let you know what I'm doing with it. People are paying attention to what's going on with this thing. So I guess I want to set an example of what you can do if you all of a sudden have a million dollars that people just gave to you directly because you told jokes."

UPDATE 3/3/2012:

Advertising Age reviews the Louis CK experiment and suggests creators engage audiences on their platforms of choice, such as Reddit or Twitter:

"The strategy has already yielded one copycat that's had the unintended effect of showing how deft C.K.'s touch was. This month, comedian Jim Gaffigan announced his own $5-a-pop comedy special, with a dollar from each sale going to a charity for wounded veterans. You've gotta love the thought, but announcing it on 'a personal media-management platform' called Whosay? That's not cool."

An Observation on Monetizing through Social Media

In another group that I read and occasionally post to, the question came up about charging for a service or content vs. using ad revenue.

The site discusses financial information and has a lively conversation. It's been free for some time, but the operator is now asking for donations. This was my reply, aimed at the proprietor of the web site:

"My $0.02 on ads vs. pay. I've been in the digital media payment/social network business for the past 4 years. As you experienced, ads only pay significantly at very large scale, like >1M uniques per month. 

"For smaller scale, catering to very devoted 'fans' if you will, it is much better if you have a paid site. The critical caveat is that there must be continuous engagement by, in the words of Hollywood, the 'talent'. In this case, the talent is you. 

"IMHO, this is why business is slow to embrace social media in a conversational way: the one-to-one or one-to-few (less than a thousand) nature of the conversation. When you get above a thousand or so active participants, you hit a ceiling. As you have seen, even if only a small % of the 1,000 people ask questions or start a conversation and expect an answer, it's overwhelming. This, of course, quickly overloads the talent, as you are experiencing. Some sites hire ghost writers to pen the writings, like Oprah and many other large social graph celebrities. But I doubt that's your style or strategy.

"It's been shown that the predominant digital products/site access services men pay for (not necessarily in order), is financial info, entertainment, health info, a passion (music, guitar playing, sports, etc.) and of course, adult. But financial info is the #1 for men, above all else."

At Bitmenu, we've noticing more social media experiments being put in place by large corporations and see that only a few are scaling up. For our sellers, paid services offset the costs associated with managing social media engagement. In addition, a continual flow of new for-pay promotions establishes the seller's authoritative voice and trust with a discerning audience. Finally, social media conversations carry these offers to new markets.

The benefit of selling premium content to a core audience:  offset social media engagement costs, increase brand trust and authority, and grow your base.

Trends in Social Commerce

This past week, eBay hosted its second Developer's Conference. The message: "e-commerce" becomes mainstream commerce when retailers integrate online services into their current business practices. Selling digital content through social media was a major trend featured by Carey Kolaja, PayPal's Senior Director of Digital Goods. She hosted a vibrant panel that yielded insights into building successful campaigns. At Bitmenu, we are constantly asked to help sellers engage buyers through their networks of colleagues and friends. Our toolset was deigned for the methods recommended by panel members:


Don't think of your audience as "only" a few hundred people. Remember that each Facebook user has an average of 130 friends who will see their activity. If you think about what messages will inspire your audience to act, your messages can extend to tens of thousands of potential impressions. When USRowing announces the availability of recent races, we see purchases across networks of friends and family members.

Tweets and posts degrade quickly. Overall, 50% of activity will occur within an hour and a half after the post. All activity will be over within 24 hours. Sellers must respond to comments and shares to extend the conversation and increase discovery. We see longer life on Bitmenu promotions from Acoustic Guitar magazine, which typically yield 5x response levels when compared to "deal" sites. Our "white label" orientation sets up the seller as the authentic voice and increases sharing.

Target sub-groups. Typically, 2/3 of social sharing is to a sub-group of known friends rather than to a general post. Suggesting who you want to reach with your messages will help your audience re-direct appropriately. Baker Street has recently focused on authors promoting within private LinkedIn groups, and has seen their sales increase 300%.





Finally, engage through the stream. As much as 95% of all visitors to a Facebook "fan" page never return. Wall posts are where the action is. Racing Yesterday sees a regular uptick in activity whenever community members comment of the author's activities.


Bitmenu sellers simply paste our URLs into Facebook, LinkedIn, Google+ and twitter. These recommendations from this excellent panel are well worth following to increase awareness, engagement and sales.