Notes from a Conversation with Dr. Toh See Kiat


 


Foreword & Background [for "posterity"]:

This conversation arose primarily out of the online fallout from an AVPAS enforcement action conducted in May 2007. Several months before the action, there had already been some advance notice that the action was going to be conducted. Nevertheless, it came as a surprise to quite a number of people. There was some confusion as to the nature of the enforcement action. In addition, prominent blogger Tsubaki of Anime Desho Desho (http://animedesho.animeblogger.net) was allegedly asked to remove his post on the matter. This led to a community backlash against AVPAS and Odex.
Admittedly, I was not immune to a certain impulse towards thoughtless knee-jerk reactions. However, when I realized that the president of AVPAS was someone whom I had previously met and could contact with relative ease, I decided to approach him, present the community's case, and obtain the facts of the matter straight from the horse's mouth, as it were.

Organizations and Individuals Involved:

AVPAS: The Anti-Video Piracy Association of Singapore. An association of local (Singaporean) and Japanese companies involved in the production and distribution of anime and Japanese dramas. Henceforth the Japanese companies will be referred to as "the licensors".

Odex: The largest [legitimate] anime distributor in Singapore. Carries out translation and publishing work. Odex licenses anime and drama series from Japanese companies, most (if not all) of whom are AVPAS members. Observations from other sources indicate that Odex may not have the wherewithal to translate all of its releases, and so some may be subcontracted to other translation firms.

Dr. Toh See Kiat: President of AVPAS. He does not hold absolute control over AVPAS, but his words may carry a certain weight. Dr. Toh's greatest area of expertise is e-commerce law and dispute resolution, but he has also in the past served as a consumer advocate, as the former president of CASE. He is also in charge of a number of businesses and consortia.

Tsubaki: The blogger whose post started this furore. Real name unknown.

The Case Presented:

Although the details and the order of presentation may vary, I presented the following opinions and questions to Dr. Toh.

1. Reactions to recent legal action

  • Widespread unhappiness
  • Two basic classes of responses: hardcore pirates ("is there a way to circumvent?") and potential or actual consumers ("can we get proper releases here?")
  • Notably, in nearly 200 responses [counting Tsubaki's blog as well as sgcafe and DrmChsr0's blog], nobody has stepped up to outright defend AVPAS' actions [at the point when the discussion happened]
  • Nobody is asking AVPAS to "un-sue"
  • Nobody is arguing about the legality of downloading
  • AVPAS faces a double-bind problem - perception of "bullying" (if AVPAS makes it public) vs. perception of "witch-hunting" (if AVPAS tries to hush it up)
  • So why was Tsubaki asked to take his post down?
  • More importantly, what exactly is AVPAS trying to achieve by sending letters to people?


2. Dissatisfaction with Odex and AVPAS

Evidence which suggests a poor attitude towards the material:

  • The licensing list itself: replete with misspellings, missing entries and meaningless repeat entries
  • Slow releases; poor quality; monaural sound and use of VCDs - quality is worse than downloaded shows! (This point was repeated several times.)
  • Acquisition of license and subsequent failure to launch: build-up of large backlog

Pursuant to the above point, a list was compiled of all the titles on the licensing list which did not appear to be readily available. This, of course, is a very long list. I conceded that perhaps half of the titles on that list might have been released but were out of print or otherwise unavailable. This, of course, still leaves a long list of titles in limbo.
Upside-down problem: DVD bundle release is not significantly more ex than VCD bundle release. However, primarily mass-market series (e.g. Full Metal Alchemist, Gundam) are on DVD! Niche series are on VCD. This is backwards. It is likely that niche-series buyers would be willing to pay for quality (hence DVD), whilst mass-market buyers would base their buying decisions mainly on price (hence VCD).

