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Does Anime Piracy Hurt The Creators?

We’ve heard it before: Anime piracy hurts the creators!
But how true is that really?

We’ve heard it before: Anime piracy hurts the creators!

But how true is that really?

Grey-market anime has been around since anime’s arrival in the West. Anime piracy has taken many forms.

VHS recordings of TV anime.

Bootleg international copies of anime tapes.

Fansubs.

Illegal streaming sites.

BitTorrent.

And regardless of how we get our ill-gotten anime, we hear time and again: “Anime piracy hurts the creators!”

It’s believable enough. When someone doesn’t pay for a product, their money doesn’t make it into that market. If the money’s not in the market, that means less pay for the producers of that product.

However, the anime market is a little different. Anime in the West is a licensing game. Companies pay Japanese companies for the rights to release anime in the US and elsewhere. Some arrangements exist where US companies help fund some productions, but it’s mostly a licensing game.

The nature of licensing gives an advantage to the Japanese rightsholders. It also gives them an incentive to license their works out. If another company will pay for the license and take on the burden of localization, distribution, and marketing, why not let them?

A major component of this relationship is the “minimum guarantee.” A “minimum guarantee” is the basic licensing fee a company pays for the rights to an anime. It’s the minimum amount a rightsholder can expect for the show they’re licensing out.

What does this mean for anime piracy?

In the US, we have a pretty robust infrastructure for anime. Almost everything gets licensed, and legal means to watch anime are abundant and widely-used. Absent piracy, most anime fans would be turning to those companies for their anime.

Companies that already paid their minimum guarantee.

The rightsholders already have their money, and the studios were paid for their work. Everyone on the Japanese side has already gotten paid.

For consumers who would otherwise buy from the likes of Crunchyroll or Funimation, anime piracy only hurts those companies. The effects don’t make it back to the Japanese market.

This isn’t to absolve anime piracy, however. Some licensing contracts include a percentage profit, paid to the rightsholder after the licensing company breaks even on the minimum guarantee. In such cases, piracy could prevent a publisher from breaking even. That, in turn, would mean rightsholders don’t get as much money. But even then, the studio has already been paid. The creators aren’t affected.

At worst, anime piracy means the Japanese industry makes less extra money. It’s not stealing from animators’ wallets. The only wallets anime piracy in the US steals from are those of US anime companies.

Again, this isn’t to absolve anime piracy. It’s important that we have a healthy market for anime outside Japan. However, the responsibility for that doesn’t only fall on the fans.

We expect the fans to “support” legal streaming and official releases. We, however, don’t hold the companies up to the standard they should be held to.

Both sides have to work for the system to be healthy. Fans should buy, but only if companies put out products worth buying. Anime piracy exists to subvert this system when companies put out sub-par products. And because of the ways money flows in the industry, anime piracy largely only hurts those companies.

The creators aren’t affected. They were paid already.

Are there long-term negative effects to anime piracy being normalized and widespread? Definitely. If Western publishers don’t have the money to pursue licenses, the Japanese industry loses money. If the industry loses money, there’s less money to go around and do things like pay studios. It’d be bad.

But the solution to that is to make high-quality products. Outcompete anime piracy through satisfying customers. Some anime fans who pirate are nonetheless willing to pay $150 a pop for anime figures. It shouldn’t be hard to figure out how to get them paying $6/month for a streaming service.

"Creative" localization in Kaguya-sama
“Creative” localization in Kaguya-sama.

When you compete with free, you have to add massive value. Things like censorship and “creative” localization in subs and dubs don’t add value. They drive people to piracy, primarily because it the fansubbers provide a product those people actually want.

Anime fans are very clear about what they expect. Western publishers habitually ignore those expectations. Is it any wonder why some choose to pirate anime?

The Western industry has a habit of making products people don’t want to buy and then trying to shame people into buying them. Implying a moral obligation to buying a product implies that the product itself isn’t good enough to buy.

The importance of a healthy Western anime market can’t be understated. However, the effect of anime piracy on anime studios is overblown. It doesn’t reflect the reality of the anime industry.

The Western industry is shooting itself in the foot. Anime piracy is bad, but Western companies bend the truth to make it look worse than it is. They could solve their problems by making better products, but they’re trying to have their cake and eat it too.

2 comments on “Does Anime Piracy Hurt The Creators?”

“For consumers who would otherwise buy from the likes of Crunchyroll or Funimation, anime piracy only hurts those companies. The effects don’t make it back to the Japanese market.”
O… kay, so what happens if too many viewers switch to piracy and CR/Funi go out of business? The numbers from Japan (website link) show that international sales comprise a massive share of the revenues of studios and the anime industry in general. If that goes away, the effects do make it back to the Japanese market — as we saw in 2007, when piracy-driven losses caused numerous US companies to scale back or shut down completely, the amount of anime produced declined accordingly. That’s “the reality of the anime industry.”

And let’s say companies clean up questionable localization choices, like the half-dozen endlessly-cited examples that get blown out of proportion and are mistakenly assumed to be pervasive. Most anime piracy already consists of watching straight rips of legal subs, so if if legal subs improve, we’re still in a “I can get the exact same good subs on 999Anime . in, why should I pay for what I can get for free?” situation.

“Some anime fans who pirate are nonetheless willing to pay $150 a pop for anime figures.”
Do these fans have the option to obtain those figures at no cost with zero risk or consequences, the way they do when pirating anime? Merchandise manufacturers generally don’t have to compete with free.

It seems like the onus is on US companies to put out a product people actually want to buy, rather than relying on a moral argument about piracy being wrong. We can argue whether it’s right or wrong that companies have to navigate around it, but that’s the reality. They do have to navigate around that.

The US anime community has been legally grey for longer than there’s been an industry in the US. Every US anime company has had to combat piracy on some level. Competing with free has always been a concern to the US anime industry, right up until now, when the US anime industry has more money and market share than ever before. If piracy were to scale up, those companies would respond. They wouldn’t be able to afford to just sit on their hands and beg people to stop pirating.

Companies like CR and Funi play a very important role in that they establish a viable market and make the product easily accessible. Pirate streaming sites have the advantage of being free, but if they’re easier to use than official sites, that’s a failure of the companies running those official sites. Companies that can afford to create a better product.

Also, I don’t know that I accept that piracy contributed to the 2007 anime industry implosion more than poor decision-making on the part of companies in the US industry and the general global economic collapse that was happening around that time.

As far as the $150 figures go, my point was to illustrate that it’s clearly not a money problem for many people who pirate. That they’re perfectly willing to spend money on products, but they have to want the products. Some people can be moralized into buying your anime product, but my argument is that if you want to get the people who habitually spend money on anime stuff on-board, you have to create a product they want to buy.

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