Harvard Study: “Weaker Copyright Protection Has Benefited Society”

Concludes illegal file-sharing hasn’t discouraged artistic production, with the number of new albums alone having doubled since 2000.

One of the entertainment industry’s favorite claims is that illegal file-sharing has discouraged people from producing new movies or albums, for example. It then argues society as a whole suffers as a result.

A new Harvard Business School study conducted by Felix Oberholzer-Gee and Koleman Strumpf contradicts this claim with a variety of gathered evidence.

“Consumer access to recordings has vastly improved since the advent of file-sharing,” it concludes. “Since 2000, the number of recordings produced has more than doubled. In our view, this makes it difficult to argue that weaker copyright protection (as a result from illegal file-sharing) has had a negative impact on artists’incentives to be creative.”

That’s right, doubled.

“While album sales have generally fallen since 2000, the number of albums being created has exploded,” it also notes. “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.”

Ouch. Illegal file-sharing hasn’t seemed to harm the incentives for artists to create, and it cites two reasons why this is likely the case.

The first is that as the price for music decreases, or even free for some, “consumer willingness-to-pay for complements increases.” People are more willing to buy a concert ticket or band merchandise, the price of both which may then rise to compensate for declining album revenue.

The second reason is the fact they’re artists. No one is suggesting that artists shouldn’t be fairly compensated for their work, but the researchers remind people that unlike other types of labor they are likely to enjoy what they do.

They see a similar trend in the movie industry.

“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).”

In fact, though it can’t be said of the music industry, the movie industry enjoyed another year of record profits last year.

What the authors investigate is the real impact that file-sharing and its resulting weakening of copyright protection mechanisms have had on the availability of creative content and its consumption in the marketplace.

“Over the past 200 years, most countries evolved their copyright regimes in one direction only: lawmakers repeatedly strengthened the legal protections of authors and publishers, raising prices for the general public and discouraging consumption.”

File-sharing has weakened copyright protections across the globe, disrupting the business models of virtually all of the creative content industries by forcing many of them to revise their pricing in order to survive, and therefore actually spurring consumption!

“While file sharing disrupted some traditional business models in the creative industries, foremost in music, in our reading of the evidence there is little to

suggest that the new technology has discouraged artistic production,” it furthers. “Weaker copyright protection, it seems, has benefited society.”

It also takes aim at the 1 illegal download equals 1 lost sale argument. In a sample of 5,600 people who were willing to share their iPod listening statistics, they found that an average of 64% of the songs on it had never been played, meaning it was probably free. I don’t think many people would buy music and then not even listen to it, the point being that just because it was illegally downloaded doesn’t necessarily mean it would have been purchased otherwise.

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