Why Slovenians have about as much choice as Somalis in becoming pirates

Kaj Jež

Recently Dan Prestwich, writer and producer best known for the TV series ”The Killing” stated in an article in Variety that ‘’illegal downloading is how shows die’’. While I (and I am sure anyone who understands how markets function) couldn’t agree more with Prestwich, I should acknowledge that the market situation and institutional inefficiency in Slovenia seems to be set up in such a way as to encourage piracy in terms of TV and movies.

I am sure that most Slovenians are aware that internet piracy, particularly in the fields of music, television and films, is quite widespread. Yet it isn’t simply the result of my countrymen’s general leniency towards crimes such as this that are perceived as victimless. It is, to a great extent, also the fault of Slovenian film distributers, legislators, law enforcement agencies and foreign digital distribution companies. In other words, market organization and institutional deficiency encourage piracy.

There are few, if any, means by which someone in Slovenia may legally access films and television shows in a convenient and timely fashion. The traditional way of seeing films and television used to be either to have whatever happens to be on funneled to those among us who cared less for what it is we happened to be watching, or for us to constrain ourselves to television’s predetermined schedule. In the last decade this has changed substantially primarily due to the much more widespread presence of internet access and the level of comfort people have with internet purchases. Sites like Hulu and especially Netflix allow users to view films and television series on demand in the comfort of their homes, on their computers. Yet sites like Netflix cannot be accessed using a Slovenian IP address, making the purchase of shows and films online for convenient viewing legally nigh impossible. The renting of movies and television series through Amazon prime is also not permitted due to geographical restrictions. While the renting of films is possible on iTunes, the digital purchase of film copies is not possible (note that piracy almost always provides the perpetrator with a permanent copy of the product), nor is it possible to view television series on the platform. Not to mention the fact that copyright and anti-piracy legislation are antiquated, vague and seldom enforced. The most convenient and cost-efficient way for my countrymen to view this content is therefore to download it illegally, considering the low level of risk involved.

The issue of poor distribution and accessibility also extends to films released in cinemas. Slovenian film distributers do not license to show all films released in the rest of the world regardless of their commercial and critical success and many high-profile film releases often premiere in Slovenian cinemas long after they are shown in the rest of the world. Slovenian cinemas hardly even screened the original (non-dubbed) version of Disney’s Frozen (by now the 5th highest grossing film of all time) as well as many other animated films, despite the fact that they are designed to appeal to a wider audience, not merely one consisting of children and their families. Note that many fans of these films refuse to go see the dubbed version of the film as that usually means paying for a product they consider defiled and greatly inferior. The relatively commercially successful Spring Breakers was also never made accessible, while the Slovenian cinema release for This Is the End was after its Blu-ray release in the UK.

The distributers are likely not the only ones to blame for the fact that many screenings have less than a dozen attendants. The price of film tickets has, to my memory, risen since internet piracy has become widespread. This could, perhaps, be attributed to cinemas misjudging the price elasticity of their service by underestimating the propensity of Slovenian film-goers to turn to illegal activity to reduce the costs of their film-viewings. Many cinemas (Kolosej, who has recently changed owners, in particular) lack any sort of customer loyalty projects to speak of, nor do they attempt significant community outreach or special events for potential demographics of loyal viewers such as families with young children or fans of comic books or their cinematic adaptations (note that comic book adaptations comprise four of the top ten highest grossing films of 2014). Moreover, as marketing for films and film culture have become more global through homogenization and the spread of the internet and the interwoven communities that depend on it, demands of consumers have also become more universal and global. Something that Slovenian distributers have failed to keep up with.

The issues in distribution can be traced further than simply to the relative incompetence of Slovenian distributers. Ever since old-school video stores, selling DVDs and video cassettes (the latter being at best a distant memory to the children of the 90’s who now make up a significant portion of the young/young adult film crowd most films are marketed to) have gone the way of the dodo, the film distribution market has leaned more away from perfect competition, as is often the case when distribution goes digital. With fewer actors on the market, they are inevitably slower at expanding to fill niches and small markets. Slovenian internet piracy is a clear example that not only government failures such as prohibition, but also market failures such as monopolies and oligopolies breed black markets.

The chart and map available here clearly show that Slovenia ranks higher than most developed countries in internet piracy. While the data only shows statistics that relate to software piracy up to 2009, it is nonetheless a clear indicator of certain patterns such as an inverse correlation between development level and piracy rate. Notable examples include our northern neighbor Austria with only a 20% rate of software piracy and our southern neighbor Croatia with a somewhat higher rate of 54%, compared to Slovenia’s 46%.

