Piracy Harming African Culture... Because Some Professor Says So

from the evidence-please? dept

Shocklee points us to an odd, totally unsubstantiated article by a University of Southern Illinois professor insisting that "piracy" is creating tremendous harm to West African content industries. This goes against numerous studies, including those by the WTO on how developing nations often should have less stringent intellectual property laws while they're developing. The article is based on some simple conjectures: that even with low budgets, films made in Nigeria are having trouble making money and it's all the fault of piracy -- first from lost sales, but also because people are pirating high budget American films as well. Basically, the argument is that if people can get those high budget films at the same "pirated" cost as local films, of course they'll go for the high budget films, and thus destroy the local film industry.

Of course, that assumes that in the absence of "piracy" prices to see foreign films or to buy their DVDs scale relative to their budget. That's simply not true. Movie tickets and DVD prices do not scale based on the budget of the movie. The professor doesn't seem to mention the fact that most films (especially the low budget kind) struggle to make money in the first place. He just assumes that it's because of piracy. He neglects to mention that there are plenty of business models beyond selling DVDs. He does mention that people seem to prefer local content, but then ignores that in his very next sentence, saying that local content "can't compete." Even though he just said that the market demands local content.


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  1.  
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    ObjectiveR (profile), Dec 3rd, 2009 @ 1:32pm

    Oh, I thought this post was going to be how the 419 scammers were losing money to people pirating their scam email content.

     

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  2.  
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    jjmsan (profile), Dec 3rd, 2009 @ 1:59pm

    Background

    His degree is in law probably with an emphasis on IP since he practiced law in an IP firm. Basically he does not have economic or sociological credentials so his opinion isn't any better than the ones expressed here. He talks about how the local musicians should lock up their work with out saying how this would create any widspread demand. I also don't see papers in areas other than opinion pages.

     

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  3.  
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    John Doe, Dec 3rd, 2009 @ 1:59pm

    Are you sure?

    Are you sure he was talking about digital piracy causing harm rather than piracy on the high seas? ;>)

     

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  4.  
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    Some Professor, Dec 3rd, 2009 @ 2:24pm

    Thank you for the link. You forgot to credit my co-author, who is some researcher at a think tank in London. This is a 700 word op ed, which admittedly is a format that suffers from some limitations. But so does the blog format, at least in the hands of some authors.

    Given Masnick's usual shtick, I'm not surprised that he finds *any* defense of copyright objectionable. But he seems to have rather missed the point. It's not about prices scaling, it's about budgets scaling to market size.

    Piracy limits the size of the market by reducing the number of possible sales. For Hollywood blockbusters, the effects aren't so noticeable because the market left is so large. They can sell cinema tickets and enjoy some effective protection against DVD copying in most of their markets. With Nollywood films relying mostly on a first-mover advantage to sell about 30,000 DVDs (no cinema showings) before piracy shuts down the market, a very limited market size and thus limited budget results.

    It's not a terribly controversial point. Every business looks at the size of the potential market before deciding whether, what, and how to produce its products. When the largest part of the cost is fixed cost, as is the case of most entertainment, then anything that limits the number of sales limits the budget, absent some other market into which to sell.

     

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  5.  
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    Anonymous Coward, Dec 3rd, 2009 @ 2:25pm

    Of course, that assumes that in the absence of "piracy" prices to see foreign films or to buy their DVDs scale relative to their budget. That's simply not true

    Way to miss the point.

    The point is the local product would likely be priced lower, and thus would have more of the market. But when everyone is getting their American made movies for free through piracy, why pay ANYTHING for the local product?

    The imported movies would be higher price than the local in normal times. But when everyone steals it, they all have the same price: zero.

     

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  6.  
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    John Duncan Yoyo (profile), Dec 3rd, 2009 @ 2:35pm

    Re: Are you sure?

    I hate it when the Soamlian pirates hijack my dvd player.

     

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  7.  
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    jjmsan (profile), Dec 3rd, 2009 @ 2:58pm

    some thinktank

    His top degree is an MS in economics at least. The think tank is a self proclaimed non partisan non profit funded by private individuals and foundations that just seems to come down on the side of corporate viewpoints. As I pointed out given your venue and background Mr Masnicks opinion is just as good as yours. Further if you are going to trade on your academic credentials it would be nice to have a lin to a peer reviewed publication.

     

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  8.  
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    Anonymous Coward, Dec 3rd, 2009 @ 2:59pm

    "But when everyone is getting their American made movies for free through piracy, why pay ANYTHING for the local product?"

