Otaku Streamers, from a Legal Perspective
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  1. #1
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    Default Otaku Streamers, from a Legal Perspective

    Hey folks. This is going to be a really long post, but it's a really good read if you have some free time.

    I figured I'd share some of the legal aspects behind how Otaku Streamers works, since I had some concerns in this area when I first started becoming involved in OS, and I'm realizing from conversations I've had with other members here that they have similar concerns.

    I'll cut to the chase; copying anime for the purpose of distribution (downloading or viewing, however you put it) without paying a small fee to the publishing studio is technically illegal.

    To explain the reason why Otaku Streamers, and many other websites on the Internet are able to "get away" with this, let's do a cost breakdown on a company that does charge their users, and subsequently pays money to the anime production studios that create the anime. Let's take a look at Crunchyroll for a minute (I'll pull as many facts from various Internet sources as I can, and will approximate the rest). If you don't want to put up with my number-crunching, and skip ahead to my results, jump down to the section that's not in blue italics.

    Crunchyroll charges $6.95 a month for subscriptions, and has roughly 750,000 paid subscriptions right now. As a rough estimate, let's say they also sell $300,000 worth of merchandise through their online store, and they make a 25% profit on it. They're also paid to attend anime expos across the U.S. - let's say they make another $250,000 off that. Adding the numbers up, at the end of the day, Crunchyroll's gross revenue is 5.57 million US dollars.

    According to glassdoor.com, their average employee salary for technical positions is $94,000 - a pretty generous dollar amount. Their non-technical positions average around $38,000. Overall, the company has roughly 50 employees. If they have 15 technical staff members and 35 non-technical members, their manpower cost is roughly 4.11 million US dollars. I'm getting that dollar amount by multiplying the final salary number I got from adding everything up by 1.5 - this accommodates the benefits package that many office jobs here in the US have and the Human Resources overhead that employees typically have.

    Most tech companies of their size have a hardware refresh budget of $200,000 - this covers the cost of buying new computers for the office every three years, and upgrading servers, buying more servers, and increasing storage capacity. The cost of leasing their office space might be around $75,000 annually - office supplies, utility costs, and other costs will add to that number, so let's say $100,000 even. They do an insane amount of online marketing, too - another $50,000 for that.

    Finally, since at this point we've only calculated that Crunchyroll is 'breaking even' with their budget, let's take $400,000 extra dollars and attribute it to building the company, instead of just breaking even. This is pretty reasonable, since companies generally don't want to just leave a ton of extra money lying around.

    Even if I'm off in some of these figures, you're left with a number in the ballpark of 4.66 million US dollars as their total expenses and profits combined. The remainder, then, has to be the money that they're paying to the anime studios in Japan as royalty fees. Basically, $910,000 is what the anime studios get. The actual anime studios get $1.21 of the money you pay Crunchyroll as their profit for a month.

    Because of the way that Japanese anime licensing works, Crunchyroll pays their royalty fees on a "per-watch" basis. In other words, if you have a subscription with them, only the studios that make the shows you're watching are the ones that get the percentage of your money that goes back to the producers. They've built an algorithm based on what all you watch that calculates this, so it all happens behind the scenes.



    Back to the relevant portion of our legal study, let's say you watch 15 different shows on Crunchyroll, from 10 different studios. Your $1.21 dollars per month that would go to the anime studios is split somewhat evenly between each of those studios. In other words, the studio itself that makes Konosuba would only make 12 cents a month off of the idea that I'd watch it on Crunchyroll. 12 cents!

    This is the reason why OS, and many other anime sites, "get away" with streaming anime in a less-than-legal manner. Because the profit margin on it through "paid-for" sites like Crunchyroll is next to nothing.

    Anime companies, in contrast, make nearly all of their income off of merchandise. Licensed shirts, posters, figurines, DVD/Bluray sets, books of manga, etc. They typically see a 10%-25% profit off the purchase price of goods like this. In other words, if I buy One Punch Man's first season on BluRay for $50, I've given the anime studio a minimum of 15 times what Crunchyroll would have given them for me watching the anime through them. Anime companies are throwing a few potential dollars away in producing anime to get a chance to gain significantly more money through doujinshi.