The problem with the presence and continuous spread of internet piracy in Slovenia is that it, as Dan Prestwich points out, distorts the market and may reduce the production of entertainment products enjoyed by both paying customers and pirates alike. People illegally viewing films whose development, marketing and distribution have been financed by customers are essentially free-riders, taking advantage of both their peers and the industry as a whole. Eventually, global distribution companies and proponents of copyright will crack down on internet piracy, even in small, seemingly irrelevant countries such as Slovenia. The eventual abandonment of such practices will be much more difficult if downloading films and TV series illegally becomes an integral part of Slovenian consumer culture, which is already the case. It is not unusual to find 12-year olds with a working knowledge of software such as torrents, used for illegal downloads and sites such as Partis and Piratebay. Internet piracy is also not frowned upon in society. Instead of disciplining their children for partaking in criminal activity, parents often learn to download films illegally from them.

However, that isn’t to say that legal online distribution platforms wouldn’t work here. While it is true that sites such as Voyo and HBO GO are steadily making legal online purchase and viewing of films and television shows on demand available to Slovenian consumers, it should also be noted that their selection of entertainment products is overly limited and it is not uncommon to see them lagging behind sites offering illegal downloading, both in terms of quantity and variety as well as ease and timeliness of access.

In addition, many Slovenian consumers have come to accept piracy as their go-to means of accessing most entertainment products, making it that much harder to eventually weed the practice out. Not long ago pirating video games was nearly as common as pirating films and TV series. This has changed due to game developers and publishers including complicated digital rights management software in their products that severely inconveniences anyone who tries to download content illegally and due to the advent of convenient digital distribution programs for games such as Steam. Steam operates here with minimal difficulties due to its much more global approach, proving that Slovenian buyers are willing to pay for convenience and support of their industries. The founder of Steam, Gabe Newell, perhaps put it best when he said in an interview that ‘Piracy is almost always a service problem and not a pricing problem.

As shown above, internet piracy requires commitment from both the film and television industry as well as local governments to be combated effectively. Doing so is in the interest of both as it prevents market distortion and ensures government laws are being enforced thereby increasing their overall legitimacy. Increased cooperation between the entertainment industry and governments in creating and enforcing legislation would be a must in ensuring internet pirates are persecuted effectively and illegal internet activity is closely monitored. Also, copyright holders as well as global and local distribution companies regardless of their nature or size need to acknowledge the change that the rise of internet distribution (legal or otherwise) has brought to the marketplace and adapt.

A further change from an ethnocentric or polycentric/regiocentric approach to a more global is inevitable in following market trends. This would require less dependency on the use of intermediaries and local distributors and more on global universal distribution platforms and supranational enforcement of harmonized copyright legislation, which has a tendency to cannibalize the industry and leave fewer actors in the market. This should not be a major issue provided that the market remains at least an oligopoly and does not stray further from a healthy level of competition and provided that the fewer agents make their products and services available worldwide with fewer local restrictions. The main issue here is that local distributers often lack incentive to develop online distribution platforms as their development and upkeep are expensive and economies of scale do not permit them to function in a market as small as that of Slovenia.

The penetration of global distribution platforms is hindered by copyright holders still relying on existing, often exclusive contracts with local distributers and the fact that an absence of proper (or at the very least harmonized legislation) on a national level makes involvement in small countries simply not worth the bother for large globally minded distributers. In addition, many local intellectual property rights enforcement proponents such as SAZAS have very poor track records in terms of ensuring that funds collected for the use of intellectual property products in Slovenia eventually reach copyright holders and the producers/authors of said intellectual property. Legislation should therefore be harmonized on a global or regional, preferably by supranational institutions or treaties such as the European Union or international trade agreements to prevent further market distortion or criminal activity. This change needs to happen as immediately as possible to prevent further cementing of internet piracy as a staple among consumers.

In conclusion, I feel I should mention that the issue of internet piracy is less to blame on consumers than may be immediately apparent. It is a consequence of an industry unable to adapt to changes in the market, especially the explosive global spread of internet access. Also, an overly global approach without local adaptation may not be sufficient in ensuring consumers turn away from piracy. This is best demonstrated by the fact that price diversity is not sufficiently adapted to global income diversity, thereby making piracy a more attractive option (and indeed more widespread) in low income countries. Action against piracy must be immediate and multilateral, for the sake of both adequate consumer representation and the market’s sustainability. 

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