3. Deeper issues - Vicious cycle

Up to now there's been a vicious cycle at work.

a.      A particular series is released.
b.      The series gets fansubbed.
c.      People download the fansubs [illegally].
d.      Much, much later, Odex releases it on VCD with a translation that has a good chance of being terrible. No effort is made to market the series because Odex doesn't have enough money to do so.
e.      Some honest people who downloaded the fansubs buy the series. Virtually nobody else does, because (1) VCD quality is pretty bad and (2) if they didn't download the series, they probably don't know about it. Nobody hears about the series and says "OK, I'll wait for the Odex VCDs", because there is a good chance said VCDs will not appear, or will be of worse quality than the fansubs.
f.      Odex makes very little money, or loses money.
g.      Go to step a.

The problems that are causing the vicious cycle:

1. Illegal downloading

  • This is a problem, but without illegal downloading, Odex might well make less money in Step 5
  • People who buy VCDs are by and large FANS of a series. One does not become a fan without watching the series. Chicken-and-egg problem!

2. Lack of marketing

  • Primarily because Odex can't afford it.

3. Poor quality

  • Some aspects of quality can't be helped much, although that is arguable
  • Translation quality: Not something that can be helped much. There is some room for improvement.
  • Media (VCD vs. DVD).


4. Solutions
There are two confirmed types of downloaders: those who refuse to ever buy anime (either from Odex or from the pirates) and those who download with intent to later purchase. The latter category can be turned into paying customers. Category 1 can be prosecuted and AVPAS is within its ethical rights to do so, but doing so won't bring the missing profits back.
However, simply stopping downloads will not turn Category 2 into paying customers, because:

  • Anger at [perceived] bullying tactics (if a "stray shot" takes out members of Category 2)
  • Poor quality
  • Lack of marketing (as above)

In other words, negative steps will never raise profits or cut losses for the companies. Conversely, they may result in a loss of profits.
Fans don't need anime in order to survive. Companies do! If everyone ups and leaves, the companies are the ultimate losers.
Therefore positive steps must be taken. Whether or not the infringers are punished, there must be an incentive for legitimate customers. Otherwise everyone is punished - the illegal rightly so, but the legitimate unfairly so [with long waits, the chance of not ever seeing a series, poor-quality product, etc].

- What kind of positive steps?

  • In all cases, the releases have to be TIMELY, or people may well go back to their fansubs (illegal or not)
  • The community wants to engage with Odex. They want information - what is going to be released, and how soon? What licenses have you acquired?


Possibility 1: pay-for-download service ($2 to $2.50 per episode; DVD quality; no dub track)
Positives:

  • Odex saves a bundle on media and packaging costs; fans get the shows faster
  • No "dead stock" sitting in warehouses and on store shelves (I've seen the same Amazing Nurse Nanako box set sitting in a Northpoint shop for nearly 6 years!)
  • Faster turnaround time
  • Users get their shows more quickly

Negatives:

  • Possibility of DRM
  • Bandwidth costs
  • Doesn't solve marketing problem, unless a monthly “buffet” model is used
  • Another possibility is to allow subscribers to P2P with each other (requires some kind of authentication mechanism) rather than with the wider world - this would ameliorate bandwidth load
  • Possibility of pirating the downloaded media - but this is more difficult than pirating fansubs, therefore unlikely

Possibility 2: sub-licensing fee allowing users to legally download fansubs (possibly $1.50 to $2 per episode, or $20 per 13-episode season, or $30-$40 per month?)
Positives:

  • Odex and the licensors get a free ride without even lifting a finger!
  • Users can continue to download
  • Easy to track who is legal and who isn't, since users register their personal info - easier to prosecute offenders - sliding scale of punishment for those who violate, which can be applied more liberally (account suspension, &c.)
  • Odex and co. profit off the pirates instead of the other way around!