    To give a real-world example for a business strategy like this in action, consider the maid girls that hand out flyers outside the maid cafes in Akihabara. The cafe itself has to pay the maids for their time to do this, and also pay the production costs to make the flyers. Let's say those flyers cost 5 cents each, and they're given out. The maid's time is $12/hour. The maid cafe is losing a small amount of money (maybe 15 cents per person who receives a flyer), to gain the chance to make a lot more money if you gain interest and come inside (20 dollars). It's simple marketing, and there's a ton of other examples that come to mind for it as well.

    For my case, where I typically buy $400-$500 worth of anime merchandise every year for anime I enjoy, I'm giving the studios 25 times more revenue than if I used a subscription-based streaming website for my anime for an entire year. They're gaining so much more money than they're losing that they won't come after me for it. Of course, this business strategy only works if you buy licensed anime merchandise, but you guys all do that already.. right?

    To re-enforce this idea further, I've talked with two anime studios via email about projects that I'm working on that involved them, and mentioned offhandedly to them that I stream my anime on Otaku Streamers and do some uploading work here. They. Didn't. Care. I gave them all my contact information, easily enough to prosecute me in court, and they didn't do anything. Why? Because it's not worth it to.

    In light of this, I don't really feel guilty anymore at the end of the day for the anime that gets streamed on OS, and I'm confident that a legal case won't be made against me for the work I've done here.

    But, at the end of the day, opinions vary, and discussion is a wonderful thing. What are YOUR thoughts on this?
    Last edited by LastVanguard; 05-01-2016 at 08:47 PM.

  2. #2
    Nihilistic Sadist Revirie's Avatar
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    True anime industry is loosing alot of money every year due to free streaming sites and cant do anything about it, Cant blame it cause most of anime viewers don't have money to pay on legit sites thus they go on free ones.

    That's why I like OS alot due to its massive selection to watch and no ads .

  3. #3
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    Quote Originally Posted by Revirie View Post
    True anime industry is loosing alot of money every year due to free streaming sites and cant do anything about it, Cant blame it cause most of anime viewers don't have money to pay on legit sites thus they go on free ones.

    That's why I like OS alot due to its massive selection to watch and no ads .
    Also, because we have very few legal alternatives, if we do not wish to spend thousands of dollars buying the dvd/blu-ray. There's crunchyroll as a streaming service which IMO really isn't that great and that's pretty much it. Even IF you wanted to buy the DVDs you'll usually have to order it from the internet because there's not many anime stores that has a large selection other than the usual Death Note, Akame ga Kill, Highschool DxD esque thing.

    Were the japanese anime industry to create their own subbed streaming service like Netflix, I'd be willing to pay for it, had it a decent selection and a decent price for that selection.
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    Quote Originally Posted by Autowinto View Post
    Also, because we have very few legal alternatives, if we do not wish to spend thousands of dollars buying the dvd/blu-ray. There's crunchyroll as a streaming service which IMO really isn't that great and that's pretty much it. Even IF you wanted to buy the DVDs you'll usually have to order it from the internet because there's not many anime stores that has a large selection other than the usual Death Note, Akame ga Kill, Highschool DxD esque thing.

    Were the japanese anime industry to create their own subbed streaming service like Netflix, I'd be willing to pay for it, had it a decent selection and a decent price for that selection.
    I'd completely agree. I hate going through middlemen for services like this, since they're taking the majority of my money in the process. Anime doesn't really have a viable method to do this through right now.

  5. #5
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    Well that's certainly interesting. My fiance got me a subscription to Funimation so I could watch anime dubbed (because I'm one who likes both) but I will be the first to tell you I appreciate Otaku Streamers so much. Their selection is huge, not to mention of good quality and no ads whatsoever. I myself can't afford the anime merchandise, though I wish I could. I want to save money to buy the Full Metal Alchemist collection so I get it before another studio redoes the English voice acting (one of those dubbed ones I love). However, it's not possible at the moment. Manga, which I would love to purchase, it too expensive where l live because I read it in like five minutes tops and other merchandise is not accessible unless I buy it online. The only time I see anime stuff is through stores such as Hot Topic or Gamestop if there's a game coming out based on anime. I wish we had anime stores here in the states. I would be there all time, looking at stuff I can't buy lol.
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  6. #6
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    I do feel guilty, but I totally agree with Auto. If the studios had their own service I would support that wholeheartedly.
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