Following the shutdown of Megaupload, Internet folk hero Jonathan Coulton asked:
[W]here is the proof that piracy causes economic harm to anyone? Looking at the music business, yes profits have gone down ever since Napster, but has anyone effectively demonstrated the causal link between that and piracy? There are many alternate theories (people buying songs and not whole albums, music sucking more, niches and indie acts becoming more viable, etc.). The Swiss government did a study and determined that unauthorized downloading (which 1/3 of their citizens do) does not create any loss in revenue for the entertainment industry. I remember but am now too lazy to find links to other studies that say the same thing. I can’t think of any study I’ve seen that demonstrates the opposite. If there is one, please point me to it.
Now, before addressing Coulton’s remarks, I want to be clear — since The Internet can be touchy about such things — that I’m not picking on Coulton; I like some of his music.
Having said that, his remarks about the evidence concerning piracy are quite common. Facts and evidence are important to discussions of copyright policy, and it’s important that we understand exactly what those facts are.
Piracy Causes Harm
As for pointing to studies that demonstrate the harm of unauthorized downloading, I would point to the same link Coulton provided. The Swiss government report 1The report is in German. I haven’t tracked down an English version yet, but you can read a Google-translated version here. — not, technically, a study — cites an academic literature review that points to not only one such study but fourteen.
The review, The Economics of Music File Sharing – A Literature Overview, by Peter Tschmuck (Microsoft Word version here), examines 22 studies which look at the effects of filesharing on the music industry. Because some are skeptical of industry generated studies, it should be pointed out that all the studies here are independent, academic studies — working papers, academic journal articles, and dissertations. Of these 22 studies, 14 — roughly two-thirds — conclude that unauthorized downloads have a “negative or even highly negative impact” on recorded music sales. 2Three of the studies found no significant impact while the remaining five found a positive impact. The literature review looked at a 23rd study but did not classify it here since the author presented a mixed conclusion: the overall effect of unauthorized downloads is insignificant, but for unknown artists, there is a “strongly negative” effect on recorded music sales.
Studies since Tschmuck’s only confirm these findings. One notable contribution is economist Stan Liebowitz’s study The Metric is the Message: How Much of the Decline in Sound Recording Sales is Due to File-Sharing? released in November 2011. In it, Liebowitz translates the conclusions of existing studies on the effects of unauthorized downloads on recorded music sales into a common metric to answer the question posed in his title.
His conclusion is stunning: “file-sharing has caused the entire decline in sound recording sales that has occurred since the ascendance of Napster.”
Looking at the available evidence, one thing is clear. It is a fact that there are multiple academic studies that show a significant negative effect on music sales caused by unauthorized downloading, and this conclusion has been reached by a significant majority of researchers. Coulton is not alone in being unaware of these findings — you don’t have to look far to find those who don’t know about the existence of these studies.
But there they are.
Enforcement Boosts Legal Alternatives to Piracy
The fact that evidence backs up one of the central premises of copyright law is, however, only a precursor to the real question: what, if anything, should be done to address the harm from online copyright infringement? The role of law in answering this question attracts perhaps the most heated debate. That leads to the next question: does copyright enforcement work?
Some point to the 400+ page Media Piracy in Emerging Economies report, released in 2011 by the Social Science Research Council and funded by the Ford Foundation, as providing evidence that enforcement “doesn’t work.” But that’s not what the report concludes, as the editor of the report itself, Joe Karaganis, pointed out in a Torrentfreak article last week:
We talk about the efficacy of enforcement at some length in our Media Piracy report. Many readers have concluded that enforcement doesn’t work. But that isn’t what we say. We say, rather, that we’ve found no evidence that it has worked.
It’s also important to note what the report researchers looked at to come to that conclusion: the research was primarily qualitative rather than quantitative, relying on interviews, focus groups, and analysis of media reporting.
That said, this is but one study. Other researchers have found evidence that enforcement has led to increases in legal purchases of music.
In a paper released last week, Dr. George Barker of Australian National University analyzed the data from a 2006 Industry Canada survey to conclude that “P2P downloads have strong negative effects on legitimate music purchases” and “stronger copyright laws would substantially increase music purchases and music industry sales revenues.”
These findings are confirmed by another recent study by four economists from Wellesley College and Carnegie Mellon University, which determined that France’s graduated response program (Hadopi) caused “iTunes song and album sales to increase by 22.5% and 25% respectively relative to” countries in a control group that hadn’t enacted graduated response programs.
A Multipronged Approach
The idea that there is no evidence showing a harm from online piracy is erroneous, as is the idea that there is no evidence that people will turn to legal alternatives with more effective enforcement.
So where does that lead us?
I think it’s incorrect to draw the conclusion that better enforcement of copyright equals more enforcement. That’s not true in any area of law, including copyright.
But at the same time, I think it’s incorrect to ignore the evidence. There are those who say piracy is only a business model problem, or a marketing problem, and enforcement should play zero role.
This puts copyright at odds with most other issues. Take driving, for example: we prefer to minimize the harm that comes from accidents. To that end, we build safer cars, we have driver education, but we also have traffic laws and cops to enforce those laws.
There’s nothing inherent to copyright law that warrants an exception to this general practice. The challenges faced by creators and businesses that invest in creativity in the online environment are myriad and require continuing innovation to craft sustainable business models and take advantage of emerging technologies. But they also require attention to legal protection of private rights to ensure that the public continues to benefit from the talents and creativity of authors and artists.
|↑1||The report is in German. I haven’t tracked down an English version yet, but you can read a Google-translated version here.|
|↑2||Three of the studies found no significant impact while the remaining five found a positive impact. The literature review looked at a 23rd study but did not classify it here since the author presented a mixed conclusion: the overall effect of unauthorized downloads is insignificant, but for unknown artists, there is a “strongly negative” effect on recorded music sales.|