Negatives:

  • P2P technology implies that these "legitimate" users will still be uploading the show for pirates to download
  • However, there are other non-P2P options such as DivX Stage 6
  • Another possibility is to allow legitimate users to P2P with each other (requires some kind of authentication mechanism) rather than with the wider world


Possibility 3: social contract, socially enforced (American model)

  • AVPAS scales back its licensing to what it can realistically release within a decent timeframe
  • AVPAS notifies the community when a license is acquired
  • Simultaneously, local companies step up their efforts to release quality product, on a timely basis (3-9 months at the most)
  • AVPAS informally agrees not to prosecute unless users are downloading already-licensed series
  • Users commit to following code of ethics:
  • Stop downloading when series is licensed
  • If series is retained, obligation to purchase
  • Social enforcement: shaming for refusal to follow the code; possibility of actually turning people in

Positives:

  • Proven model
  • Fansubs act as a promotion mechanism
  • Strategic licensing announcements can be used to the companies' advantage (but aggressive licensing followed by inadequate releases may infuriate)
  • Prosecution less likely to have a chilling effect on the community (since the violators are also in violation of community standards)

Negatives:

  • Could be misinterpreted as condoning piracy
  • Still illegal under Berne Convention!
  • Social enforcement requires community and corporate commitment


Possibility 4: AVPAS continues on its current route; users stop downloading and buying (and move on to other hobbies)
Positives:

  • No more illegal activities.

Negatives:

  • Everyone loses. Profits drop even more; users have to find new hobbies; companies may even close shop.


I didn't explicitly mention Possibility 4, but it was implied at a couple of points.

-

The Response:

By and large Dr. Toh was very willing to hear me out and to provide information. However, some of the information provided is off-the-record and Dr. Toh specifically asked me not to repeat it. What I can say is that the "classified" information is not anything which would be extremely detrimental to the community. There are a few pieces which I would dearly love to release, but at the same time it is my belief that it is in the community's best interest to cultivate a cordial relationship with AVPAS.
Most of these quotes will be paraphrased; I am not an expert reporter. However, this document has been verified as accurate by Dr. Toh.
As for whether the information is factual, I cannot say. I will say that Dr. Toh at least appears to be trustworthy, and that the information came straight from him.

1. Dr. Toh was very emphatic that AVPAS had not taken any action to silence bloggers, either covertly or overtly. Common sense will, of course, suggest that AVPAS has vested interest in avoiding a PR fiasco, and that silencing people would only lead to such a fiasco. When asked if the person responsible could be an over-zealous AVPAS employee, he stated that this was extremely unlikely. Further, he added that no such action would be taken in the future.
He also stated the following:
"I want to categorically say that no courts would allow us to prosecute bloggers for downloading simply because they blog about shows. [In order to go after them] we need to catch them in the act, so to speak - because who knows if their detailed knowledge is due to downloading, or watching the Japanese TV runs, or buying the DVDs from other markets, or from parallel imports? And by the way, parallel imports are legal in Singapore - so AVPAS cannot do anything to stop these."
Which, of course, doesn't mean that bloggers will not be targeted for "investigation" - but of course, linking a specific blogger to the IP address which you've found is quite difficult. Much easier to take all the infringing IP addresses and pick the most frequent downloaders.

2. Dr. Toh stated that AVPAS "obviously... has no intention of taking punitive action against consumers who are aware of the ethical obligation to pay for what they get, and who are willing to do so." Conversely, he also stated that "if people display an unwillingness to pay their dues [by purchasing the licensed VCDs/DVDs] or are unwilling to contact us and discuss the matter, we are prepared to take legal action." The first step to be taken if you receive the dreaded letter is to contact them; it doesn't necessarily have to result in a lawsuit. In summary, "[AVPAS doesn't] prosecute people unless [they] feel they really, really deserve it." I was unable to obtain data on the exact figures which people have had to pay, and what exactly AVPAS considers to be punitive.

3. On the issue of quality, Dr. Toh wished to reserve comment. However, he agrees fully that the apparent lag time of official releases is a problem, and one of the major factors which have resulted in loss of profits. He further clarified by noting that typically, series can only be released - at the very earliest - after the Japanese DVDs have been released, and that very often the releases may lag behind releases in larger markets such as the US.
He expressed interest in examining the list of alleged "limbo licenses" in further detail, and accordingly I gave him a copy.

