Friday, 13 February 2015

Movie Piracy, and the myth of 'try before you buy'

Strumpf (in press), drawing from file-sharing data between 2003 and 2009 finds that movie piracy had a modest impact on box office revenues. And yet, other research has come to wildly different conclusions.

Zentner (2010), for instance, finds that DVD sales dropped by some 27% from 2004 to 2008 and this substitution effect has been found elsewhere (see Bai and Waldfogel, 2009 and Rob and Waldfogel, 2006).

However, other research, such as that of Martikainen (2011) and Smith and Telang (2010) does not arrive at the same conclusions and does not find a substitution trend.

So what is going on here?

Well, it's down to our old friend again: research methods.

Digital piracy is incredibly difficult to measure, and the different approaches used makes it difficult to draw comparisons across studies (as I tried to do above).

So when someone asks you if watching movies illegally acts as a 'try before you buy' sort of sampler, you can tell them 'I don't know, because neither does the research'.

Certainly the trend is that digital piracy harms sales, and this is intuitive. It does not however make it correct.

Sparing a thought for the poor box office performance of films which were leaked ahead of release (think: The Expendables 3) and you can't help but feel like it is the case.

If I watched a pirated movie, regardless of whether or not I actually enjoyed it, I can't see what motivation I would then have to then go and spend money going to see it again at the cinema.

But that doesn't make it so.

Check out the research.

Tweets @musicpiracyblog


Bai, J. and Waldfogel, J. (2009). Movie Piracy and Sales Displacement in a Sample of Chinese College Students (Working Paper).

Martikainen, E. (2011). Does File-Sharing Reduce DVD Sales? (Working Paper).

Rob, R. and Waldfogel, J. (2006). Piracy On The High C's: Music Downloading, Sales Displacement, And Social Welfare In A Sample Of College Students. Journal of Law and Economics, 49(1), 29-62.

Smith, M.D. and Telang, R. (2010). Piracy or promotion? The impact of broadband internet penetration on DVD sales. Information Economics and Policy, 22(4), 289-298.

Strumpf, K. (in press). Using Markets to Measure the Impact of File Sharing on Movie Revenues (Working Paper).

Zentner, A. (2010). Measuring the impact of File Sharing on the movie industry: An empirical Analysis using a Panel of countries (Working Paper).

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