EU Piracy Report Suppression Raises Questions Over Transparency

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One of the most important aspects of online piracy is whether it affects sales. So, when the EU Commission spends 360,000 euros on a study to find out, one might think it would be useful to publish the results. Instead, Member of the European Parliament Julia Reda had to jump through hoops to obtain them. Why all the secrecy?

Over the years, copyright holders have made hundreds of statements against piracy, mainly that it risks bringing industries to their knees through widespread and uncontrolled downloading from the Internet.

But while TV shows like Game of Thrones have been downloaded millions of times, the big question (one could argue the only really important question) is whether this activity actually affects sales. After all, if piracy has a massive negative effect on industry, something needs to be done. If it does not, why all the panic?

Quite clearly, the EU Commission wanted to find out the answer to this potential multi-billion dollar question when it made the decision to invest a staggering 360,000 euros in a dedicated study back in January 2014.

With a final title of ‘Estimating displacement rates of copyrighted content in the EU’, the completed study is an intimidating 307 pages deep. Shockingly, until this week, few people even knew it existed because, for reasons unknown, the EU Commission decided not to release it.

However, thanks to the sheer persistence of Member of the European Parliament Julia Reda, the public now has a copy and it contains quite a few interesting conclusions. But first, some background.

The study uses data from 2014 and covers four broad types of content: music,
audio-visual material, books and videogames. Unlike other reports, the study also considered live attendances of music and cinema visits in the key regions of Germany, UK, Spain, France, Poland and Sweden.

On average, 51% of adults and 72% of minors in the EU were found to have illegally downloaded or streamed any form of creative content, with Poland and Spain coming out as the worst offenders. However, here’s the kicker.

“In general, the results do not show robust statistical evidence of displacement of sales by online copyright infringements,” the study notes.

“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.”

For a study commissioned by the EU with huge sums of public money, this is a potentially damaging conclusion, not least for the countless industry bodies that lobby day in, day out, for tougher copyright law based on the “fact” that piracy is damaging to sales.

That being said, the study did find that certain sectors can be affected by piracy, notably recent top movies.

“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,” the study notes.

“People do not watch many recent top films a second time but if it happens, displacement is lower: two legal consumptions are displaced by every ten illegal second views. This suggests that the displacement rate for older films is lower than the 40 per cent for recent top films. All in all, the estimated loss for recent top films is 5 per cent of current sales volumes.”

But while there is some negative effect on the movie industry, others can benefit. The study found that piracy had a slightly positive effect on the videogames industry, suggesting that those who play pirate games eventually become buyers of official content.

On top of displacement rates, the study also looked at the public’s willingness to pay for content, to assess whether price influences pirate consumption. Interestingly, the industry that had the most displaced sales – the movie industry – had the greatest number of people unhappy with its pricing model.

“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,” the study notes.

For other industries, where sales were not found to have been displaced or were positively affected by piracy, consumer satisfaction with pricing was greatest.

“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,” the study concludes.

So, it appears that products that are priced fairly do not suffer significant displacement from piracy. Those that are priced too high, on the other hand, can expect to lose some sales.

Now that it’s been released, the findings of the study should help to paint a more comprehensive picture of the infringement climate in the EU, while laying to rest some of the wild claims of the copyright lobby. That being said, it shouldn’t have taken the toils of Julia Reda to bring them to light.

“This study may have remained buried in a drawer for several more years to come if it weren’t for an access to documents request I filed under the European Union’s Freedom of Information law on July 27, 2017, after having become aware of the public tender for this study dating back to 2013,” Reda explains.

“I would like to invite the Commission to become a provider of more solid and timely evidence to the copyright debate. Such data that is valuable both financially and in terms of its applicability should be available to everyone when it is financed by the European Union – it should not be gathering dust on a shelf until someone actively requests it.”

The full study can be downloaded here (pdf)

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