A Tale Of Two Studies On File Sharing...

from the guess-who-paid-for-the-terrorism-one? dept

I've recently come across two separate studies concerning file sharing -- that seem to come to vastly different conclusions. The first, as pointed out by Michael Scott, is a very long (128 pages), but very thorough research report analyzing pretty much everything having to do with file sharing in the Netherlands, commissioned by the government. It studies the economic angles, the legal angles, the cultural angles -- and then compares the local results to international results. While you might quibble with some of the methodology here or there, the overall conclusions of the report are pretty strong and clear: file sharing is not a problem for the overall industry. File sharing has, in fact, created a net benefit to the economy and society in both the short and long term, and that will likely continue. The direct impact on sales of file sharing is minimal (though it depends on the category). In fact, the only areas actually in trouble right now may be the sale of plastic discs (CDs and DVDs), but much of the damage has nothing to do with file sharing, and there are indications that the "lost" money can be made up in other ways. The report recommends moving away from criminalizing user activities, and focusing instead on encouraging new business model development. A quick excerpt from the conclusions:
The short-term net welfare effects of file sharing are strongly positive given that it is practised by consumers whose demand is driven by a lack of purchasing power. To the extent that file sharing results in a decline in sales, we see a transfer of welfare from operators/producers to consumers, with no net welfare effect.

The market for CDs and the market for DVD/VHS rentals are the only sectors of the entertainment industry that are suffering from a slump in sales. Whereas this may be attributed in part to file-sharing activity, file sharing is not solely to blame for the decline. The markets for DVDs and console games continued grow impressively after P2P services were introduced, and the cinema market showed sustained growth between 1999 and 2007. The total entertainment market has remained more or less constant, suggesting budget competition among the various products.

As long as the markets for games and films are on the rise or remain stable, there is little reason for concern that the diversity and accessibility of content is at stake. File sharing has significantly enhanced access to a wide and diverse range of products, albeit that access tends not to have the approval of the copyright holders.
In other words, pretty much everything that plenty of folks around here have been saying for a better part of a decade is pretty much true. File sharing isn't damaging -- and, in fact, can represent a net economic improvement, and the business troubles faced by a few small parts of the industry are really business model challenges, rather than legal ones. The report makes it clear that focusing on legal solutions to dealing with file sharing is a big mistake that tends to only backfire and seems to be totally misdirected.

So, what's the other study? It's also quite long, but is full of fear mongering about piracy. It just so happens to be funded by the movie studios claiming that piracy is helping to promote terrorism -- and because of that, the US government needs to devote stunning levels of new resources to stopping piracy at all costs. So what does this report recommend?

  • Fully funding and implementing the PRO-IP Act (PL 110-403), which toughens civil and criminal laws against counterfeiting and piracy, provides enhanced IP enforcement and prosecutorial resources, and improves IP coordination within the executive branch.
  • Supporting the introduction, passage and enactment of a Customs and Border Protection Reauthorization bill to better address trafficking in illicit goods.
  • Supporting the Baucus-Hatch legislative improvements to the USTR's Special 301 process to help deal with other countries that fail to live up to their international IP obligations.
  • Concluding negotiations for a substantive and enforceable Anti-Counterfeiting Trade Agreement (ACTA) with major trading partners.
  • Pursuing trade agreements with strong global IP protections.
  • Expanding U.S. leadership on IP protection within the G8, the Security and Prosperity Partnership for North America, and other bilateral and multilateral frameworks.
  • Building coalitions in favor of strong IP protections at international organizations, such as the World Health Organization, World Intellectual Property Organization, and U.N. Framework Convention on Climate Change (UNFCCC).
  • Engaging Beijing to improve China's IP legal and regulatory regimes through the implementation of new patent, trademark and copyright laws.
  • Pursuing reforms on data exclusivity, incremental innovation and optical discs legislation in India.
  • Working towards improved retail and copyright enforcement in Russia, as well as the successful implementation of IP reform through Part IV of its Civil Code. 
Which of the two reports is more credible? Which do you think will have more impact on government policy in the next year or so? The answers to both questions are unfortunately obvious and extremely disappointing.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    :Lobo Santo, Mar 4th, 2009 @ 9:25am

    Netherlands

    Netherlands, huh? I might move there then.

    What language do they speak there, Netherese? And are there any hot mexican chicas there?

     

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  2.  
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    Anshar, Mar 4th, 2009 @ 10:18am

    I am going to send a copy of that first report to my MP in the vain hope that he'll take the time to both read it and understand it.

     

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  3.  
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    Anonymous Coward, Mar 4th, 2009 @ 10:38am

    Re:

    He might if you include a few million dollars with it.

     

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  4.  
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    robin, Mar 4th, 2009 @ 10:56am

    Rand is Only Partially Clueless

    ..but the Chamber of Commerce is just blind with stupidity.

