The Consequences of Movie Piracy
Monday, November 23rd, 2009 by Patrick Ross
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There remains a stubbornness out there among some Internet users, a sense of entitlement to enjoying someone else’s creativity without payment to the creator.
In this Chicago Sun-Times story by Kara Spak, Ms. Spak quotes a student at the U. of Illinois at Chicago who enjoys watching unauthorized and infringing copies of movies online saying the following:
“I don’t think it’s wrong,” said 21-year-old online movie-watcher Ahmad Al-Ashqar of south suburban Palos Heights. “I’m sure the movie industry is doing a lot of harm to us, taking our money.”
So receiving payment in return for a product or service is “doing a lot of harm.” I don’t care how “new” a business model is, when receiving payment is viewed as causing harm, there won’t be a business.
I think it’s safe to say that most consumers understand that payment is sometimes necessary when enjoying creative works someone else invested time and money to create. Even “free” content like broadcast television or streaming on Hulu involves a “payment” in terms of exposure to ads. But this easy ability of someone a bit short of cash, as this infringer identifies himself, to rationalize enjoying someone else’s work without compensation in any form to them causes significant harm.
The Sun-Times story notes the almost immediate availability of the new motion picture New Moon. You couldn’t have paid me to watch it, but millions apparently were willing to pay, it grossed more than $140 million this weekend. But no one can say with a straight face that, prior to the availability of infringed works online, at least some of those infringers would have been among those purchasing tickets. Lost sales are a reality.
But the vast majority of motion pictures are not major Hollywood blockbusters featuring dreamy vampires and werewolves.
Take creative works made abroad. In an article in Uganda’s Daily Monitor, we learn about “Nollywood,” Nigeria’s film industry. Every nation on earth has creative people eager to ply their craft; in each country this creative talent base is a potential source of domestic economic growth and exports. But as Alec van Gelder points out, despite having a production cost a small fraction of a Hollywood film, piracy not only significantly reduces the potential paying audience for Nigerian works but actually contributes to a higher per-unit cost of production than a DVD from Hollywood.
That is not a good formula for economic growth.
Someone enjoying a creative work online without authorization or payment of compensation can choose any rationalization they want. The common one, echoed by the student above, is this: “I want to enjoy creative works in the way that I want, in the setting that I want, when I want, and at the price point I want, and if those demands aren’t being met, then it’s the producer’s fault I’m opting out of their business model.”
Opt out all you want — if you think New Moon should be released online for free simultaneously with a theatrical release where moviegoers are charged, then don’t go to the theater. But don’t then adopt mock righteousness and watch an infringed copy while telling yourself your behavior is justifiable.
November 23rd, 2009 at 2:10 pm
Hear hear. Well said. Thanks, Patrick.
November 23rd, 2009 at 11:57 pm
Indeed, very well said.
“But no one can say with a straight face that, prior to the availability of infringed works online, at least some of those infringers would have been among those purchasing tickets. Lost sales are a reality.”
Sadly I’ve encountered many who do say this with a straight face, vigorously insisting that “no one who pirates would’ve purchased anyway” (this typically comes after the arguments about how “piracy isn’t theft” and “it’s not piracy, it’s copyright infringement”). I’ve always found it ironic that many who rant about how equating a pirated copy with a lost sale on a one-to-one ratio is clearly false (generally asserting that the entertainment industry does this), will then turn around and assume that pirated copies equal no lost sale, which is equally false.
November 24th, 2009 at 11:47 am
I would agree with Eo that assuming pirating causes no lost sales is false. Having said that study after study indicate things like your biggest customers are pirates. For instance a recent study in europe indicated that pirates spend considerably more on music purchaes attended more concerts and bought more paraphanlia than non pirates. Does this mean that you made more from them than if they didn’t pirate? Dificult to answer, they may have spent more if pirating wasn’t an option but it does show who you are attacking, your chief customers. How many lost sales has the Music industry suffered due to a terrible image. The problem of pirating is not going away. The only thing to determine is how a business model survies this reality.
Fighting it is fruitless, 3 strikes? How do you fight encryption? How do you fight private sharing? How do you fight Darknets?
So far the movie industry seems to be doing fine. I’m sorry but if Uwe Boll can have a career producing movies how can anyone be concerned with your industry….well ok but that’s a different concern.
Don’t be blacksmith evolve to the opportunities
Value propositions will be the only winners
Look to companies like Valve for clues to success
November 24th, 2009 at 11:58 am
Sam I Am and Eo, thanks for your support and insight.
