and 2007. The total entertainment market has remained more or less constant, suggesting budget competition among the various products.
As long as the markets for games and films are on the rise or remain stable, there is little reason for concern that the diversity and accessibility of content is at stake. File sharing has significantly enhanced access to a wide and diverse range of products, albeit that access tends not to have the approval of the copyright holders.
In other words, pretty much everything that plenty of folks around here have been saying for a better part of a decade is pretty much true. File sharing isn’t damaging – and, in fact, can represent a net economic improvement, and the business troubles faced by a few small parts of the industry are really business model challenges, rather than legal ones. The report makes it clear that focusing on legal solutions to dealing with file sharing is a big mistake that tends to only backfire and seems to be totally misdirected.
Harvard Study Finds Weaker Copyright Protection Has Benefited Society (2009)
Canadian law professor Michael Geist wrote in 2009:
Economists Felix Oberholzer-Gee and Koleman Strumpf have just released a new Harvard Business School working paper called File Sharing and Copyright that raises some important points about file sharing, copyright, and the net benefits to society. The paper, which includes a helpful survey of the prior economic studies on the impact of file sharing, includes the following:
1. The data indicates that file sharing has not discouraged creativity, as the evidence shows significant increases in cultural production. The authors note that:
Overall production figures for the creative industries appear to be consistent with this view that file sharing has not discouraged artists and publishers. While album sales have generally fallen since 2000, the number of albums being created has exploded. In 2000, 35,516 albums were released. Seven years later, 79,695 albums (including 25,159 digital albums) were published (Nielsen SoundScan, 2008). Even if file sharing were the reason that sales have fallen, the new technology does not appear to have exacted a toll on the quantity of music produced. Obviously, it would be nice to adjust output for differences in quality, but we are not aware of any research that has tackled this question.
Similar trends can be seen in other creative industries. For example, the worldwide number of feature films produced each year has increased from 3,807 in 2003 to 4,989 in 2007 (Screen Digest, 2004 and 2008). Countries where film piracy is rampant have typically increased production. This is true in South Korea (80 to 124), India (877 to 1164), and China (140 to 402). During this period, U.S. feature film production has increased from 459 feature films in 2003 to 590 in 2007 (MPAA, 2007).
Given the increase in artistic production along with the greater public access conclude that “weaker copyright protection, it seems, has benefited society.” This is consistent with the authors’ view that weaker copyright is “unambiguously desirable if it does not lessen the incentives of artists and entertainment companies to produce new works.”
2. The paper takes on several longstanding myths about the economic effects of file sharing, noting that many downloaded songs do not represent a lost sale, some mashups may increase the market for the original work, and the entertainment industry can still steer consumer attention to particular artists (which results in more sales and downloads).
3. The authors’ point out that file sharing may not result in reduced incentives to create if the willingness to pay for “complements” increases. They point to rising income from performances or author speaking tours as obvious examples of income that may be enhanced through file sharing. In particular, they focus on a study that concluded that demands for concerts increased due to file sharing and that concert prices have steadily risen during the file sharing era. Moreover, the authors canvass the literature on the effects of file sharing on music sales, confirming that the “results are decidedly mixed.”
The authors were one of the first to challenge the early claims about the effects of file sharing. Years later, many other economists have followed suit (including the study funded by Industry Canada). This latest paper does a nice job of expanding the discussion, by using the data to examine incentives for creativity and the effects on aggregate creator and industry income.
The Hargreaves Review Of UK IPR Policies (2011)
The UK government commissioned a review of its policies on copyright, patents and other intellectual property rights (IPR), which was presented in May 2011. The review was done by Professor Ian Hargreaves, who holds the Chair of Digital Economy at the Cardiff School of Journalism, Media and Cultural Studies and Cardiff Business School.
The resulting Hargreaves Review (pdf, 130 pages) is very interesting reading.
One thing should be made absolutely clear: The Hargreaves Review is not a “Pirate Manifesto”. It is written from a general pro-IPR perspective, and there are many cases where the Pirate Party disagrees with the proposals made, or thinks that they do not go far enough. In particular, the Review offers no solution to the problem of illegal file sharing, other than the usual enforcement/education policy that has failed so spectacularly for at least a decade.
But if we leave that aside, there are many positive concrete recommendations in the Review that deserve to be taken seriously.
We urge Government to ensure that in future, policy on Intellectual Property issues is constructed on the basis of evidence, rather than weight of lobbying …
This is indeed an area where there is much room for improvement. In the Executive Summary, the Hargreaves Review states:
The frequency of major reviews of IP (four in the last six years) indicates the shortcomings of the UK system. In the 1970s, the Banks Review deplored the lack of evidence to support policy judgments, as did the Gowers Review five years ago. Of the 54 recommendations advanced by Gowers, only 25 have been implemented. On copyright issues, lobbying on behalf of rights owners has been more persuasive to Ministers than economic impact assessments.
On copyright, the Review first of all advocates a “digital copyright exchange [that] will facilitate copyright licensing and realise the growth potential of creative industries”.
Although it would cause no harm if somebody feels like trying to establish such an exchange under today’s copyright legislation, it is very doubtful if this would be enough to solve the problem of easy pan-European licensing, and to lay a foundation for Europe as a Digital Single Market.
But there are other very constructive suggestions. The Review states in its Recommendations:
