Piracy Boosts Concert Ticket Sales, Hurts Box Office Revenue

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Online piracy is a complicated phenomenon that's constantly evolving. While it's hard to draw strong conclusions across the board, new research published by the University of Amsterdam reveals interesting trends, including effects on legal consumption. The study is a follow-up to an earlier report which made the news last year because the EU Commission held it back.

Over the past decade there have been dozens of detailed reports researching the prevalence and effects of piracy.

With a wide array of results, it’s hard to draw uniform conclusions but as the research adds up, stable patterns start to emerge.

The Global Online Piracy Study, published by the University of Amsterdam’s Institute for Information Law (IViR) today, is an important contribution to this field.

The research is the result of extensive consumer surveys among 35,000 respondents, including over 7,000 minors, in 13 countries. Combined with similar data collected in 2014, it shows how online piracy habits are changing.

One of the main conclusions is that the number of online pirates is decreasing in most of Europe. This decline is visible in France, the Netherlands, Poland, Spain, and Sweden. Of all surveyed countries, only Germany saw a slight increase in the number of pirates.

In the surveyed countries across Europe, the piracy rate among Internet users is the highest in Spain, but this is topped by Brazil, Thailand, and Indonesia in the full sample.

Number of Internet users accessing content illegally

TorrentFreak spoke to Dr. Joost Poort, one of the authors of the report, who notes that pirates and legal users are largely the same people. In fact, roughly 95% of all pirates also consume content legally, and they typically spend twice as much as their non-pirating counterparts.

This doesn’t mean that pirates are rich, of course. In fact, the research shows that a higher per capita income is linked to a lower number of pirates per legal users. In other words, ‘poorer’ countries have relatively more pirates.

Lower income = more pirates

When people are asked about the reason why they pirate, the cost factor is also frequently mentioned. Pirating is free which is convenient for those who have little to spend. But does that mean that it also leads to a decrease in sales? Is piracy hurting revenues?

According to the research, there’s an overall negative effect of piracy on media sales. However, this doesn’t apply to minors. The latter makes sense, as that group has relatively little to spend anyway.

“This study confirms earlier studies in finding statistical evidence that illegal consumption of music, books, and games displaces legal consumption,” the report reads.

“However, the displacement coefficients are surrounded with substantial uncertainty. Separating these results between minors and adults suggests that displacement occurs for adults and not for minors.”

What’s also worth highlighting is that piracy doesn’t affect all media and entertainment types the same. It even benefits some revenue streams.

For example, the data suggest that every ten music albums pirated leads to three extra concert or festival visits. However, at the same time, it leads to a significant drop in physical album sales and digital downloads, while music streaming remains unaffected.

For video content, including movies, online piracy doesn’t appear to affect sales of physical copies or digital downloads. Here, however, cinema visits and online streams are severely impacted.

“For live concerts and music festivals, a positive sampling effect is found. For audio-visual content, no such sampling seems to occur for the cinema, which suffers from statistically significant displacement, as do digital streams.”

To give an illustration, the data suggest that ten downloaded movies would in general lead to four missed cinema visits.

While the research provides evidence for the negative effects of piracy, the authors don’t see any evidence that stricter copyright laws or enforcement against individuals are a good solution.

Instead, legal content providers should focus on making their work readily available for a good price.

“In terms of policy, obviously hunting down the industry’s largest customers is not the best of ideas. Rather, push for better availability, affordability, and findability of legal content. Affordability of large platforms in lower-income countries is certainly an issue,” Poort tells us.

“If you must do something in terms of enforcement, website blocking seems to be a much better strategy than going after consumers. There is some solid looking evidence for effectiveness in the UK.”

Finally, it is worth noting that this is a follow-up to a controversial EU-funded study. That report made headlines last year because the European Commission held it back. The latest version is funded by Google which had no such restrictions.

“This builds on the EU study that caught some traction because the commission was very reluctant to publish it. This time, Google financed it and respected our academic interests and independence so much better than the Commission did…,” Poort says.

A copy of Global Online Piracy Study is available here (pdf).

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