Back in 2013, a research study was initiated to assess the relation between piracy and sales of digital software including, video games, movies and so on. The research was entrusted to the company Ecorys Nederland BV in 2013, the report was finished by May 2015, but the EU Commission never made it available to the public. The study had concluded that there’s no significant co-relation between piracy and sales. A German politician, Julia Reda, had access to the report and the German site netzpolitik.org has published it.
You can read the full report here, and we have quoted a brief summary below:
In 2014, on average 51 per cent of the adults and 72 per cent of the minors in the EU have illegally downloaded or streamed any form of creative content, with higher piracy rates in Poland and Spain than in the other four countries of this study. In general, the results do not show robust statistical evidence of displacement of sales by online copyright infringements. That does not necessarily mean that piracy has no effect but only that the statistical analysis does not prove with sufficient reliability that there is an effect.
An exception is the displacement of recent top films. The results show a displacement rate of 40 per cent which means that for every ten recent top films watched illegally, four fewer films are consumed legally. People do not watch many recent top films a second time but if it happens, displacement is lower: two legal consumptions are displaced by every ten illegal second views. This suggests that the displacement rate for older films is lower than the 40 per cent for recent top films. All in all, the estimated loss for recent top films is 5 per cent of current sales volumes.
The study also analysed consumers’ “willingness to pay” for illegally accessed creative content in order to assess whether piracy might be related to price levels. To optimize the recollection of the respondent, it was asked for the last illegal online transaction. Consumers may be willing to pay more or less for other transactions so the results should be interpreted with caution. Overall, the analysis indicates that for films and TV-series current prices are higher than 80 per cent of the illegal downloaders and streamers are willing to pay.
For books, music and games prices are at a level broadly corresponding to the willingness to pay of illegal downloaders and streamers. This suggests that a decrease in the price level would not change piracy rates for books, music and games but that prices can have an effect on displacement rates for films and TV-series. In sum, the main contribution to the existing literature is the finding on displacement rates for recent top films and the lack of a robust (positive) displacement rate for films / TV-series in general, music, books and games despite the carefully developed questionnaire and the application of econometric analysis.
The quasi panel data approach for recent top films was the only methodology that resulted in robust estimates of displacement rates. Hence this approach seems recommendable for other types of creative content, although top titles would be less dominant in total sales than is the case for films.
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