    I don't know, why don't you ask the local product creators why their product doesn't have any fans who would want to buy it?

     

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  9.  
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    Mike Masnick (profile), Dec 3rd, 2009 @ 3:14pm

    Re:

    Piracy limits the size of the market by reducing the number of possible sales.

    How so? The actual evidence on this suggests otherwise. People are spending more than ever on music and movies these days -- even as "piracy" has grown consistently. It would suggest that this statement is flat out incorrect.

    With Nollywood films relying mostly on a first-mover advantage to sell about 30,000 DVDs (no cinema showings) before piracy shuts down the market, a very limited market size and thus limited budget results.

    Which suggests the real problem is with the business model that Nollywood has chosen, not piracy. Why not help them choose more reasonable business models?

    It's not a terribly controversial point. Every business looks at the size of the potential market before deciding whether, what, and how to produce its products.

    Indeed.

    When the largest part of the cost is fixed cost, as is the case of most entertainment, then anything that limits the number of sales limits the budget, absent some other market into which to sell.

    Indeed. But again, you have not shown that piracy limits the market. You just keep insisting its true despite the evidence to the contrary.

     

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  10.  
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    Anonymous Coward, Dec 3rd, 2009 @ 3:27pm

    Please correct me if I am mistaken, but my read here from your article and the linked article is that the "piracy" being talked about concerns the sale of counterfeit DVDs, and not internet downloads.

     

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  11.  
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    Anonymous Coward, Dec 3rd, 2009 @ 3:59pm

    Re: Re:

    People are spending more than ever on music and movies these days

    In Africa? Are you sure?

    Your stats are true, as far as they go, although the UK stats you had up not long ago showed that the amount of income from music sales and live events was exactly the same as it was in 2004! So I guess people in the UK aren't buying more. Would you care to report on Africa?

    Indeed. But again, you have not shown that piracy limits the market. You just keep insisting its true despite the evidence to the contrary.

    please, show us the evidence to the contrary. We're waiting!
    Which suggests the real problem is with the business model that Nollywood has chosen, not piracy. Why not help them choose more reasonable business models?

    What business model? Your competition is all entirely free, and most people in your country don't have extra money to pay for local movies when they get hollywood stuff for free. What is the business model to save them, oh guru?

     

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  12.  
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    Some MBA Student at SIU, Dec 3rd, 2009 @ 4:11pm

    Academic Excellence at SIU

    I don't see why you question Professor Schultz's methods or conclusions. SIU is well known for it's academic excellence, after all our president was accused of plagiarism on his dissertation.

     

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  13.  
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    Some blog reader, Dec 3rd, 2009 @ 5:06pm

    Re:

    shtick ?
    really?
    and you call yourself a professor

     

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  14.  
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    Mike Masnick (profile), Dec 3rd, 2009 @ 5:43pm

    Re: Re: Re:

    In Africa? Are you sure?

    Yup.

    Your stats are true, as far as they go, although the UK stats you had up not long ago showed that the amount of income from music sales and live events was exactly the same as it was in 2004! So I guess people in the UK aren't buying more.

    I was referring to the Harvard study that showed how much more people were spending on the music ecosystem.

    please, show us the evidence to the contrary. We're waiting!

    We have shown both macro and micro evidence showing that it is possible to profit greatly through smart business models that embrace piracy.

    What business model? Your competition is all entirely free

    The business model of selling *scarcities*. The competition on that is not entirely free. It is only free for the infinite goods.

    and most people in your country don't have extra money to pay for local movies when they get hollywood stuff for free.

    But the report clearly stated that people preferred local films to Hollywood. So there clearly is demand for it.

     

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  15.  
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    Tailsnake, Dec 3rd, 2009 @ 6:54pm

    Mike's Fallacy

    I usually agree with what Mike writes here, but this article was filled with so many misconceptions that I actually felt a need to reply.

    You're taking concepts that work in 1st world ecosystems and trying to apply them to a very different one. So we're on the same page I'm going to explain the situation there (mainly from first hand experience, since I am Nigerian, even if I haven't been back there in a while).

