On digital piracy. (Part Two)

VIDEO: https://www.youtube.com/watch?v=vjm6Hv4JBYw&feature=youtu.be

In our previous article we discussed the attractive nature of digital piracy, especially with consideration to the difference in our attitude between outright shoplifting and online illegal downloads.

Now to answer the question- does digital piracy really matter?

Glancing at some of the statistics, the effects do certainly seem alarming.  We mentioned them in the previous article- how in 2011 the International Federation of the Phonographic Industry claimed 95% of the music in the world was illegally downloaded, and how 42% of software running in the world was illegal. With digital piracy continuing to spread and diversify, these statistics are likely to be even higher right now.

But let's put the statistics aside for a while, and get a real life case study of digital piracy and its effect on content producers. Who better to choose than creator of the UK's most pirated music album of 2012, Ed Sheeran. In 2012, in the UK his debut album + had sold 1.2 million copies- while there were reportedly 8 million illegal downloads of the same album. This sounds a horrific imbalance, but Sheeran himself has shrug (honestly or not, only he knows) the statistic off- he instead lauds the fact that over 9 million have his music, but more importantly he claims that it does not have too much of a negative impact on the economic aspect of his career- he cites increasing ticket sales as something to balance the money 'lost' to piracy.

And there is valid reason to this- digital piracy is very effective in spreading the talent of new artists to the music scene. Clearly, many people were not prepared to pay full price for Ed Sheeran's debut album, and perhaps rightly so (not many people knew of him at the time)- but the spreading of his album via digital piracy opened it to a huge audience. Once people heard his full songs, those who liked them would then be more willing to pay the price of a concert ticket, or buy future songs (of course, the latter would not be reflective of all fans).

This opinion is part of a view that the music industry is changing- that the function of the music album is changing from an ends itself to more of a means- a means to attract people to pay for concert tickets, to buy merchandise, etc.

One could say that Ed Sheeran is not representative of the music industry as a whole- he is indeed one of the most popular and thus wealthiest artists in the world. Digital piracy may not damage him too badly, but what about the smaller artists trying to make their big break? Won't illegal downloads damage them and make their desire to make music financially unsustainable?

Well, no doubt this has happened to artists- however a simple response to this (as well as the aforementioned potential benefits of piracy) is that few small artists have their content available online to illegally download in the first place. Whereas you can easily find an illegal download of Ed Sheeran's latest album, finding one of a new, independent artist is definitely more of a task.

You wouldn't want to cross the Expendables cast by
illegally downloading their films....

It is possible to say that digital piracy has a positive, promotional effect on the movie or games industry too. Illegal viewings of 'The Expendables 2' may have encouraged many people to shell out for a cinema ticket to watch 'The Expendables 3' if they liked it. However in most cases where there is only mild interest in a film or a game, perhaps an illegal viewing may encourage someone to wait until they can illegally download the sequel.

However the effect of digital piracy on movie industry revenues has been almost invisible. A famous study by the London School of Economics stated “Despite the Motion Picture Association of America’s (MPAA) claim that online piracy is devastating the movie industry, Hollywood achieved record-breaking global box office revenues of $35 billion in 2012, a 6% increase over 2011,”. 

This growth in the face of rising internet piracy can be attributed to numerous reasons- perhaps better (and/or more) films, people recovering economically and spending more on entertainment, growth in more expensively-ticketed 3D films. It also suggests that piracy does not have a profound effect on the industry- not as many sales are 'lost' as believed.

I put 'lost' in quotation marks because it is another question we must consider- is a sale really 'lost' every single time an illegal download occurs? Globally speaking, the answer is no in many cases. A 16 year old boy illegally streaming the latest Fast and Furious film in an internet cafe in Botswana is not a 'lost' sale- it is likely that the film would not be showing in his locale anyway, or he would have more urgent things to spend money on than a ticket even if there was a showing. 

A Chinese university student illegally downloading Command and Conquer Generals wouldn't count either- because even if he wanted to purchase it legally, the game is banned in his country. 

We must be wary that such instances are included in the global statistics that we hear- and the globalised, developing nature of the world means that countries such as China do account for a large amount of the digital piracy we hear about, and in many of these cases legal sales are not possible, and thus not 'lost'. 

So we must consider all sides and dimensions of this debate. Yes, income is sometimes damaged by digital piracy, but then again income can be boosted by the positive promotional effects of pirated content. Piracy makes media widely available to all, and can be a launching pad for a music artist to become the favourite of millions, whereas perhaps if piracy was unavailable they may not have received the widespread reach that gave them their big break. 

The effects on the movie and game industries are arguably similar but of less strength- though statistics often exaggerate the cost of 'lost' sales due to piracy, and these industries are in fact flourishing (due to various reasons).

So, that's an overview of the economic effects of digital piracy- it is a matter that is certainly not as clear as it first seems.

What do you think? Comment below with your opinions and thoughts! 

SOURCES (and recommended reads):
LSE Report http://www.scribd.com/doc/172985274/LSE-MPP-Policy-Brief-9-Copyright-and-Creation
http://www.cbc.ca/news/business/digital-piracy-not-harming-entertainment-industries-study-1.1894729
http://www.bbc.co.uk/news/technology-19599527