File sharing and copyright
Posted on | June 17, 2009 | No Comments
I stumbled upon an interesting paper from Felix Oberholzer-Gee and Koleman Strumpf. The title is “File-Sharing and Copyright” but the paper is more specifically investigating how file-sharing has damaged the entertainment industry in the last years. The result is: it hasn’t. The take home message of the work is the following:
While file sharing disrupted some traditional business models in the creative industries, foremost in music, in our reading of the evidence there is little to suggest that the new technology has discouraged artistic production. Weaker copyright protection, it seems, has benefited society.
The link to a social benefit is a very indirect one, though. It comes from the observation that production of creative goods (books, music, movies, etc) has increased dramatically in the last 5 years and that this is not really compatible with a scenario that’d see the publishing industry on its knee.
I am going to copy and paste here some interesting data reviewed in the paper. For references look inside.
At a price close to zero, many consumers will download music and movies that they would not have bought at current prices. This issue is likely to be important. In a sample of 5,600 consumers who were willing to share their iPod listening statistics, the average player held a collection of over 3,500 songs (Lamere, 2006). A full 64% of these songs had never been played, making it unlikely that these consumers would have paid much for a good portion of the music they owned. While it is difficult to say how representative this sample is, there is no doubt that trade groups such as the Business Software Alliance vastly exaggerate the impact of file sharing on industry profitability when they treat every pirated copy as a lost sale
[...]two goods for which a decrease in the price of one leads to an increase in the demand for the other. A well-known example for two complements is music and iPods. As file-sharing eroded the effective price of music for a large group of consumers, demand for mp3-players soared, allowing Apple to benefit from consumers’ increased willingness-to-pay for its line of products.
Overall production figures for the creative industries appear to be consistent with this view that file sharing has not discouraged artists and publishers. While album sales have generally fallen since 2000, the number of albums being created has exploded. In 2000, 35,516 albums were released. Seven years later, 79,695 albums (including 25,159 digital albums) were published [...] Similar trends can be seen in other creative industries. For example, the worldwide number of feature films produced each year has increased from 3,807 in 2003 to 4,989 in 2007 (Screen Digest, 2004 and 2008). Countries where film piracy is rampant have typically increased production. This is true in South Korea (80 to 124), India (877 to 1164), and China (140 to 402). During this period, U.S. feature film production has increased from 459 feature films in 2003 to 590 in 2007 (MPAA, 2007).
