EU Buried Its Own $400,000 Study Showing Unauthorized Downloads Have Almost No Effect On Sales
from the but-the-truth-is-finally-out-now dept
One of the problems in the debate about the impact of unauthorized downloads on the copyright industry is the paucity of large-scale, rigorous data. That makes it easy for the industry to demand government policies that are not supported by any evidence they are needed or will work. In 2014, the European Commission tried to address that situation by putting out a tender for the following research:
to devise a viable methodology and to subsequently implement it in view of measuring the extent to which unauthorised online consumption of copyrighted materials (music, audiovisual, books and video games) displaces sales of online and offline legal content, gathering comparable systematic data on perceptions, and actual and potential behaviour of consumers in the EU.
The contract was awarded to Ecorys, a “research and consultancy company” based in the Netherlands that has written many similar reports in the past. The value of the contract was a princely €369,871 — over $400,000. Given that hefty figure, and the fact that this was public money, you might expect the European Commission to have published the results as soon as it received them, which was in May 2015. And yet strangely, it kept them to itself. In order to find out what happened to it, a Freedom of Information (FOI) request was submitted by the Pirate Party MEP, Julia Reda. It’s worth reading the to and fro of emails between Reda and the European Commission to get an idea of how unhelpful the latter were on this request. The European Commission has now released the report, with the risible claim that this move has nothing to do with Reda’s FOI request, and that it was about to publish it anyway.
The 304-page document (pdf), made available on the netzpolitik.org site, contains all the details of the questions that were put to a total of 30,000 people from Germany, France, Poland, Spain, Sweden, and the UK, their answers, and exhaustive analysis. The summary reveals the key results:
In 2014, on average 51 per cent of the adults and 72 per cent of the minors in the EU have illegally downloaded or streamed any form of creative content, with higher piracy rates in Poland and Spain than in the other four countries of this study. In general, the results do not show robust statistical evidence of displacement of sales by online copyright infringements. That does not necessarily mean that piracy has no effect but only that the statistical analysis does not prove with sufficient reliability that there is an effect. An exception is the displacement of recent top films. The results show a displacement rate of 40 per cent which means that for every ten recent top films watched illegally, four fewer films are consumed legally.
That is, there is zero evidence that unauthorized downloads harmed sales of music, books and games. Indeed, for games, there was evidence that such downloads boosted sales:
the estimated effect of illegal online transactions on sales is positive — implying that illegal consumption leads to increased legal consumption. This positive effect of illegal downloads and streams on the sales of games may be explained by the industry being successful in converting illegal users to paying users. Tactics used by the industry include, for example, offering gameplay with extra bonuses or extra levels if consumers pay.
The research did find evidence that there was some displacement of sales in the film sector. Another result of the Ecorys work provided an explanation of why that might be:
Overall, the analysis indicates that for films and TV-series current prices are higher than 80 per cent of the illegal downloaders and streamers are willing to pay. For books, music and games prices are at a level broadly corresponding to the willingness to pay of illegal downloaders and streamers. This suggests that a decrease in the price level would not change piracy rates for books, music and games but that prices can have an effect on displacement rates for films and TV-series.
In other words, people turn to unauthorized downloads for films and TV because they feel the street prices are too high. For books, music and games, by contrast, the prices were felt to be fair, and therefore people were happy to pay them. This is exactly what Techdirt has been saying for years — that the best way to stop unauthorized downloads is to adopt reasonable pricing. A new post on the EDRi site points out something rather noteworthy about the research results concerning video and TV series:
Interestingly, these results concerning the film industry found their way to a publication of an academic paper by Benedikt Hertz and Kamil Kilja?ski, both members of the chief economist team of the European Commission. Yet the other unpublished results, showing no negative impact of piracy in the music, book and games industry, were not mentioned in the paper. Beyond that, the original study itself is not referred to either.
This seems to substantiate suspicion that the European Commission was hiding the study on purpose and cherry-picked the results they wanted to publish, by choosing only the results which supported their political agenda towards stricter copyright rules.
The European Commission was quite happy to publish partial results that fitted with its agenda, but tried to bury most of its research that showed industry calls for legislation to “tackle” unauthorized downloads were superfluous because there was no evidence of harm. This is typical of the biased and one-sided approach taken by the European Commission in its copyright policy, shown most clearly in its dogged support for the Anti-Counterfeiting Trade Agreement — and of the tilted playing field that those striving for fair copyright laws must still contend with on a regular basis. Sadly, it’s too much to hope that the European Commission’s own evidence, gathered at considerable cost to EU taxpayers, will now lead it to take a more rational approach to copyright enforcement, and cause it to drop the harmful and demonstrably unnecessary upload filter it is currently pushing for.
