Following up on yesterday’s thoughts on piracy: I ran across an example that perfectly illustrates the ways that the big content industries are shooting themselves in the foot when it comes to profit and piracy.

Jaimie and I are big fans of Castle; it’s the only ongoing television show we actually watch. I was reading some discussion on this week’s episode this morning, and discovered that while ABC puts the video up on the website for streaming (good move!), they limit access to people in the United States (horrible move!).

Presumably, they have lots of reasons for this – deals with networks in other countries and so on. But the result is that lots of people overseas pirate it, because they just want to watch the episode. This is particularly true of countries where they don’t get the content for a year or more afterward. Even Canada doesn’t get the content immediately. The result? Lots of complaints about the policy, and several (now deleted) comments saying, “Just download it from [file-sharing site].”

ABC could make themselves a tidy little profit by opening the views up to everyone. Instead, they’re causing people to pirate by preventing them any legitimate access to the content. Yes, I recognize that people are still responsible for their own illegal behavior, but ABC is blind not to recognize that they could stop most of this piracy and increase their own profits all in one fell swoop.

The moment the old media companies realize that the internet is on their side – that it’s a vast, still largely untapped source of profit, if only they’ll adapt to it – is the moment that most piracy dies on the vine. As I said yesterday: most people don’t want to pirate; they just want access to the content. Most people will pay for it – through advertising or reasonable subscriptions – if you let them. The two main problems are:

1. Big content won’t let people pay.
2. Big content is trying to charge too much.

On the first problem, see above. The solution to the second problem is also fairly simply to grasp. As a friend of mine put it in a discussion on Facebook yesterday:

The difference between one person paying ten while three people pay nothing and four people paying five is positive ten on the latter side.

This is why the Apple App Store has made some people enormous profits, despite the fact that most apps sell for $0.99. Put simply: it’s easier to convince one hundred people to spend one dollar than to convince ten people to spend ten dollars, especially for an app for their phones. (There are other problems with that model, but those have to do with the saturation of the market and the resulting difficulty of discovery and differentiation, rather than the economics.)

Lower prices sometimes mean higher profits – sometimes much higher profits. This isn’t always the case, and everyone has to consider the various messages that prices send, but in general, you want to shoot for the price point that maximizes profits. Generally speaking, that’s not the maximum price you can get a few people to pay, it’s the maximum price you can get many people to pay.

The easiest way to kill piracy is to dry up the demand for it from the vast majority of the population. ABC should make Castle available all over the world in two forms: ad-supported but free, and at some low price point without advertising. Moreover, it should do this immediately after it airs, or – better yet – concurrent with its airing. Everyone wins.