Significantly, it appears that this list is not of licensed titles, but rather of titles owned by the Japanese member-companies within AVPAS.

Further, he was prepared to agree that there was room for improvement in Odex's business model, but noted that the other AVPAS members were not in a position to dictate what business model they should adopt. There is an awareness that positive steps need to be taken rather than simply whacking people.

4. On the issue of whether fansubs are damaging sales, he asserted that the Singapore market's anime sales volume dropped by 70% in a single year. The exact year in which this happened is classified information which he was unwilling to reveal to me, but in the absence of other factors it would seem that downloading is at least partly responsible, and that the reduction in sales is real and not blowing smoke. (Heaven knows Odex's products haven't gotten that much worse, although they certainly haven't gotten better either.) However, he was willing to acknowledge that for those people who are willing to purchase the licensed series, fansubs can and do act as a promotional mechanism: "some of Odex's customers are also downloaders." (My personal guess is that "some" is a bit of an understatement, but I doubt that it would be politically viable to say anything otherwise.)

5. Significantly, Dr. Toh revealed that due to the small size of the Singapore market, the licensors are not prepared to offer Odex or other local companies the same sort of licensing agreements which the US companies receive. The exact kind of licensing agreement which Odex gets is classified information. When questioned as to why Blue Max apparently is not subject to the same kind of agreement, he appeared to be unsure and informed me that he could not speak for them, since they aren't with AVPAS. Further, it does appear (my own conjecture, based on the List) as though some of the companies which license to Blue Max are not AVPAS members either.

6. Further, I was informed that the licensors do not see Singapore as a significant potential market. Their interest in Singapore is not so much in making money, but in preventing it from becoming a distribution node for pirated media. ("Welcome to Singapore!" My conjecture is that if Odex disappears and the local anime scene goes down the toilet, it would not be a significant blow to them.) Dr. Toh was quick to add that if the sales volume showed that Singapore was a potential major market, the licensors might change their tune. Conversely, the licensors prefer to work with Odex because they have built up a strong business relationship over the years; this accounts for the relative lack of other companies producing licensed anime.

7. In regards to the proposed solutions, Dr. Toh was generally optimistic about Odex's ability to re-invent itself, although he cautioned that the lack of funds might pose an obstacle. His responses were as follows:

a. E-commerce and downloading: He was understandably enthusiastic about this, since he apparently runs an e-commerce consortium (in addition to his many other activities)! Of course, setting up such a system would be costly and time-consuming. However, when asked about the possibility of leveraging P2P technology to cut bandwidth costs and speed up downloads, he noted that it would be expensive to come up with a P2P solution with some sort of authentication. He was ambivalent about DRM and acknowledged that it was not likely to be of much use.

b. Sub-licensing and "legal torrenting": He was surprisingly enthusiastic about this idea, although also quite amused. However, he noted that there might be resistance from the licensors.

c. Social contract (the US approach): Because of the differences in licensing formats and in culture, he wasn't sure this would work. My personal observation, however, is that Odex appears to be pursuing a somewhat-modified version of this approach.

d. Everyone dies: As stated, he was aware that anime fans don't need anime to survive, and that the people affected the most would be Odex. However, he informed me of the possibility that with Odex out of the picture, the licensors might take more aggressive steps against downloaders. Remembering that their primary objective is what it is (see point 6), this possibility is not too far-fetched.

-

Additional Comments by Dr. Toh (selected):

1. AVPAS acts for producers of content. Most of our members are in that category. Content producers own the copyright in all content they create and it is an infringement of copyright law to download their content without authorisation [ed: no matter whether it is locally licensed or not]. The titles that AVPAS acts on are therefore not necessarily licensed to Odex or anybody for that matter.