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Filed Under: copyright, eu, eu commission, piracy, sales, studies, suppression, transparency
Comments on “EU Buried Its Own $400,000 Study Showing Unauthorized Downloads Have Almost No Effect On Sales”
Considering that (a) games generally have no “free”, OTA, or other type of distribution, and (b) they are freaking expensive to buy, and (c) they often suck, I would say that yes, some people are doing “try before you buy”.
What that points to more is a failing of a business model, rather than any great advantage of piracy. A better free trial system or similar might work out even better.
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“A better free trial system or similar might work out even better.”
How do you figure that? Pirates are packaging and offering a “free trial”. Your suggesting that as a developer I should spend resources duplicating what someone else does for me for free? Why would I waste time and money on something I can let someone else do?
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Well, the pirates do it by giving the shop away. You could do it by providing a version that plays to a certain point, or otherwise doesn’t give all the goods away. It would also put you more directly in contact with your customers and potential customers.
The pirates aren’t doing this to do you a favor – they are doing it to make ad revenue (and apparently, to mine bitcoins… another story). When they mess up (and they sometimes do) it’s your reputation that is on the line, not theirs. Your game plays poorly because of a bad hacked version? Clearly your game is broken, so no sales for you!
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I’d rather pirate an unplayable game for free due to a mistaken hack, than purchase an unplayable game because the DRM screws with my hardware. Warez groups actually have an incentive to issue fixes and patches, while game companies typically have to be dragged, kicking and screaming, before they make fixes for the problems that their DRM caused. Meanwhile, apologists like you will be at the frontlines, insisting that all the people who legitimately purchased the product must be pirates/EFF supporters, because why else would the DRM ruin their experience?
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It’s a fairly recent development, but Steam’s refund system is pretty great. You can request a full refund on any purchase for any number of reasons, including it simply not being fun. Refunds can only be requested within two weeks of purchase, and for games with less than 2 hours of play time, but that’s plenty of time to try out the game. They also don’t seem to be hard limits, for example I refunded a game that had 2 hours and 31 minutes of play time. I’ve definitely found that I’m more willing to make purchases where I’m not sure if I’ll like the game, as getting a refund is pretty hassle free.
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Same for movies and series actually. And TD has always highlighted how piracy is a symptom of a failed business model. Glad you finally recognized it after all these years.
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What that points to more is a failing of a business model, rather than any great advantage of piracy.
Um. Yes. This is the point we’ve been making for 2 decades, during most of which you’ve been commenting mocking us for saying such things.
So, I guess, apology accepted. Thanks.
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You don’t get to slither away with that one.
Your point has always been that the business model fails because of “infinite distribution”. That isn’t the issue here, is it?
The issue here is more to do with the choices they have made relative to trials and pricing of the full product, rather than anything else. It really isn’t a question that piracy is better (because more and more, we are seeing it’s not – malware as an example). Rather, it’s a question of how the landscape has changed with apps and sites like Steam.
The gaming landscape has changed, and people are less willing to part with $40-$100 for a game sight unseen. They have too many other options out there that are free or “without cash cost” to try out. The risks of buying an expensive game are high.
So no, it’s not a business model failing in not dealing with piracy, sorry, sad trombone for you for trying. It’s about an evolved landscape, mostly on the free apps side.
So no apology, sorry!
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And anti-piracy enforcement has nothing to do with the “changing landscape”, yet you harp on the solution like it’s manna from Heaven. When a company complains about poor sales you leap to their defense because they whine about piracy. Same goes for DRM – you want consumers to blindly trust companies who demand huge sums of money just so they can install Denuvo on our machines.
What’s funny is that you ended your “lack of apology” on a “sorry”. Irony is a lost art on you. But what do you expect from a Prenda fanboy?
Yes, people would watch more movies if cheaper and better.
Techdirt repeats truisms as if final proof.
Key fact is the “displacement” of four movies NOT paid for out of every 10 illegal. This study shows exactly what anyone reasonable expects: piracy reduces sales.
You try to make much of that books, games, and music don’t have similar “displacement”. The study also says that further lowering of price won’t cause more sales.
Re: Yes, people would watch more movies if cheaper and better.
