By Michael D. Smith and Rahul Telang
As researchers at Carnegie Mellon University, we are primarily concerned with data and evidence. Unfortunately, when it comes to piracy and its impact on creative artists, we’ve discovered that data and evidence can frequently be obscured by opinion and ideology.
A significant portion of our research involves using data to understand how technology is changing the business of entertainment. Over the past several years, as we’ve pursued this work with colleagues at Carnegie Mellon and elsewhere, we have uncovered several key insights about piracy and how it affects digital entertainment.
These issues have a profound impact on you as members of the creative community (see Myth # 2) and you should be informed about how and why they affect you. So, in an effort to provide data and evidence to help you be better equipped to discuss these issues, we have included below summaries of three key studies than can serve to “bust” some of the biggest myths about piracy.
Myth #1: “Piracy doesn’t hurt sales.”
The argument goes something like this: Piracy doesn’t hurt sales of media, because the people who seek out pirated content would never pay for it anyway.
That’s an interesting theory, but what really matters is how well it matches the evidence we see in the real world. Fortunately, economists and other academics have been gathering data and compiling research since the days of Napster in 2000. This provides us with over 15 years of peer-reviewed papers on the topic. My colleagues and I recently reviewed the published academic literature on this topic and found that 22 out of 25 peer-reviewed journal articles showed “piracy causes harm to producers by reducing legal sales and revenues.” The evidence is clear: In the vast majority of settings, piracy does exactly what you would expect it would do: it hurts sales.
Myth #2: “Piracy doesn’t affect creative artists.”
“Okay,” one might say, “but why should I care about the producers’ revenues? If I can get content for free, that’s great for me, and I don’t care if it’s bad for you.”
We recently investigated the question of whether piracy affects creative output that found that although piracy might benefit consumers in the short run, it is likely to harm them in the long run. Why? Because when revenues are reduced, producers are likely to invest in fewer projects. Yes, technological advances have made it cheaper to make films, which means artists and studios are making more of them than ever, but if piracy could be eliminated, the evidence suggests, we’d have even more investment in high quality filmed entertainment than we do now.
Less content means fewer opportunities for creative artists to do what they love, which means piracy harms both audiences and creatives alike.
Myth #3: “Piracy can be a GOOD THING because it helps create buzz.”
This particular argument reared its head around the time Quentin Tarantino’s most recent film The Hateful Eight was leaked before its theatrical release. Those responsible for the leak issued an apology but argued the early release would create advance buzz and increase the movie’s theatrical sales.
Again, this is a great theory. The only problem is that it doesn’t show up in the data. We have found that although piracy causes some people to discover and pay for movies they wouldn’t have otherwise discovered, this positive effect is dwarfed by a far larger negative effect: our research shows that the net impact of piracy is a 15-percent decrease in box-office revenue compared to sales that would have occurred if piracy didn’t exist. Even if some filmgoers were enticed to see The Hateful Eight at the theater after watching portions of the pirated film online, great—but that audience is too small to outweigh the revenue lost to those who chose not to watch the film legitimately.
As members of the creative community, we hope you have found this information to be of value and we encourage you to visit Technology Policy Institute’s website, where you can read several of the reports I’ve co-authored, including three referenced here: “The Truth About Piracy,” “Piracy and the Supply of New Creative Works,” and “Piracy and Buzz.”
Thanks for taking the time to read this – and thanks for helping debunk these myths and sharing the facts.
Michael D. Smith and Rahul Telang are Professors at Carnegie Mellon University’s Heinz College and Co-Directors of CMU’s Initiative for Digital Media Analytics.
They are also co-authors of Streaming, Sharing, Stealing: Big Data and the Future of Entertainment, which is available for pre-order on Amazon.com.