Warner Bros.’ Newest Consumer Segment: Pirates

Prosecuting the criminals that steal content is one way of fighting piracy. Over at Warner Bros. (NYSE: TWX), they’re adopting a more opportunistic attitude, closely tracking pirates in hopes of converting them into consumers.

On Wednesday at the Content Protection Summit in Los Angeles, Ben Karakunnel, director of business intelligence at WB’s anti-piracy unit, offered a rare glimpse at the data they’ve assembled over the past 18 months in an effort to quantify illegal consumption online (they tracked P2P and streaming via Compete and Peer Media).

The studio is better known for its intent to curb, not capitalize, on piracy. But as Karakunnel told it, WB has evolved to the point where internal sales reports distributed to WB executives now come complete with stats on how a particular program is faring on the internet’s black market.

While the data he shared was short on actual numbers, his observations were telling. Here’s a few highlights:

Pirates Make Purchases: Few subsist on copyright infringement alone; typical pirates steal in addition to making legitimate entertainment purchases like boxoffice, DVD and even online transactions. Even the most diehard pirates spend some money, though less than more casual infringers. “One of the main things we’re doing is looking at why they do things legitimately on certain products and not on others,” said Karakunnel.

My two cents: WB’s recognition that pirates are legal consumers too may bolster the theory the piracy not only doesn’t necessarily replace entertainment revenues, but may in fact serve as marketing for legal consumption. When footage of WB’s latest Harry Potter film leaked online last month, some theorized that the studio did it intentionally for publicity purposes.

Chicks Dig Streaming: While WB data shows most pirates tend to be males 18-24, there’s an interesting anomaly: TV piracy on streaming platforms (as opposed to peer-to-peer) actually skews more female, and they are gobbling up Warner Bros.-produced fare like The CW’s Gossip Girl and Vampire Diaries. Good to hear there’s some gender equality in cyber-crime.

Linking Sites Rule: WB has studied what are the most popular starting points for piracy, and found in one trial that search engines was less prevalent than just typing in the URLs to one of the growing breed of websites that simply link to illegal content (rather than hosting the content, i.e. cyberlockers). Even the volume of users who started out looking for legal content but settled for illegal paled in comparison to those who immediately sought out those linking sites, which include Surfthechannel and Sidereel. WB is still examining whether this is a bona fide trend.

“It’s an interesting finding that we’re building on because these linking sites have a higher brand awareness,” said Karakunnel, who also noted social media hubs like Facebook are also increasingly being used to disseminate links to illegal content.

Movies Top TV: 65.31% of WB-related downloads on P2P are films, compared with 34.69% for TV. That number may only grow once Jeff Robinov takes control of WB film production given his reported intent to iincrease the number of tentpole movies–always a big draw online–the studio produces each year.

Translating Piracy Overseas: In the international markets, illegal WB content in which pirates dub or subtitle themselves is increasingly popular. For one unspecified program Karakunnel used as an example, it wasn’t until the third day after its initial airdate that one such pirate-created translated version accounted for 23% of pirated files of that particular program. By day 10, it accounted for 74%.

Said Karakunnel, “If we can get dubbed or subtitled language versions in the first two days, we can beat them to the punch.”

On a similar front, WB studied piracy patterns in the United Kingdom and adjusted strategy accordingly. Last year, “preview episodes” of “Vampire Diaries” were distributed on iTunes one day after their debut in the U.S., well before their broadcast window in the U.K. prior to their broadcast debut in the U.K. because the pirated version from the U.S. was flooding that market. WB will attempt that in other markets as well.

With thinking like that, WB just might find it will do more to curtail by piracy by letting it read the marketplace’s needs rather than playing defense.