SOPA

[StrangeSox]

Here's a 2004 study that investigated the impact of pirating.

 

The statistical insignificance of the point estimate notwithstanding, how large an effect is the estimated reduction in sales? NPD’s MusicWatch Digital, an industry market tracking service, estimates that users in the U.S. download 0.8bn music files every month from file sharing networks (Crupnick, 2003). Applied to our study period, this implies that each matched file transfer in our data set corresponds to roughly 71,000 transfers in the entire United States. Focusing on the most negative point estimate (model IV in Table 12), it would take 5,000 downloads to reduce the sales of an album by one copy. After annualizing this would imply a yearly sales loss of 2m albums, which is virtually rounding error (total U.S. CD sales were 803m in 2002). To provide a point of reference, aggregate sales declined by 139m from 2000 to 2002. Given that the estimated effect of downloads is even smaller in model (III) and positive (but still economically small following a similar calculation as above) in models (V) and (VI), there is little evidence in our results that file sharing has a marked negative impact on sales.

[iamshack]

Here's a 2004 study that investigated the impact of pirating.

A 2004 study that occurred before the advent of iTunes. This is a bit outdated for purposes of this discussion.

[iamshack]

I worked at a record store in high school (2000-2002). We had a whole wall of singles.

However, on iTunes, nearly every song can be purchased as a single, rather than 10-40% of the album.

[Jenksismyhero]

Unfortunately, they realized this far too late and after fighting against digitization. If they had realized this years earlier and implemented their own digital distribution systems, they may have headed off a good portion of the piracy. As it is, consumers wanted easy, instant access to their entertainment options and it was provided by Napster, Limewire, torrenting etc.

 

Come on.... assume the recording industry came up with it's own digital distribution system and charged X amount for content. It'd be competing against Napster/Limewire and torrenting sites which offered all of the same content for FREE (and without criminal or civil penalties since everyone thought it was still legal and legit file sharing). Who would have won?

Edited January 23, 2012 by Jenksismybitch

[StrangeSox]

A 2004 study that occurred before the advent of iTunes. This is a bit outdated for purposes of this discussion.

 

iTunes would decrease the likelihood of piracy.

[iamshack]

No, there isn't. This is basic economics and is separate from a free-rider issue. The act of me making a digital copy of something does not cost anyone anything, discounting the negligible electricity costs. This is a distinctly different situation than me stealing a physical CD from a store, as someone had to manufacture, ship and retail that physical good.

You're only looking at the actual production costs for that particular unit you stole.

 

 

 

 

This is only true to some extent. I've linked to numerous studies in this thread that examine the actual impact of piracy, and it's found to be relatively minimal. Somewhere around 80% of illegal downloads are "deadweight loss" people, or, in other words, people who wouldn't be paying for the item if it wasn't available for free. They don't represent losses to anyone since their demand for the item at any price > $0.00 is zero. Now, the other 20% does represent some loss. Demand is less in this case, but I don't see a compelling reason for retailers and producers to suddenly start dropping prices due to increased demand for a digital good. There's essentially zero marginal costs for producing more, so additional sales represent pure profits.

 

 

 

 

Please take note that I have said several times in this thread that I am not advocating for pirating or saying that there should be no copyright protections. I clearly stated that I have no issue with The Mega Conspiracy arrests.

You're only looking at the actual production costs for that particular unit you stole.

An album or movie or a novel is not like a brick, or a computer, or a physical cd even, as you mention. It's a creative work that required effort and talent and lots of work to create. How do your basic economics value that? What is it worth? The time the artist took to create it?

[StrangeSox]

However, on iTunes, nearly every song can be purchased as a single, rather than 10-40% of the album.

 

At best, this is more evidence of the record industry dragging its feet and refusing to give consumers the options that they want. They were forced to give consumers more choice by piracy.

[Balta1701]

You're only looking at the actual production costs for that particular unit you stole.

An album or movie or a novel is not like a brick, or a computer, or a physical cd even, as you mention. It's a creative work that required effort and talent and lots of work to create. How do your basic economics value that? What is it worth? The time the artist took to create it?

