Netflix raised some eyebrows over the weekend when it revealed that it monitors pirate sites to see which TV series it should be adding to its streaming lineup, but the strategy makes perfect sense to some media observers.
The revelation about Netflix's pirate polling strategy was revealed by the company's Vice President of Content Acquisition Kelly Merryman in a posting at a Dutch website called Tweakers. Netflix rolled out its streaming video service in the Netherlands last week.
The Netflix executive explained that what TV series are popular at pirate websites enters into the company's calculations in what it should buy for streaming to its subscribers.
"With the purchase of series, we look at what does well on piracy sites," Merryman told Tweakers.
Netflix did not respond to a request for comment for this story. In an earlier interview with Tweakers, Netflix CEO Reed Hastings noted that illegal downloads from BitTorrent pirate sites could actually drive business to his company.
"Netflix is so much easier than torrenting," he told Tweakers. "You don't have to deal with files, you don't have to download them and move them around. You just click and watch."
Convenience is a big deterrent to piracy, said Daniel Castro, a senior analyst with the Information Technology & Innovation Foundation. "It's often easier to use a paid tool than download something illegally where the quality may be lower and it might contain a virus," he told CSOonline.
"Consumers typically take the path of least resistance," he said.
In the past, when a customer searched on the Internet for a movie, they might have found the top links pointing to BitTorrent or Pirate Bay, Castro explained. Now you will receive links to legal options.
Taking the temperature of pirate sites toward content makes sense from Netflix's point of view, he said. "It's the kind of market intelligence a lot of companies wished they had."
"I would be surprised if Netflix was the only one doing this," Castro added. "I would expect that studios are looking at what countries have the highest rate of piracy when they're looking at pricing decisions and DVD release dates."
Netflix illustrates what happens when content is attractively priced. "The number of subscribers go through the roof," Wayne Rosso, a media consultant, said in an interview.
He, too, praised Netflix's pirate site strategy. "It makes perfect sense," Rosso said. "That's the first place any of these producers should go to see what's popular."
Some folks may see Netflix's trawling of pirate sites as legitimizing what those sites do. "Maybe so, but what difference does it make?" he asked.
"Netflix probably isn't doing anything different than other outlets, only they're admitting to it." Rosso said. "I think it's pretty cool and pretty smart."
Far from encouraging piracy, Netflix likes to say that's cutting into it when it arrives on the scene. In Canada, for example, piracy went down 50 percent during the first three years the service was offered Canadians.
Indeed, there were signs during the summer of what happens when a popular TV show gets blocked from its audience. Pirate downloads of the CBS hit series "Under the Dome" jumped when millions of fans couldn't watch the show due to a dispute between CBS and Time Warner.
However, Netflix claims should be taken with a grain of salt, Castro said. "I don't think Netflix can single handedly take credit for any drops in piracy," he said. "Sure, they're a contributing factor, but so are many market changes like Hulu, Amazon and iTunes."