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Study says piracy does not affect box office sales, delayed releases do

Posted at 15 February 2012 01:26 CET by R.J. Huneke

On January 16, 2012, an academic study concluded that not only does the US box office not suffer any loss of sales due to piracy, but also that Hollywood’s delayed release dates drive piracy, at a seven percent box office loss, internationally.

This news broke just three days before the arrest of Megaupload founder Kim DotCom and the seizure of the infamous file sharing company’s domains by US authorities.

The copyright infringement issue of stealing artistic media will never be a clear, two-sided argument, but what is clear is that legislators have certainly targeted online piracy with all of the renewed vigor of the Salem witch hunt trials.

The Motion Picture Association of America (MPAA) was actively involved in the multi-year FBI investigation of Megaupload, yet the study titled Reel Piracy: The Effect of Online Film Piracy on International Box Office Sales, conducted by Brett Danaher of Wellesley College and Joel Waldfogel of the University of Minnesota along with NBER, refutes the need for any such witch hunt.

The study admits that the question of how free availability of intellectual property content affects paid demand is not as obvious as it may appear.

But the economists involved appear to have done their homework and after careful analysis of sales results in the US and abroad have reached stunning conclusions. The authors wrote that they, do not see evidence of elevated sales displacement in US box office revenue following the adoption of BitTorrent [file sharing starting in 2003].

The movie studios are not losing any box office sales money in the US . . . period.

There have been no discernible losses for movies, in US theaters, so the MPAA’s claims against piracy in the US appear to be at least partly unfounded.

The study also made another startling discovery. In countries with high BitTorrent use, movie piracy has reduced sales internationally by seven percent when there was a huge delay in the theatrical release of the films.

Hollywood and other international film studios routinely release their films in other countries months after their initial debut, but then they blame piracy for their losses in sales. The MPAA and film companies that continue to use 35mm film to play their movies in theaters need to find a more cost-effective means to distribute these films without the months-long lags between the US releases and international ones. The Muppets was only just released in the UK this month — after a Thanksgiving release in the US, and this huge gap, where international movie viewers are left out in the cold, has spurred on piracy abroad.

The study states that movies: have become available through illegal piracy immediately after release in the US, while they are not available for legal viewing abroad until . . . foreign premieres . . . [and] this variation in international release lags . . . [that] facilitate more local pre-release piracy . . . [also] depress theatrical box office receipts in eager viewers [that] pirate movies.

There is a direct correlation between delayed releases of films and the pirating of such movies by impatient viewers, and the movie companies are responsible for these delays. Piracy is, alternatively, not to blame for any theatrical losses it would seem. So why does SOPA and other legislative witch hunts keep on creeping up?

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There are 17 comments

UTR
MyCE Resident
Posted on: 15 Feb 12 02:52
    Most people who pirate a movie would never buy it or go to the theater to see it under any circumstances. It is a fallacy when claims are made that a downloaded movie or song is also a lost sale. IMO, this is rarely true.
    paulw2
    MyCE Senior Member
    Posted on: 15 Feb 12 08:21
      I'm sure the same can be said for people downloading TV programs outside the US when their local TV channels block any attempt by Netflix or Hulu to operate there and show programs months / years / if ever after the US release dates unless it's reality TV then it same day/week showings..
      samlar
      MyCE Resident
      Posted on: 15 Feb 12 11:38
        Hollywood has a problem because they spend to much money to make bad movies and then it cost to much for popcorn at the movies.
        7.50 a box.
        Anthony1uk
        MyCE Senior Member
        Posted on: 15 Feb 12 11:48
          I do not classify downloading TV shows as piracy. And its a case that nothing anyone says will change that. TV shows are created to be free to air.

          Regarding the issue it does not need a study to know when releases are delayed it will be pirated. But all these studio execs will see is 7% loss from piracy when we delay a release. Jeez we better get those download sites shut down to stop that one from happening.
          Zod
          MyCE Resident
          Posted on: 15 Feb 12 16:50
            I think the reason why it wouldn't affect box office sales is that you still have that gap in time between the theatre release and the bluray release. In that first window of time the only pirated copies available are people filming a theatre screen and are subpar.

            So now the release window looks like this: Theatre Release, Early leaked bluray release, official bluray release.

            I think pirating might have a bigger impact on the sale of physical media. There's no real alternative for theatres.

            As for pirated copies not being a lost sale. I definitely agree with that. There's no way there's enough extra money kicking around that people could just buy all the copies they are downloading.

            You also have people that do both. They are die hard movie collectors. They might be tempted to pirate because it might be on the internet a month before release. They still end up buying the movies they like. So they're both the pirate and the customer.
            BradWright
            MyCE Member
            Posted on: 15 Feb 12 20:14
              The very first sentence of this story contradicts the title, and itself. "On January 16, 2012, an academic study concluded that not only does the US box office not suffer any loss of sales due to piracy, but also that Hollywood’s delayed release dates drive piracy, at a seven percent box office loss, internationally."

