Torrentfreak: “Microsoft: We’ve Always Had Freemium, It’s Called Piracy” plus 1 more

Microsoft: We’ve Always Had Freemium, It’s Called Piracy

Posted: 21 Oct 2014 04:22 AM PDT

In recent years the ‘freemium’ business model has gained much traction in many areas from gaming to software services. But while the portmanteau describing the phenomenon is a relatively new addition to our language, the idea behind the business model is not.

In the 1980s, those with access to Bulletin Board Systems would download programs and share them with their friends, all with the full encouragement of the software’s creators. Shareware, as it was known, often encouraged users to send off a snail-mailed registration fee in return for a code to unlock premium features. Although basic, freemium had been born.

Today the concept has gone way beyond those humble roots. The App Store and Google Play are awash with free-to-play games with premium addons, and services such as Spotify and Dropbox offer decent free levels of service to get users onboard and primed to start parting with real cash.

If Joe Public was pressed into a snap judgment, Microsoft would probably be more associated with premium than free, with the company historically charging sizable amounts for its Windows and Office products, for example. However, speaking with CNBC, Microsoft CEO Satya Nadella says that the company has always had an eye on the freemium experience.

The idea, the CEO notes, is to get people on board with a product they find useful. Then, when it becomes clear how users are utilizing the service, options to monetize become available alongside their demands for improved service. He uses the company’s cloud-storage service as an example.

“We want everybody to use OneDrive. And then when you are starting to use it for business, that’s when we want to monetize. So we do not want to have you only start using us when you have a business license or subscription. We want to have you use us when you just want to save any file or any document, any artifact of yours. And then have a natural way for us to monetize as you use more of it in the commercial context,” Nadella explains.

By now millions of people online are familiar with ‘freemium’ in one shape or another but comments from Nadella suggest that while this business model has been leveraged by Microsoft for quite some time, the company had it forced upon them.

“Well, we’ve always had freemium. Sometimes our freemium was called piracy,” Nadella reveals.

“[The] thing that I don’t want us as a company to shy away from is usage first. Because I think if anything, the new competition has taught is that, you know, what matters is do not try to equate revenue and usage day one.”

The ‘piracy is promotion’ angle is something rarely spoken about by company execs, probably in fear of endorsing an illegal activity and validating it in the eyes of piracy proponents. However, by speaking of it alongside ‘freemium’, Microsoft’s CEO appears to have confirmed what many have been saying all along, that getting people on board for free – via piracy if necessary – is one the first steps on the monetization trail.

Indeed, this belief his held so strongly in some quarters that there are some who insist that it’s preferable for people to pirate the software of company ‘A’ than switch to the opposition, whether paid or not.

That said, what Microsoft does not want is people selling pirated copies of its premium products – that kind of ‘promotion’ is never welcome. If people use a free sample of Microsoft products at home, the company isn’t likely to kick down the door. Do the same in a business environment, however, and things aren’t anywhere near as open-minded.

There are no signs that Microsoft is going soft on piracy but as business models change, as they have with Adobe’s Creative Cloud, free tiers attractive to would-be pirates will become more commonplace. And that can only mean one thing for piracy rates.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

4shared Demands Retraction Over Misleading Piracy Report

Posted: 20 Oct 2014 09:50 AM PDT

Last month the Digital Citizens Alliance and NetNames released a new report with the aim of exposing the business models and profitability of "rogue" file-storage sites.

The report titled Behind The Cyberlocker Door: Behind The Cyberlocker Door: A Report How Shadowy Cyberlockers Use Credit Card Companies to Make Millions, is being used as ammunition for copyright holders to pressure credit card companies and advertisers to cut ties with the listed sites.

While some of the sites mentioned are indeed of a dubious nature the report lacks nuance. The “shadowy” label certainly doesn’t apply to all. Mega, for example, was quick to point out that the report is “grossly untrue and highly defamatory.” The company has demanded a public apology.

4shared, the most visited site in the report with over 50 million unique visitors per month, is now making similar claims. According to 4shared's Mike Wilson the company has put its legal team on the case.

“We decided to take action and demand a public retraction of the information regarding 4shared’s revenues and business model as published in the report. Our legal team is already working on the respective notes to Digital Citizens Alliance and Netnames,” Wilson tells TorrentFreak.

As the largest file-hosting service the report estimates that 4shared grosses $17.6 million per year. However, 4shared argues that many of the assumptions in the report are wrong and based on a distorted view of the company’s business model.

“Revenue volumes in this report are absolutely random. For instance, 4shared’s actual revenue from premium subscription sales is approximately 20 times smaller than is shown in the document,” Wilson says.

4shared explains that its premium users are mostly interested in storing their files safely and securely. In addition, the company notes that it doesn’t have any affiliate programs or other encouragements for uploading or downloading files.

Unlike the report claims, 4shared stresses that it’s not setup as a service that aims to profit from copyright infringement, although it admits that this does take place.

To deal with this unauthorized use the file-hosting service has a DMCA takedown policy in place. In addition, some of the most trusted rightsholder representative have direct access to the site where they can delete files without sending a takedown notice.

This works well and the overall takedown volume is relatively low. Together, the site’s users store a billion files and in an average month 4shared receives takedown notices for 0.05% of these files.

In addition to their takedown procedure 4shared also scans publicly shared music files for copyright-infringing content. This Music ID system, custom-built by the company, scans for pirated music files based on a unique audio watermark and automatically removes them.

Despite these efforts 4shared was included in the “shadowy cyberlocker” report where it’s branded a rogue and criminal operation. Whether the company’s legal team will be able to set the record straight has yet to be seen.

Netnames and Digital Citizens have thus far declined to remove Mega from the report as the company previously demanded. Mega informs TorrentFreak that a defamation lawsuit remains an option and that they are now considering what steps to take next.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.