    Rand's report, paid for by the MPA, nevertheless has this to say:

    "This report addresses only.....the burning or otherwise copying of illegal DVDs for subsequent distribution and sale. This is where the money is to be made—for organized crime and for terrorists as well."

    which to be honest is quite a different subject from filesharing.

    The stupid list of gov't programs comes from the U.S. Chamber of Commerce, and is actually a dream list for the Obama Administrations new USTR nominee, who goes before the Senate next week(?) for confirmation. It's a lobbying effort.

     

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  5.  
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    Kevin (profile), Mar 4th, 2009 @ 11:20am

    The second report

    Is it just me or does the second report just read like a Xmas list for the music and movie industries?

     

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  6.  
    identicon
    Anonymous Coward, Mar 4th, 2009 @ 11:21am

    "This is where the money is to be made—for organized crime and for terrorists as well"

    So the MPA is admitting to racketeering?

     

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  7.  
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    Anonymous Coward, Mar 4th, 2009 @ 11:48am

    luckely I live in the netherlands(where we speak dutch not netherese LOL) where our goverment isn't stupid or controlled by big companies, they are just boring(and no we don't have alot of mexicans, alot of turks tho)

     

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  8.  
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    Anonymous Coward, Mar 4th, 2009 @ 11:48am

    Re: Netherlands

    Netherland literally translates into underworld. Bizzaro world indeed. Also...... pot is legal :)

     

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  9.  
    identicon
    Anonymous Coward, Mar 4th, 2009 @ 12:04pm

    Re:

    Yeah, bin Laden is baking DVDs and selling them to his al Qaida buddies. In their caves, they use the shiny side as mirrors.

     

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  10.  
    identicon
    Comboman, Mar 4th, 2009 @ 12:15pm

    strange bedfellows

    Building coalitions in favor of strong IP protections at international organizations, such as the World Health Organization, World Intellectual Property Organization, and U.N. Framework Convention on Climate Change (UNFCCC).

    I can see why WIPO would want in on this, but WHO actually opposes tougher IP protections (particularly medical patents that keep life-saving medicines out of the third world) and I don't see why UNFCCC would care about IP laws one way or the other (if anything, downloading movies instead of physically traveling to the theater should help with global warming).

     

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  11.  
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    Buzz, Mar 4th, 2009 @ 1:12pm

    Ummm

    What concerns me about the latter report is that it disregards what is actually at stake here, even if it were entirely accurate. What are we worried about? Movies? Music? Games? ENTERTAINMENT? Sorry, but we should criminalizing actual crimes committed by actual criminals, not the downloading of Season 4 of House MD by some 14-year-old in his basement. Let the entertainment industry die. Better yet, let the modern day innovators take over, make money, and demonstrate how "piracy" can be monetized instead of hunted.

    It also disturbs me that "fixing" this "problem" involves telling the entire world to behave like us and to follow our laws. The government needs to stop listening to ancient and incorrect argument that "if intellectual property is not protected, art will cease to exist". There is no evidence to support that claim. In fact, there is evidence to the CONTRARY! Art has existed long before copyright ever did. Humans thrive on art. Art will be made with or without IP laws. Just the other night, I watched an interview with a 3D animation artist. He openly stated: "If I were not being paid to do what I do, I would do it for free." He loves art! He loves what he does! It's just convenient that he can make money doing it. ;)

    Kill IP laws. Let the Internet grow and progress. Set BitTorrent free. Force the old media companies out; let the innovative media outlets of today transform our culture!

     

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  12.  
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    Mr. Masnick, Mar 4th, 2009 @ 1:40pm

    Credibility

    I agree that the report funded by movie studios (MPAA?) is no doubt full of fear mongering and far fetched implications regarding the impact of piracy on society, but is your blog any better?

    It's been a while since you've given honest, unbiased, information regarding piracy. I understand this a blog not a source of news so you are not obligated to hide bias. But don't you think doing so might allow you to gain a little credibility?

    Just my two cents.

     

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  13.  
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    Chris In Utah, Mar 4th, 2009 @ 1:56pm

    Are you worried?

    "Expanding U.S. leadership on IP protection within the G8, the Security and Prosperity Partnership for North America, and other bilateral and multilateral frameworks."

    Define Other and the scope. Welcome to a day and age without the constitution.

     

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  14.  
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    Mike (profile), Mar 4th, 2009 @ 2:58pm

    Re: Credibility

    I agree that the report funded by movie studios (MPAA?) is no doubt full of fear mongering and far fetched implications regarding the impact of piracy on society, but is your blog any better?

    Yes. Much better. I'm not pushing any corporate message. I'm not handing any reports to Congress.

    My opinions are clearly opinions, I back them up with facts, and leave the discussion OPEN for anyone to talk about it.