Jeff, thanks for commenting. I would recommend that when arguing infringers are financially supporting creative industries financially, you should ask yourself a few questions, such as: Does piracy actually CAUSE infringers to buy more creative works, or are infringers LARGER CONSUMERS OF CREATIVE WORKS TO BEGIN WITH, and thus are more likely to still spend money where infringed works aren’t available. (All caps not shouting, just for emphasis.)
As for the “recent study in europe” you cite, I think you are referring to a poll of 1,008 U.K. consumers. Nearly 100 of them admitted to downloading creative works without paying for them, and those infringers said they spent about 77 pounds per year on copyrighted works. The survey did not ask them how much they would have paid had infringing works not been available, unfortunately, but it’s a stretch to argue that piracy somehow encouraged them to spend that 77 pounds, or that such a trivial amount of money can sustain creative industries long-term.
November 24th, 2009 at 1:31 pm
I think I alluded to that when I said “Difficult to answer, they may have spent more if pirating wasn’t an option ”
Piracy impact can be difficult to evaluate.
I know more about the Music industry than the Movie Industry.
But as the Music industry complain about lost revenue how does the idea that I can by one track from Itunes that I like and no longer have to buy the album factor into that revenue loss? Just as one example of how profitability is complicated in relation to piracy.
In any case these are still your prime customers. Creative solutions are needed from a creative industry.
Piracy will continue to exist, your customers pirate, how will you engage them to reduce piracy and ensure success?
think of pirates as a large market that you need to lure to legitimate consumption.
I think companies like Itunes, Amazon, Valve and couple of others have done a good job of that. But I haven’t really seen any equivalent in the Movie Industry.
November 24th, 2009 at 1:37 pm
I know hundreds of individual creators and work with a lot of companies in the entertainment and software space. It is news to no one that piracy won’t go away. Every creator and company I know is scrambling like mad to provide consumer-friendly alternatives to infringement. There is no economic incentive whatsoever not to reach consumers legally with works. Infringing technologies and services will always advance faster than rights-based ones, but creators are doing their best to keep up.
The question raised in the original post was, in fact, whether infringement can be rationalized. That is a question worth answering.
November 24th, 2009 at 2:07 pm
Whether infringement can be rationalized
I’m not sure this is a good question. I say this because infringement can take many forms and can be argued on many levels.
Copyright was introduced to protect the property rights of the creator so that he would have incentive to create more and be able to profit from his works. But it’s morphed into something that also now protects large conglomerates who create nothing but buy others creations and then profit from them. I’m not suggesting this is wrong, however laws begin to change as we see rights extended years after death to protect property rights. Does this help to protect the creator? Will we continue to extend copyrights as certain valuable properties come up to expire? If one country does this should all follow?
It gets murky for me at certain points.
For instance it’s my understanding that RIAA considers ripping MP3’s from a legally purchased CD Infringement. If this is infringement than I would argue it could be rationalized. Apparently playing a music over the radio in a public garage can be considered infringement. Again I think it could be rationalized
It’s an easy argument if someone downloads a CD thats been out for a couple of years and doesn’t own a copy. However it can be come murky say for example companies trying to copyright pieces of software code that anyone trying to achieve a certain goal might code on their own anyway because it’s common sense.
So I guess my answer would be in some cases yes, infringement can be rationalized.
November 24th, 2009 at 2:28 pm
I have more questions. Forgive me but the Idea of Copyright and protection of works fascinates me. Is discussion of infringement only in relation to law? For instance in my country it is legal to take streaming digital music from the net and copy it for personal use(record the stream for listening later). I’m sure the rights holder would consider this infringement, but according to the law (at least in my country) it is legal. Using this method I could legally create a very nice digital music collection and not pay a cent.
Now if I take a copy of that recording and give it to a friend I’ve broken the law but it’s hard to make that connection of recording a performance legally and freely and then that item once again regaining it’s protection.
November 25th, 2009 at 3:57 pm
Jeff,
First, generally speaking, in the US you cannot legally record streaming music–and you certainly can’t do so to create a digital library. Second, if you “take a copy of that recording and give it to a friend,” you actually have broken the law because you are distributing an illegal copy. Even if the copy was legally made, you still would have copyright problems. Think, for example, if you if you bought a CD, ripped a copy, and then gave it to a friend; you are infringing on the copyright contained in the CD (both the sound recording and the music). If, however, you buy a CD, you can legally sell or give that CD to someone else. That is called the doctrine of first sale.
November 30th, 2009 at 10:30 am
[...] write a lot on this blog about the puzzling ability of those who are able to rationalize their acquisition of a [...]