Then you slyly mix in movies as if same. But movies are intrinsically orders of magnitude more expensive to make: on the order of a few thousand for books, movies, and even many games, versus TENS OF MILLIONS for a typical movie.
If price of ANY expensive-to-make product were lowered, more would be bought. But that’s not possible unless you simply forget about "sunk (or fixed) costs", which is exactly what Masnick does in his infamous "can’t compete" piece; read it and you’ll see that Masnick just ignores COSTS except for bandwidth. — Economics is easy for Masnicks who can just omit facts, yet the people making movies worry first about just re-couping costs.
The length limit for comments from TOR seems to be 1024, as this totaling 1137 didn’t go in first two tries. I like them spread out just as well, so don’t change it back.
Re: Re: Yes, people would watch more movies if cheaper and better.
Techdirt just hates filthy TOR pirates.
Re: Re: Yes, people would watch more movies if cheaper and better.
When almost all of your expenses are sunk costs, and the cost of copies approaches zero, you can lower prices so as to maximise your income. If for example, halving your price results in three times as many sales, you come out well ahead by doing so.
Re: Re: Yes, people would watch more movies if cheaper and better.
You are forgetting basic economics. People simply don’t care how much it costs to make something. The one, and only consideration is whether or not the item being purchased is worth more, or less than the amount of money being asked.
Movies are currently priced higher than most people value them.
The movie studios are trying to get people to pay what it costs to produce the movies. This is backwards. What they need to start doing is figuring out how to create movies for a price people are willing to pay.
Re: Re: Re: Yes, people would watch more movies if cheaper and better.
Basic economics also says that Hollywood would be out of business if they had been operating with a real loss on any film for as long as they have been. They are making a comfortable profit, but use Hollywood accounting to rob artists of any share of their profits.
Re: Re: Re:2 Yes, people would watch more movies if cheaper and better.
I think “comfortable” is too charitable. I’m betting it’s more like “obscene” profits. And then the rest about Hollywood accounting still applies.
Re: Re: Re: Yes, people would watch more movies if cheaper and better.
Yes, but "how much does it cost to make it?" is part of how people assess a thing’s worth.
Ask a few people whether ebooks should cost the same as physical hardcovers and see how they answer. I guarantee the subject of manufacturing cost will come up.
(This seems to be less of an issue for games, where buyers seem much more cognizant of the benefits of a digital model — not having to drive to the store, put a disc in a drive, etc.)
Re: Re: Re:2 Yes, people would watch more movies if cheaper and better.
You’re probably correct, but, at least for myself, I enjoy the physicality of books. I’ll buy hardcover copies of books from favorite authors, and I’m willing to pay a (reasonable) premium for the added value.
On the other hand, I don’t buy paperbacks any more, preferring ebooks. There are actually a few instances where I got an ebook, and ended up liking it so much I then went on to get a hardcover copy of the same book.
Re: Re: Yes, people would watch more movies if cheaper and better.
Again with the $100 million movie garbage. If you choose to throw that much money into a movie it’s not my responsibility to ensure you make a profit. Hell, I can choose to do without, which you want anyway, and that doesn’t put money in your pocket.
You’re not very good at thinking things through, are you?
Re: Re: Yes, people would watch more movies if cheaper and better.
Well, pay less to actors! We don’t need no more Brad Pitts making millions for a few months of mediocre acting.
Re: Yes, people would watch more movies if cheaper and better.
No, because many if not most those sales were never going to happen regardless.
People are paying to see a movie with friends at the same rate they did before piracy. Or to rent it or stream it. We KNOW this – because Hollywood is making record profits.
But teens and others can’t afford to pay for ALL the movies they want to see. Take away piracy, and the sales still don’t happen.
Re: Yes, people would watch more movies if cheaper and better.
That is because the price is close to the customer’s perceived value. It doesn’t matter how much it cost to produce the product, what matters is how much a consumer is will pay for the product. Econ 101 stuff.
Here is my personal perceived value of the products being discussed:
Ebook – $2.00
Dead Tree Book – $15.00
Music (purchased) – $1.00 per track
Music (streamed) – $.001 per track
Movie – Price of HBO/Showtime subscription and 3 month delay
The limit before your comments start triggering my bullshit meter seems to be 1024.
Re: Re: Yes, people would watch more movies if cheaper and better.