    Are you unable to see the difference?

    It's been a while since you've given honest, unbiased, information regarding piracy.

    Huh? This is an opinion site. I speak my opinion. I am always honest and unbiased.

    Why do so many people think that having an opinion is "bias"? I have no monetary stake in the game.

    Just my two cents.

    You should have paid more.

     

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  15.  
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    Weird Harold, Mar 4th, 2009 @ 3:27pm

    Re: Ummm

    "Let the entertainment industry die. Better yet, let the modern day innovators take over, make money, and demonstrate how "piracy" can be monetized instead of hunted"

    I almost can't stop laughing. I would actually get a really big laugh if the entertainment industry stopped turned stuff out for, I dunno, 12 months. You guys would go mental. The only entertainment would be guys blowing fart bubbles on youtube. No House, no CSI, No hit movies, no nothing.

    Wait, you want the best of both worlds - you want someone else to pay to MAKE the entertainment, and you want it all for free, delivered to you without commercial interuptions, on demand, without any restictions.

    What would you do when the entire music industry is reduced to some guy named bob down the street strumming his guitar at the local coffee shop?

    Careful what you wish for, you might just get it.

     

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  16.  
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    tim, Mar 4th, 2009 @ 4:17pm

    Re: Re: Ummm

    weird harold - I would be more than happy if the entertainment industry dropped itself right in the shitter because you know what? it would resurrect itself, except it would be forced to actually produce quality entertainment. I am very happy to pay for entertainment, provided it is high quality and doesnt come with so many strings attached. When they clean their act up, they will get my money again. Until then, I hope they die quickly.

     

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  17.  
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    Buzz, Mar 4th, 2009 @ 4:49pm

    Re: Re: Ummm

    I'm willing to pay for the right entertainment -- http://www.youtube.com/watch?v=Njuo1puB1lg

    Producers can make MORE money by embracing BitTorrent -- http://www.youtube.com/view_play_list?p=03EF3B07022FBAC8

    Do your research. ;)

     

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  18.  
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    Daniel Tunkelang (profile), Mar 4th, 2009 @ 10:21pm

    But isn't that what the **AAs are saying?

    "The market for CDs and the market for DVD/VHS rentals are the only sectors of the entertainment industry that are suffering from a slump in sales."

    Well, sure. But aren't those the markets that the RIAA and MPAA are complaining about? I'm not defending their tactics, but it seems silly to dismiss their concerns on the basis you cite.

     

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  19.  
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    Mike (profile), Mar 4th, 2009 @ 11:00pm

    Re: But isn't that what the **AAs are saying?


    Well, sure. But aren't those the markets that the RIAA and MPAA are complaining about? I'm not defending their tactics, but it seems silly to dismiss their concerns on the basis you cite.


    No. Actually, the RIAA and MPAA have been quite clear that they're complaining about the threats to MUSIC and MOVIES, and specifically the threats FROM PIRACY. Furthermore, they have put out multiple studies claiming massive overall economic damages done BY PIRACY. But what the study is showing is three important things:

    (1) The music industry and the movie industry have plenty of opportunities to make money. Selling plastic discs is a small part of it.
    (2) While selling plastic discs may be declining, it's mostly NOT due to piracy, but other competition in the market.
    (3) The net impact on the economy is actually positive not negative.

    All three are pretty important and QUITE different than what the RIAA and MPAA have been complaining about.

     

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  20.  
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    Anonymous Coward, Mar 5th, 2009 @ 6:37am

    I just love these

     

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  21.  
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    Ed, Mar 5th, 2009 @ 7:14am

    I just love these "end of the workd" statements

    I am constantly hearing Pro-IP people say "If we don't protect IP, people will stop making Music/Movies/Books, etc". Well, if that is true, why not let it happen? End copyright, and prove your point. When all entertainment stops, it will be obvious you were right, others are wrong, and copyright will have to be restored.
    I find it so funny when people make ridiculous claims of "If people can get it for free, they will never pay for it". I know I certainly don't fit that mold, and can not believe I am unique.

    1) I am constantly replacing home make dvds (recorded from TV, acceptable quality), with purchased ones, when I come across them.

    2) I purchase multiple versions of books; paper, ebook (from which I am able to produce mp3s) and audio books (when available).

    The second point is for those who argued in favor of the kindle banning text to speech. Example I own 2 versions of LOTRs in paper, one in ebook, 3 different audio book versions (including one recorded from public radio, I
    eventually ordered by phone from Harrods, London, since it was not available in this country in 1985).
    I am not against copyrights (of reasonable duration, requiring refiling at intervals to maintain). People deserve to get paid for their work. But taxes and laws should be for the greater good, not the sole benefit of special interests, with deep pockets.

     

    reply to this | link to this | view in thread ]


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