The economic value in the work is determined by a combination of the demand for that work in the marketplace and the strength and tenacity of the government's copyright protections.

 

Basic economics would say that if the value of the product is less than what people are commonly able to earn for it, the net result should be a dearth of production of entertainment or a search for new sources of funding.

[StrangeSox]

You're only looking at the actual production costs for that particular unit you stole.

An album or movie or a novel is not like a brick, or a computer, or a physical cd even, as you mention. It's a creative work that required effort and talent and lots of work to create. How do your basic economics value that? What is it worth? The time the artist took to create it?

 

You're still talking about two different things here. There is no cost associated with producing an additional digital copy. This is different from the cost for producing the goods in the first place. The argument is that the ~80% of piracy that's deadweight loss does not represent any cost or loss whatsoever because those people would not otherwise have purchased the goods and there was no cost associated with them copying the goods.

 

If I would never pay anything at all for a Batman DVD, regardless of the availability of pirated copies, what is the cost associated with me making a copy?

[StrangeSox]

Come on.... assume the recording industry came up with it's own digital distribution system and charged X amount for content. It'd be competing against Napster/Limewire and torrenting sites which offered all of the same content for FREE (and without criminal or civil penalties since everyone thought it was still legal and legit file sharing). Who would have won?

 

iTunes seems amazingly successful even though it was years behind Napster.

[iamshack]

iTunes would decrease the likelihood of piracy.

How many people own iPods and iTunes worldwide? I'd say your assertion is very debatable, considering the ease of which music can now be enjoyed.

 

Secondly, the music industry is making more money now due to iTunes than it was when sales were at rock bottom in the early 2000's...the fact that I can so easily purchase music via iTunes now, and yet people are still pirating music on limewire pro seems like while even if piracy has decreased, the overall lost revenues could still be greater.

[Jenksismyhero]

iTunes seems amazingly successful even though it was years behind Napster.

 

Little to do with the availability of music and 100% due to the little proprietary device called the Ipod that was crazy successful. From that point forward Apple locked in customers to Itunes because it is/was too much of a pain to transfer music to any non-Ipod device (and for a while you couldn't at all).

 

Edit: and it was also after all of the Napster/Livewire file-sharing court cases were in the news and/or decided.

Edited January 23, 2012 by Jenksismybitch

[StrangeSox]

How many people own iPods and iTunes worldwide? I'd say your assertion is very debatable, considering the ease of which music can now be enjoyed.

 

???

 

How would iTunes increase piracy?

 

Secondly, the music industry is making more money now due to iTunes than it was when sales were at rock bottom in the early 2000's...the fact that I can so easily purchase music via iTunes now, and yet people are still pirating music on limewire pro seems like while even if piracy has decreased, the overall lost revenues could still be greater.

 

Of course if no one pirated anything they'd have more revenue. No one is arguing against that. What we're arguing against is that the impact is not that great, certainly compared to what they're proposing, and that they already have robust enforcement mechanisms.

[StrangeSox]

Little to do with the availability of music and 100% due to the little proprietary device called the Ipod that was crazy successful. From that point forward Apple locked in customers to Itunes because it is/was too much of a pain to transfer music to any non-Ipod device (and for a while you couldn't at all).

 

Edit: and it was also after all of the Napster/Livewire file-sharing court cases were in the news and/or decided.

 

You can very easily import pirated music into iTunes. Yet iTunes still remains very, very successful. This indicates that, had the music industry not stupidly fought against the trends in the late 90's and early 00's, they'd be doing even better than they are now.

 

Piracy was and is extremely easy in a post-Napster world. Napster was a giant PITA compared to what you can do now.

Edited January 23, 2012 by StrangeSox

[iamshack]

???

 

How would iTunes increase piracy?

 

 

 

Of course if no one pirated anything they'd have more revenue. No one is arguing against that. What we're arguing against is that the impact is not that great, certainly compared to what they're proposing, and that they already have robust enforcement mechanisms.

