Why illegal downloads do not necessarily harm sales

October 03, 2017 09:42
European authorities have been accused of burying a report that suggested that piracy doesn't affect legitimate content sales much. Representational image: Bloomberg

Piracy is widely criticized in today's information-driven society. The activity is considered to have a damaging impact on the broad economy. However, a study ordered by the European Commission suggests this belief may not be true.

Commissioned by European Commission, Dutch consulting firm Ecorys completed a 300-page report in May 2015 on how piracy affects sales of music, books, movies and games in the EU.

In the report, whose findings have only recently come to light, Ecorys researchers concluded that, going by analysis of industry figures in Germany, UK, Spain, France, Poland and Switzerland, "the results do not show robust statistical evidence of displacement of sales by online copyright infringements".

There are a number of possibilities why it is so.

For example, when a singer launches a new album, loyal fans would opt to buy authentic and licensed versions of the album. Meanwhile, those who only want free music won't pay for a genuine album even if they can't find counterfeit ones.

Moreover, the study even suggests that illegal downloads might sometimes generate economic benefits.

For instance, widespread free downloads of a song may make the singer famous, bringing her more work in terms of shows, endorsement deals, etc.

Likewise, illegal downloads and streams can have a positive effect on sales of games, as it would stimulate players' interest in the game, and some of them would go for the authentic copy.

The European Commission has buried the report until this year, probably because it does not like the conclusions. The study might have been aimed at serving a political agenda to push for stricter copyright rules, but the conclusions were not what authorities had envisaged.

Despite the surprise findings, Ecorys researchers did make a disclaimer that the report "does not necessarily mean that piracy has no effect but only that the statistical analysis does not prove with sufficient evidence that there is an effect."

Moreover, they've only studied figures of 2014, and neglected the potential long-term impact of online copyright infringements.

This article appeared in the Hong Kong Economic Journal on Sept 29

Translation by Julie Zhu with addtional reporting

[Chinese version 中文版]

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Hong Kong Economic Journal columnist