              So the US box office suffers no loss due to piracy, but there is a seven percent box office loss due to piracy. Huh? You can't get any more contradictory than that.

              Maybe instead of making up excuses and using invalid studies to provide bogus statistics to justify piracy, people should just stop downloading things that they haven't paid for. It's stealing, and stealing is piracy. I just don't understand peoples' thinking when it comes to this. Pirating movies from the internet (and using current thinking to justify it) is no different than taking a book from a bookstore, then justifying it by saying new books are overpriced and it takes too long for them to go on sale, come out in paperback, or show up at the libray, and I really want to read it now, so I'll just take it. Or would that be OK, too? After all, no one is losing anything because I wouldn't have bought the new book anyway, right? And I'll probably buy the book when it goes on sale or comes out in paperback, even though I've already read it for free.
              Zzyzxroad
              MyCE Senior Member
              Posted on: 15 Feb 12 21:58
                Maybe if the MPAA paid the release groups to slip in some ads on their rips, things would would work out better finacially for them.

                The theatres have ads
                The blurays have ads
                why not downloaded movie with ads?



                I would be into watching/downloading a movie with ads if it was legal. MPAA gets paid, advertisers get their product out there, and I get a movie thats easy on my wallet.

                Want a movie ad-free? Why not downloadable for $4.99. Great price.
                CharmedonWB
                MyCE Member
                Posted on: 15 Feb 12 22:37
                  Quote:
                  Originally Posted by BradWright
                  Maybe instead of making up excuses and using invalid studies to provide bogus statistics to justify piracy, people should just stop downloading things that they haven't paid for. It's stealing, and stealing is piracy. I just don't understand peoples' thinking when it comes to this. Pirating movies from the internet (and using current thinking to justify it) is no different than taking a book from a bookstore, then justifying it by saying new books are overpriced and it takes too long for them to go on sale, come out in paperback, or show up at the libray, and I really want to read it now, so I'll just take it. Or would that be OK, too? After all, no one is losing anything because I wouldn't have bought the new book anyway, right? And I'll probably buy the book when it goes on sale or comes out in paperback, even though I've already read it for free.
                  What proof do you have that the study is invalid? And no one is making any excuses to promote piracy. The study is trying to ascertain facts as opposed to the MPAA and RIAA's nonsensical statistics. As for your analogy it is inherently flawed. If I steal a book from a bookstore then the vendor no longer has that book from which to make a profit. On the other hand, if I make a digital copy of the book I have not taken anything from the vendor. It still has the book to sell. The next argument is piracy removes potential customers from the market which again is speculation with no tangible evidence to suggest its true impact. Perhaps libraries where movies, books and games can be rented free of charge also impact sales--maybe we should outlaw them too!
                  RTV71
                  MyCE Member
                  Posted on: 15 Feb 12 23:14
                    Quote:
                    Originally Posted by CharmedonWB
                    ]Perhaps libraries where movies, books and games can be rented free of charge also impact sales--maybe we should outlaw them too!
                    Some game publishers are adding single-use online keys specifically to block rental/used game sales.
                    UTR
                    MyCE Resident
                    Posted on: 15 Feb 12 23:46
                      Quote:
                      Originally Posted by Zzyzxroad
                      I would be into watching/downloading a movie with ads if it was legal. MPAA gets paid, advertisers get their product out there, and I get a movie thats easy on my wallet.

                      Want a movie ad-free? Why not downloadable for $4.99. Great price.
                      You just hit on another fantastic business model for how the MPAA, RIAA etc. can beat the pirates at their own game.
                      UTR
                      MyCE Resident
                      Posted on: 15 Feb 12 23:49
                        Quote:
                        Originally Posted by RTV71
                        Some game publishers are adding single-use online keys specifically to block rental/used game sales.
                        If they want to sell a lot of new games then they had better be really good if they use this tactic.
                        huneke
                        MyCE Rookie
                        Posted on: 16 Feb 12 16:01
                          Quote:
                          Originally Posted by BradWright
                          The very first sentence of this story contradicts the title, and itself. "On January 16, 2012, an academic study concluded that not only does the US box office not suffer any loss of sales due to piracy, but also that Hollywood’s delayed release dates drive piracy, at a seven percent box office loss, internationally."

                          So the US box office suffers no loss due to piracy, but there is a seven percent box office loss due to piracy. Huh? You can't get any more contradictory than that.
                          How about the use of the word "internationally" in the first sentence? There are international losses at the box office, due to piracy that is directly correlated to and driven by delayed releases "internationally." In the US there are no losses attributable to piracy...the study is quite extensive and the link to it is in the site. The pdf is free and is quite clear and thorough.