You value your purchases at what they cost you. If they were available cheaper you would value them less. As an example, I value a DRM-free MP3 track at nine cents, because that’s what I pay for it at MP3Million. And because I found a cheap source, I buy far more of them than I did before. I spend more money on music now that I can get a better deal.
Re: Re: Re: Yes, people would watch more movies if cheaper and better.
But "deal" implies that you know you’re getting it for less than the going rate — not that you think it only has nine cents’ worth of value, but that you’re only paying nine cents and you’re getting more than nine cents’ worth of value in return.
Re: Re: Re: Yes, people would watch more movies if cheaper and better.
That isn’t true at all. Those numbers represent the point where I start to question the wisdom of the transaction in my own mind. I will certainly pay less, if it’s offered, but paying more would require additional justification for me.
Re: Re: Yes, people would watch more movies if cheaper and better.
Agree.
But for music purchased is BS, $1 per song is the same as $12 per CD, which was the old legacy bs.
Also ECON 101 dictates that the cost of production determines price. So you are saying does not matter if music costs little to produce, producers still deserve what people are willing to pay? That is ridiculous. You are forgetting the fact there is a MONOPOLY in the production and distribution processes of the Mainstream Music ie recording studios, labels, publishers, radio, TV, etc.
Re: Yes, people would watch more movies if cheaper and better.
Except where it doesn’t:
Did you read those and only those the parts of this post that confirm your assumptions?
Re: Re: Yes, people would watch more movies if cheaper and better.
I suspect this commenter is from the European Commission…
Re: Yes, people would watch more movies if cheaper and better.
“piracy reduces sales”
Here’s a great example of of what actually reduces sales:
I have a moderate collection of DVDs, retail and legit. I own a single Blu Ray, also legit. All of my DVDs play fine in every device I put them in, but the obvious drawback is that they contain videos of a very limited picture quality (by today’s standard). The one Blu Ray I own will play in only a single device (PS4) and even then it has a 50/50 chance of coming back with an error as a result of all the requirements and restrictions they have saddled the format with. In other words, they have made it about as painful and unpleasant as possible to view content legitimately.
So what did I do about watching that one movie that I have on Blu Ray that I purchased legally and cannot watch? Did I run out and buy another copy on DVD so I can watch it? Noooooo. Did I run out and purchase a whole new player to add to my collection of media playing devices that work fine for everything else? Hahahahah. Did I attempt to return that disc for a refund or exchange it for a medium that actually functions? LMFAO. No, I pirated a copy. It played flawlessly on every device I own. It’ll play whenever I want it to, as many times as I want it to until such time as I remove it from my collection.
So tell me again what my incentive is to purchase movies legally? Tell me again how it was piracy that has led to loss of sales? Because it seems to me that it was their own shitty practices that have now resulted in my decision to not buy from them again. It seems to me that they are doing this to themselves.
Re: Re: Yes, people would watch more movies if cheaper and better.
Indeed. Let us buy media or DRM-free data that just works without hassles, without unskippable FBI warnings and commercials, and we will pay what it’s worth.
Does this mean that members of TD’s fan club should curtail their constant denigration of the MPAA whenever it expresses concern about piracy of its members films? It would seem so.
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You did see the part where it said: "An exception is the displacement of recent top films. The results show a displacement rate of 40 per cent which means that for every ten recent top films watched illegally, four fewer films are consumed legally."
If wonder whether the MPAA would consider going after the people who craft the give-all-the-plot-surprises-away trailers for recent top films which, in my case at least, are the most effective way to get me to not go see a movie.
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No, but man they sure hate Rotten Tomatoes.
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No. No it shouldn’t. There was never a more useless body of idiots gathered in one place as the MPAA.
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It’s not even just the copyright issue, but a whole sorry mess of institutional sexism, racism, homophobia and other unsavoury crap. They’re dinosaurs waiting for the merciful asteroid strike, in every conceivable way.
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Huh? The article talks about how the European Commission chose to hide a study they personally paid for, because it produced results they weren’t expecting and didn’t like. A proper parallel would be Masnick funding a study which claims that downloading movies makes Hollywood starlets destitute, and he chooses not to talk about it.
But you already know this, and you’re just here to piss and moan about your heroes getting caught red-handed. We’ve seen how you make apologetics for Hollywood accounting, because executives screwing the people working for them is small potatoes – but a grandmother merely accused of downloading pornography she has no interest in needs to be jailed and have her life savings taken away, because copyright.
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TD’s fan club….in a TD forum! looooooool…
You forgot your foot.
out_of_the_blue just hates pirates
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who the fukk is out of the blu???
Pricing
It seems the retail pricing is more important than anything for ‘piracy’ control. Movies and videos seem over priced to many based on the quality and variety. Music, books seem to be priced more fairly in general so why pirate. Plus there is more variety and quality available. Fairer pricing also means one if often more willing to a flyer on an unknown musician or author by purchasing something they have done.
lack of an effect surprises me
Personally, the ability to try before I buy has me buying more than before. I’m not illegally downloading but listening to music on Youtube. Now that I can get a better idea of how much I’ll like a given album and/or band, I feel much safer in my purchases, and, as a result, I purchase more.
SO AS WE'VE SAID
So as we’ve said if you want to destroy these numb nut copyrightists give em all they want and no one will buy shit be able to pirate and then what ….they can kiss my f..in arse while they sit in a welfare line
Re: SO AS WE'VE SAID
Unfortunately, that would also give them total control over everything that was published, as they would make it illegal to self publish.
The self publishers and services that support them are the real targets of the maximalists, because unless they can gain the copyright on what is being published, they cannot make a profit on it.
it’s never been about money in any form, it’s always been about getting control of the Internet. the entertainment industries, in their usual stupidity, declined to accept the internet and that it was the way forward as far as media distribution, the audiences it would be reaching and the ease of doing so, as well as the cheapness of getting all the audiences wanted into their inboxes and homes! just the same as they failed to accept that torrent was the fastest, easiest and cheapest way of distributing those media files to, basically, thew whole world in almost one, fell swoop! now, torrent files and torrent sites are the worst thing that has been unleashed on the Planet, that is, until those industries get control of the Internet and want to get their movie and music files to everywhere as cheap as possible, as fast as possible while charging as much as possible, then torrents will be the best thing since sliced bread!!
All along they’ve been making us pay in advance whether we end up liking the product or not (with no refunds offered). It’s well time we flip the script permanently.
I use Disney as the comparison.
When Iron Man 1 was first released on BluRay by Marvel Entertainment, it retailed at $25. Some time after, the price dropped to around $15. Then Disney purchased Marvel Entertainment. Shortly thereafter, the BluRay went back up to $25, where it remains to this day in my local stores. The original CARS film, which is now 11 years old, still retails at $25 for the BluRay.
Conversely, Illumination put out Despicable Me on BluRay for $25. Now you can buy a combo pack of the first 2 films plus the Minions film and their accompanying mini films for around $15 on BluRay. I expect sometime within 18-24 months it will become a 4 pack (Minions plus all 3 Despicable Me films) for $15-$20.
If I want the BluRay immediately upon release, I may be tempted to pay the $25. Usually I will wait 6 months or so for it to drop in price and then purchase it. However, you’ll notice in my collection a distinct lack of Disney films. $25 for a 10 year old film is not good value to me.
Sure they have!
The sales in the study-the-effects-of-downloads department are booming!!
I don’t support the jailing of subtitle makers, therefore, I don’t buy shit from the copyright cartel.
Tier-ing access is the solution
The EU Commission might have delayed its release but I don’t buy the argument that the Commission wanted to hide it, because they know that they can’t. But it serves Julia’s – and her party’s – consistent stand.
The problem lies in the very premise of this study which misses completely the point on piracy.
The real issue in the music and film industries is tier-ing their offer to adapt to their customers’ purchasing power in the way, say, the automobile industry can: those who can afford and are ready to pay higher prices, those who are fine with the existing prices and those who cannot afford yet want nevertheless to own/enjoy these products.
Until now, there were 3 tier for music: purchase, subscription and ad-supported free. Soon there will be another tier: hi-res. Films and TV series have only the first two tiers right now.
Piracy is not a category. And it is wrong to say that piracy acts as a culture enabler, because free radio and free TV channels provide the whole spectrum of cultural content, with no or very little time delay, while funding the creative industries.
The problem with piracy is that ISPs and file-sharing service providers make money but do not share in the content economy: they are leeches, free-riders and their business has no justification.
Re: Tier-ing access is the solution
Then why didn’t they release ASAP in consumers knowledge and society’s best interest?
Re: Tier-ing access is the solution
“free radio and free TV channels provide the whole spectrum of cultural content”
LIES. I dare you to cut your cable and your internet, and see how you “cover all the cultural spectrum” with free radio and free TV. Be prepared to start talking like Oprah. lol