Because the product I am pirating can be enjoyed so much more easily and conveniently now?

 

 

[Jenksismyhero]

You can very easily import pirated music into iTunes. Yet iTunes still remains very, very successful. This indicates that, had the music industry not stupidly fought against the trends in the late 90's and early 00's, they'd be doing even better than they are now.

 

Piracy was and is extremely easy in a post-Napster world. Napster was a giant PITA compared to what you can do now.

 

But I still think "piracy" in the form of file-sharing software (free) to itunes (a dollar) was the natural progression which allowed the digital distribution model to work. I don't see how the recording industry having it's own digital "store" would have stopped piracy. They would not have created the .99 model that Itunes did.

Edited January 23, 2012 by Jenksismybitch

[iamshack]

You're still talking about two different things here. There is no cost associated with producing an additional digital copy. This is different from the cost for producing the goods in the first place. The argument is that the ~80% of piracy that's deadweight loss does not represent any cost or loss whatsoever because those people would not otherwise have purchased the goods and there was no cost associated with them copying the goods.

 

If I would never pay anything at all for a Batman DVD, regardless of the availability of pirated copies, what is the cost associated with me making a copy?

First of all how do we arrive at that 80% figure?

 

Secondly, that 20% loss seems like it would equate to a huge loss of revenue.

 

As for your Batman question, how can we be sure you would never pay anything at all for a Batman DVD? How did you get your movies prior to being able to steal them? Did you own 0 movies? Did you know immediately whether or not you were going to purchase every movie you indeed did end up purchasing?

 

How do we know that record labels don't charge what they do for albums based having to make up for the perceived loss of revenue (if what you argue is true) even though there is no actual loss of revenue?

[StrangeSox]

Because the product I am pirating can be enjoyed so much more easily and conveniently now?

 

Fair enough, I was thinking of the iTunes store front. It'd be interesting to see if the iPod has really increased piracy. I might try to find a breakdown of music piracy rates by year later, but it may be hard to separate out "iPod effect" vs. higher bandwidth, more internet connectivity etc.

[Balta1701]

First of all how do we arrive at that 80% figure?

 

Secondly, that 20% loss seems like it would equate to a huge loss of revenue.

 

As for your Batman question, how can we be sure you would never pay anything at all for a Batman DVD? How did you get your movies prior to being able to steal them? Did you own 0 movies? Did you know immediately whether or not you were going to purchase every movie you indeed did end up purchasing?

 

How do we know that record labels don't charge what they do for albums based having to make up for the perceived loss of revenue (if what you argue is true) even though there is no actual loss of revenue?

Let me turn around and ask you this...

 

Should this website be shut down for 2k5 posting the full text of a tweet?

 

If you want it a different way, I'm trying to ask you if you think copyright protections should be effectively infinite, and that protection of copyrights ought to be the largest priority of the government.

 

If you're willing to put any limits at all on how far the government should go to protect copyrights, then the argument needs to be about where to put that line.

[Jenksismyhero]

Let me turn around and ask you this...

 

Should this website be shut down for 2k5 posting the full text of a tweet?

 

If you want it a different way, I'm trying to ask you if you think copyright protections should be effectively infinite, and that protection of copyrights ought to be the largest priority of the government.

 

If you're willing to put any limits at all on how far the government should go to protect copyrights, then the argument needs to be about where to put that line.

 

Everyone in this thread has agreed that this is a bad idea, and given that now both SOPA and PIPA are off the table for the time being, it's looking likely that the whole domestic side that the "internet industry" was worried about isn't going to happen.

[StrangeSox]

First of all how do we arrive at that 80% figure?

 

Secondly, that 20% loss seems like it would equate to a huge loss of revenue.

 

It's referenced in several of the links up thread. That 20% is the number of pirating downloads that represents otherwise-paying customers, not 20% of all customers. There's a huge difference there as pirating still represents only a fraction of annual revenues.