2. Bluemax is not a member of AVPAS so we cannot speak on their behalf.

3. The US-Singapore Free Trade Agreement obliges the Singapore government to criminalise individual downloads that are wilful and significant (section 136 Copyright Act). The Copyright Act is available for free on the website statutes.agc.gov.sg. The inclusion of this seemingly draconian rule was at the insistence of the US government as US content producers were losing millions of dollars to individual and commercial pirates in Singapore and Asia. AVPAS in issuing its recent letter only seeks to exercise the legitimate rights now given to all content producers and owners of copyright [ed: not just those in the US] by the copyright law of Singapore.

4. Odex is a commercial distributor of licensed content. Whether or not their business models are sustainable is up to them to decide. I am sure, however, that they want to be responsive to their customers, meeting demand where there indeed is actual demand - and not hypothetical demand speculated by bloggers. They have apparently produced limited editions for students (at $15!) on DVD as requested by fan clubs and not even been able to sell off 10% of what was produced. The truth is - not that many people buy the DVDs that Odex produces; that's why they are more often in the cheaper VCD format! But you can be certain that Odex will improve its business model if it sees weaknesses; or money to be made in DVDs.

5. Quality issues - of content and translation - are issues that Odex have to answer themselves. Odex insists that their content quality is comparable to the Japanese releases. Lapses in translation quality apparently came about in a failed (and now aborted) experiment to allow fans to help in translation so as to speed up releases. [Ed note: Of course, VCDs with mono sound - albeit dual-language tracks - aren't quite the same as DVDs. But we have already established that DVDs don't seem to sell well, at least according to AVPAS.]

6. AVPAS has not sent out letters indiscriminately to all and sundry. They need to be wilful and significant downloaders. Or commercial pirates. In any case, almost all of those who have received our letters have approached us and seen things from our perspective, and settled amicably. If you have any feedback, call us. We are very reasonable people - not witch-hunters. But we are commercial people and not charities, and our teams produce entertainment for the fans for reasonable remuneration (we need to pay the mortgages and feed our families). If we do not get paid for our skills and efforts, we'll move to other jobs and businesses.
[Ed notes:
- Some accurate, verifiable data on the exact figures which people have had to pay would be welcome. I was not able to get this data.

- How do you define "amicably"? If one is given the choice between going to court and settling "amicably"......
- In regards to what is "significant", the law is not clear. One or two episodes don't seem to be significant, and indeed Dr. Toh made a comment which appeared to imply that. An entire season, or multiple seasons, probably constitute "significant". Anything else in-between is up in the air.]

7. If any of you think you can do this better than Odex, you are welcomed to approach any of my content owning members for a licence on any title you feel you can make money on :-). So put your money where your mouth is - and realise the true extent of the problem personally! For example, if you can find a better e-commerce model to generate sales....

-

Conclusions and Analysis (my own)

1. Odex is trying to revamp their business model, and AVPAS is encouraging them to do so. However, money is a problem.

We've already seen some evidence of this in their increased number of DVD releases. It is possible that they will fail to do so because of inadequate commitment, but this is not likely. It is also possible that they will fail to do so because of lack of funds. Let me say that although we, the anime fans, are not a charitable organization, if you have already downloaded a series, it makes sense to purchase the Odex release rather than the official R1 or R2. It's cheaper too!

2. AVPAS's objectives are not really uniform.

The licensors are mainly interested in preventing Singapore from becoming a piracy hub. (Again, "Welcome to Singapore!") On the flip side, the Singapore companies are mainly interested in getting people to purchase licensed anime and TV shows. The two objectives are complementary but not the same.

3. Odex is indeed very likely to be losing money.

Which is partly why a remark I made earlier on about "cash cows" sounds a bit silly ... But seriously, conjecturally speaking, if people who downloaded fansubs were willing to buy the series (if only for the sake of legality), then I frankly doubt Odex would be losing money.
On another note, it does appear as though DVD sales are a problem. Then the solutions could come from two sources: (1) stop selling VCDs of series released on DVD, and/or (2) make it such that the DVDs represent genuine value added over and above the fansubs. 


If you have any questions, please feel free to e-mail me at haitakaATgmail . There's still a lot of information that I didn't manage to get, but I'll try to answer as best as I can.


- 5parrowhawk