    The movie industry in Nigeria was classically low budget and straight to video, this allowed them to keep costs low and compete with Western movie studios (who at times wouldn't release movies there until years after they were available elsewhere). Piracy was still an issue back then, but because VHS tapes degrade when copying, the copied version of the movie was never as good as the original. Back then, even though there was still pressure from the west and pirates, it didn't harm the movie industry as much. The introduction of VCDs and DVDs are where things really changed. A digital copy of the movie could be copied ad infinitum without quality loss. Packaging for the movies has never been high quality in order to keep costs down and video stores are generally privately owned (i.e. no real large franchises that you can be sure to sell original copies). What this essentially lead to are copies that are for intensive purposes identical to the originals (in both quality and packaging) being sold along side the originals in stores. Consumers, may not even know they're buying a copy and when they do the price difference is enough to make it so that don't care, they're essentially getting the same product. Many shop owners are known to buy a single copy of a movie and make copies of it then sell those copies at the same price as the originals since it can be so difficult to tell the difference. As time passed western movies started being released at more reasonable times after their original release, but the advent of the internet made that a non-issue. Bootleggers would download the movie off the internet and sell them at a low price. When it comes down to paying for an original Nigerian movie vs an almost identical copy or a western movie with better production values, the bootleg copies almost always win, especially since they're cheaper than the original Nigerian movie (which was already rather cheap).

    The industry has responded by pumping out hundreds of carbon copy movies and splitting movies with rather simple plotlines (that can be fit into a single movie) into 2, 3, or even 4 part movies. This has helped the bottom line, but the movie industry in Nigeria is dieing. Quality is low because of piracy, piracy is high because of low quality, initial drive to increase quality isn't there when current sales are being butchered by pirated copies (and the few movies that have tried higher productions did not recoup the costs).

    Mike, I know you think Piracy is never the problem, but in this situation it really is and I can't see another scarcity they can sell (sans opening movie theaters and creating a theater only release window for bigger movies, but that would both piss of costumers that are used to just buying the movies and be expensive to initialize). If you can see a shining light in this quagmire, please tell us, the vague answers you're giving that anonymous coward isn't helping anyone.

     

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  16.  
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    Anonymous Coward, Dec 3rd, 2009 @ 7:34pm

    Re: Re: Re: Re:

    Oh my!

    Mike, do you actually believe yourself?

    Where do you see the numbers of Africa? I google searched your site and didn't find anything. Please do point.

    We have shown both macro and micro evidence showing that it is possible to profit greatly through smart business models that embrace piracy.

    "smart-dumb" strikes again. Yes, you have shown the possibility, but not in any meaningful way that is easily duplicated on the ground. Further, none of your examples happen in Africa. You haven't even made it clear in the story if the piracy is internet based, duplication based, or other. There is no indication as to what they are facing. To say "embrace piracy" without having a clue what is going on is just laughable.

    But the report clearly stated that people preferred local films to Hollywood. So there clearly is demand for it.

    People in the US clearly prefer music over crappy t-shirts. They listen to way more music, they enjoy more music, and they pirate more music. Yet demand is not enough, is it?

    Obviously, if the market is FREE, then selling movies in such a market isn't going to happen. Africa isn't know for it's massive disposable incomes, which would suggest that there isn't exactly huge numbers of people willing to pay way over the market for a t-shirt or a game of whatever the local version of mini-putt is. So while you might be all smug on your "smart-dumb" logic, there is no indication that it would work in reality on the ground in this area.

    I just think you are ignoring the realities of the marketplace, and making the worst assumption possible: that their market place is the same as your local one.

     

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  17.  
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    Anonymous Coward, Dec 3rd, 2009 @ 7:44pm

    Re: Mike's Fallacy

    The movie industry in Nigeria was classically low budget and straight to video, this allowed them to keep costs low and compete with Western movie studios

    Perhaps why a new business model is now necessary.

    Packaging for the movies has never been high quality in order to keep costs down

    So the low quality goods are being pirated in identical low quality and this is killing sales of the originals. It sounds like poor quality is the cause of the problem.

    and the few movies that have tried higher productions did not recoup the costs

    That's common in all markets. Countless high budget films fail dismally despite having everything (cast, director, sets, funding) in their favour. Film making is very high risk. Hollywood has been working at it for 100 years and they still don't consistently succeed.

    If you can see a shining light in this quagmire, please tell us, the vague answers you're giving that anonymous coward isn't helping anyone.

    Sounds like a combined problem of commercial levels of piracy, poor production values and a lack of export potential.
    1/ The government needs to stamp out commercial sales of pirated content
    2/ Make quality movies
    3/ Produce content with a wider appeal than just the local market

     

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  18.  
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    not smart and not dumb, Dec 3rd, 2009 @ 8:36pm

    What is this smart dumb thing you keep going on about.
    Give it a rest already

     

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