 

As for your Batman question, how can we be sure you would never pay anything at all for a Batman DVD? How did you get your movies prior to being able to steal them? Did you own 0 movies? Did you know immediately whether or not you were going to purchase every movie you indeed did end up purchasing?

 

It's a simple hypothetical based on simple economic models. There are some goods that you will consume if they are free (disregarding ethical concerns that may apply) but would not pay anything for them. If you now consume an illegal digital copy of this good, it has not cost anyone to produce said copy and it doesn't represent any potential lost sales.

 

I know what you're driving at, and it's that people might internally justify their own downloads on this basis, even if it isn't necessarily true. That's a fair point, but it doesn't counter basic economic S&D models.

 

And, again, I am not defending or advocating piracy. I'm explaining why it is not quite the issue that RIAA/MPAA makes it out to be economically.

 

How do we know that record labels don't charge what they do for albums based having to make up for the perceived loss of revenue (if what you argue is true) even though there is no actual loss of revenue?

 

Because higher prices lead to less demand and, counter-productively, would lead to increased pirating.

[Balta1701]

Everyone in this thread has agreed that this is a bad idea, and given that now both SOPA and PIPA are off the table for the time being, it's looking likely that the whole domestic side that the "internet industry" was worried about isn't going to happen.

Then my next question following that would be...why should I believe that current levels of copyright protection are the best ones? They've been changed many, many times historically. They started at 28 years when this country was founded, and now are at 95 years, and will be expanded again before 2023.

 

No one is saying that content creators should have no right to own their own goods...but there have to be appropriate limits in terms of both efforts of enforcement and levels of control...and trying to cite the poor artist working hard for the production of their art as an argument suggests that at present, the person arguing that either believes copyrights should be infinitely protected or that copyright enforcment is currently not strong enough.

[iamshack]

I agree in principle to what both Balta and SS have just posted...but I do agree with Tex as well. I don't favor this legislation, but I do think that artists should be protected from having the fruits of their creative efforts stolen, regardless of whether any profits would come from those goods being stolen or not.

 

A parallel I keep coming back to is songs played on the radio that were recorded using a stereo and an audio cassette (back when people actually did this). Certainly that would be similar to pirating a song via Limewire, yes? This is just sort of a fact of life that came along with distributing your music to radio stations for play over the airwaves and while I am certain artists were not happy about the proliferation of recordable cassette tapes back in the 80's, no one tried to shut down radio stations, did they? So those advocating a deadweight loss theory probably can draw that parallel to backup their argument.

 

Personally, I have always wanted to support the artists whose work I appreciate most by purchasing their works, but I certainly did not then go and illegally download the works of others who I "sort of" appreciated but didn't appreciate enough to shell out my hard-earned dollars for. But that is more of a moral issue than anything else.

[iamshack]

A good case study for this would be Radiohead's In Rainbows album. The band made it available for download and asked people to pay whatever they felt comfortable paying.

 

Wikipedia

 

In early October 2007, a spokesman for the band reported that "most people [paid] a normal retail price with very few trying to buy [the download version] for a penny" and that most fans had preordered the discbox.[49] Citing a source close to the band, Gigwise.com reported that by the day of its online release, the album had sold 1.2 million copies.[50] The claim, however, has been dismissed by band manager Bryce Edge as "exaggerated".[51] According to an Internet survey conducted by Record of the Day of 3,000 people, about one-third of people who downloaded the album paid nothing, with the average price paid being £4.[52] When asked in a December 2007 interview by The Observer how many discboxes were ordered, the band members responded with various answers ranging between 60,000 and 80,000.[21] In October 2008, a report from Warner Chappell revealed that although most people paid nothing for the download, pre-release sales were more profitable than the total money from sales of Hail to the Thief. The report also stated that the discbox sold 100,000 copies.[53]

[Balta1701]

A good case study for this would be Radiohead's In Rainbows album. The band made it available for download and asked people to pay whatever they felt comfortable paying.

 

Wikipedia

I bought that on cd.

 

I also saw them on tour that year. I got into them originally via MP3s. They've literally made $100+ from me pirating their music as an undergrad.