After years of legal wrangling, the UK High Court has ruled that The Pirate Bay infringes copyright, and has ordered a group of major Internet service providers to prevent their users from accessing the site. However, many games, music, and video retailers will be wondering what, if any, effect this will have on them.
Initially, only The Pirate Bay will be blocked by the Internet service providers, and ways to get around the restriction are already being openly discussed on web forums, so the impact of the ban is likely to be minimal. However, the ruling provides a precedent for future legal cases on other sites that direct users to files (called torrents) that enable the downloading of copyrighted material, and if done extensively and rapidly enough may make finding such material difficult, in which case consumers may opt to spend more on legal music and video products and services.
As users of torrent files are technologically savvy, the retailers that stand to gain are those that can provide the most technically advanced service and the most convenient delivery of digital products. Download sites such as iTunes and Amazon may benefit, but low cost unlimited streaming services such as Spotify stand to gain the most from a successful crackdown on pirated material.
Verdict does not expect the benefit to be significant in the short term, but consumer behavior may well be shifted to legal services in the long term. There is little price competition in digital downloads, with the prices to a large extent set by the content owners. Instead, sites are increasingly investing in ensuring convenient delivery. Shoppers have been drawn to torrent downloading not only because it is free, but because it is easy. The exponential growth of m-commerce through tablets and smartphones signals where future growth lies. Tablets and smartphones can now provide a perfect platform for retailers to create a viable alternative to torrents that can be customized to suit user needs.
Illegal downloading has become a major problem for the content industries, but much of the blame is down to the fact that they were too slow to offer convenient paid digital services, meaning that those who wanted such a service could sometimes only get it through channels that breached copyright. They followed this up with a series of blunders, including poorly thought out digital rights management restrictions. While legal squabbling continues - for example, EMI is still locked in a five-year legal dispute with cloud locker service provider MP3Tunes, which went bankrupt last week - other retail sectors are warned of the perils of not embracing technology and giving customers exactly what they want.