                          Best,

                          RJ
                          CharmedonWB
                          MyCE Member
                          Posted on: 16 Feb 12 16:11
                            Quote:
                            Originally Posted by RTV71
                            Some game publishers are adding single-use online keys specifically to block rental/used game sales.
                            Which goes to show that this industry is based upon pure greed and nothing else. The used item industry is a practical business model in all sectors: vehicles, books, movies, music, electronics and etc. Why is it that the gaming industry feels that it deserves to profit from an item from which they have already profited? I do not see Ford trying to get paid for every one of their pre owned cars that get sold. Game rentals is also a legitimate business and now the industry wants to kill that off too? I believe industry has a right to profit but not at the expense of the consumer.
                            DukeNukem
                            MyCE Resident Commenter
                            Posted on: 16 Feb 12 18:22
                              Quote:
                              Originally Posted by CharmedonWB
                              Why is it that the gaming industry feels that it deserves to profit from an item from which they have already profited?
                              Same as us having to pay tax on a used item, like a car for instance. Why should the government get paid again? They already got the taxes the first time. Makes no sense to me.
                              tmc8080
                              MyCE Resident
                              Posted on: 18 Feb 12 22:50
                                Quote:
                                Originally Posted by Anthony1uk
                                I do not classify downloading TV shows as piracy. And its a case that nothing anyone says will change that. TV shows are created to be free to air.

                                Regarding the issue it does not need a study to know when releases are delayed it will be pirated. But all these studio execs will see is 7% loss from piracy when we delay a release. Jeez we better get those download sites shut down to stop that one from happening.
                                Sorryt to say, that both OTA (over the air) broadcasters AND cable-tv companies who make and distribute TV-Series programs DO consider it piracy to "DOWNLOAD" an unauthorized copy! For OTA broadcasters: how are they going to be able to prove they have a viewing audience that watched PAID COMMERICAL TIME if everyone downloads? It's about getting paid to create & distribute content (take-away: SO THEY CAN MAKE A BOATLOAD OF MONEY ON ADVERTISERS & SUBSCRIPTIONS) more than anything. If you watch OTA and many cable-tv channels you're bombarded with ads for DRUGS (PRESCRIPTION), CARS, LEGAL SERVICES, TAX SETTLEMENT LAWYERS, OIL COMPANY ADS (No wonder gas is going to $5 a gallon again!), and speical interest group ads which are more political than ever (and not JUST in an election year!)

                                I definitely agree, I don't have time to watch all that crap! It's bad enough I spend 2-4 hours watching the tv-series I like, BUT to double & triple my watching time with commericals?!? BAH!-- Once you go commerical free, you don't really wanna go back, On that, I totally agree! Don't worry, they get to slam the most popular commericals in when I watch CNN online (tryign to break the watching CNN habit, it's real easy when they cover a story like NON-STOP [insert big story here with crappy reporting and harping on every single angle even if it's not accurate, cough, cough Whitney Houston!]. BTW, about 35% my FAV tv series are from the UK and not even available here..
                                steeleword
                                New Member
                                Posted on: 04 Mar 12 08:42
                                  US Home video sales (DVD, BluRay, PayTV, VOD, Streaming) are down 25% to $18.5B in 2011 from $25B in 2006. The first BitTorrent search engines debuted in 2004. Recorded music is down worldwide from $27B in 1999 (Napster) to $15B in 2011. Those are real jobs lost that are not coming back until the public realizes that these are your friends and neighbors whose careers are being destroyed by lack of copyright enforcement. Who is destroying these industries, ISPs, search engines and internet ad networks that profit from pointing to and distributing music, movies, software, games and books without paying any royalties. Google $44B a year, Verizon $120B a year, Viacom (CBS, MTV & Paramount Pictures) $14B a year, Warner Music Group $2.4B a year.
                                  CharmedonWB
                                  MyCE Member
                                  Posted on: 04 Mar 12 14:01
                                    Quote:
                                    Originally Posted by steeleword
                                    US Home video sales (DVD, BluRay, PayTV, VOD, Streaming) are down 25% to $18.5B in 2011 from $25B in 2006. The first BitTorrent search engines debuted in 2004. Recorded music is down worldwide from $27B in 1999 (Napster) to $15B in 2011. Those are real jobs lost that are not coming back until the public realizes that these are your friends and neighbors whose careers are being destroyed by lack of copyright enforcement. Who is destroying these industries, ISPs, search engines and internet ad networks that profit from pointing to and distributing music, movies, software, games and books without paying any royalties. Google $44B a year, Verizon $120B a year, Viacom (CBS, MTV & Paramount Pictures) $14B a year, Warner Music Group $2.4B a year.
                                    I see that you are a sensationalist. Can you please show me the evidence that correlates between the loss of sales and piracy? I would like to see something conclusive and not the same continuous wild speculation. US automakers have been in steady decline since the 70's; am I to believe this is also due to piracy? The sales of recorded media have been on a decline since the late 80's, long before there was ever any widespread digital piracy. People have a million and one different types of distractions these days, it isn't just television, music and movies anymore. Besides iTunes has been selling digital media hand over fist. As a matter of fact, Mike Lang of Miramax said that iTunes was strangling the industry and he sees it as a bigger threat than piracy. (http://news.techeye.net/internet/itu...re-than-piracy)

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