December 2nd, 2009 at 6:19 pm
So approach the Internet service providers (I.e.,cable companies etc) about a media tax or eqivilant. This charge could be minute comparatively and could be used to pay royalties or dues to the creators and artists. But this would take work and an approach to the untouchables. Look I can do the same thing With a liitle bit more physical work, by visiting the library. I’m sure the libraries have a little due to the music and film industry, so why not the very folks who allow for these “horrible acts of crime”. It’s non-violent crime at best in a world of grotesque. Grow up, stop playing with your peers and make something. Happen.
December 2nd, 2009 at 7:40 pm
Ahmad Al-Ashqar of south suburban Palos Heights still has a lot to learn. How nice of him to use his full name though, that’ll make it easier for the attorneys to track him down to serve process for a copyright infringment lawsuit.
Folks, ripping movies or music or games or whatever, hurts content creators. Don’t get us confused with large conglomerates for whom you may have little sympathy. They pay us content creators for our music and movies. If their profit margins are suffering because of rampant piracy they sure don’t have any money to pay the creators.
December 3rd, 2009 at 10:39 am
“I don’t think it’s wrong,” said 21-year-old online movie-watcher Ahmad Al-Ashqar of south suburban Palos Heights. “I’m sure the movie industry is doing a lot of harm to us, taking our money.” THIS STATEMENT IS THE MOST INSANE COMMENT I’VE EVER HEARD ON THIS SUBJECT. Seriously, Ahmad or whatever his name actually is should be locked someplace where he can’t hurt himself or others. I know the argument about “old enough to serve in the military, old enough to vote”. BUT AHMED’S STATEMENT SHOULD BE ENOUGH TO PROVE TO EVERYONE ON THE PLANET ONCE AND FOR ALL THAT NO ONE REGARDLESS OF AGE SHOULD BE ALLOWED TO VOTE UNTIL THEY HAVE AT LEAST SOME SEMBLANCE OF WHAT REALITY IS.
December 5th, 2009 at 12:43 am
I think it’s a great quote, puts a very calous face on the subject. It’s also a great example of how difficult this battle is, as Ahmad Al-Ashqar of south suburban Palos Heights according to the article quoted has broken no laws. The act amoral and the comment …well intellectually challenged comes to mind.
So what is needed, another law? A better way to shut down these sites? More enforcement? or perhaps all of the above?
December 5th, 2009 at 3:52 pm
“I want to enjoy creative works in the way that I want, in the setting that I want, when I want, and at the price point I want, and if those demands aren’t being met, then it’s the producer’s fault I’m opting out of their business model.”
Patrick,
Well that about sums it up. Unfortunately, the world does not revolve around one individual’s needs and demands. I was having a discussion about this very attitude with a friend who’s a sound engineer at a popular Hollywood (recording) studio last week. Many studios are hurting and many record labels just aren’t signing artists that are deemed to be “risky” or “different”. This is largely due to all of the downsizing that has taken place as a result of all the lost sales due to piracy. This means more homogenization in our culture. That is the harm that those who wish not to pay are doing to themselves in the long run. How boring life is without diversity in the arts. God knows, we don’t want this to happen to the film industry as well.
Great article:-)
PS-There also exists a little thingie called Property Rights. If we do not respect that principle, where will it end?
December 8th, 2009 at 11:51 am
The fact is, is that it will happen. The industries have tried to push us away from “piracy” by imposing heavy fines. If at 750$ a song (which is what my friend was charged a few months ago when he was caught) you are being forced to pay unreasonable fines. I myself if I were to be held to the same fine would owe a little under 3 million. (3800 songs at 750 is equal to 2,950,000$) Not to mention movies, but the fact of the matter is i download because i cant afford to buy. That is something I think hasnt been taken into consideration. I dont have the money to buy all the CD’s i want or buy the movies i want, so i download. As for sharing, why not? If you buy a CD and put the songs on your computer and then give the songs from your computer to someone else isnt that just the same as send the CD you bought to the person?
December 8th, 2009 at 3:05 pm
Yikes, James let me first start by saying that online anonymity is a myth. And something about the right not to incriminate yourself.
So your argument is if you can’t afford food or a DVD player you should be allowed to steal it? I’m onside with you in regards to perhaps overly harsh fines but you are breaking the law. I might point you to find a way to legally record streaming music as there are such methods available
If you’re the US this law would apply to you
According to US copyright Law
1008. Prohibition on certain infringement actions
“No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.”
Just quoting the law here folks, don’t get too excited
If you do this in a way that does not bypass copy protection systems then it is legal.
Morally it still might be questionable but at least you won’t be exposing yourself to lawsuits, fines or legal entanglements.
PS If US law has changed in this regard to section 1008 please let me know - Thanks