Researchers Conclude Piracy Not Stifling Content Creation

Some academic fields rely on the use of working papers—complete drafts of potential publications—to solicit feedback on the basic arguments and analyses used in the work-in-progress. These days, that simply involves posting it on the Internet for all to see; you can have a look at the document yourself. There are clearly a few places where the authors could polish up their arguments, but the paper makes a compelling case that the relationship between file-sharing and copyright law is a complex one.

The authors construct a bit of a causal chain between file sharing and the intent of copyright law to foster creative works. First, you’d need to know that file sharing was harming music sales, and that the music industry wasn’t finding alternative ways of generating income. Then you’d need to show that the loss of income provided a disincentive to musical creativity. They recognize that this calculus might seem a bit heartless, though: "It might seem curious to some of our readers that we do not consider the welfare of artists and entertainment companies in our calculus. Our approach, however, reflects the original intent of copyright protection, which was conceived not as a welfare program for authors but to encourage the creation of new works."

None of these questions, however, turn out to be easy to answer. The authors point out that the decline in music sales came at a time where the replacement of vinyl with CDs was tailing off. The actual piracy of a copyrighted song may not represent a lost sale, either: in some cases, the individual would never have paid for the music anyway, while many studies have shown that file sharing can act as a prelude to legitimate sales. In the end, they join many of their academic peers in deciding that the role of file sharing in the music industry’s woes is overblown, noting, "many studies conclude that music piracy can perhaps explain as much as one fifth of the recent decline in industry sales."

So there is some damage, which handles the first link in their logical chain. This leads us to the question of whether there’s offsetting revenue. "File sharing also influences the markets for concerts, electronics and communications infrastructure," the authors argue. "For example, the technology increased concert prices, enticing artists to tour more often and, ultimately, raising their overall income." In support of that argument, they note that, to generate $20 in concert income, artists used to have to book sales of about 8.5 CDs; that figure has dropped to under 6.4 in more recent years. Adding in total concert revenue to record sales actually shows the industry grew a bit between 1997 and 2007.

The authors get a bit clumsy with their arguments here, as they consider how piracy might have fostered revenue streams that don’t go to the music industry, specifically iPod sales. If you tack those sales on top, the growth in that decade shoots to 66 percent. But it’s pretty obvious that iPods were displacing other forms of portable music players, so that revenue clearly came at a price elsewhere.

If the first two links in the chain are tenuous, the last one pretty much gets demolished. There’s essentially no indication that the more challenging economics are slowing down creative content production. In the five years prior to 2007, film production is up 30 percent, album releases have doubled, and book releases are up by two-thirds.

The authors also cite statistics that suggest that finances aren’t (or at least, shouldn’t be) the primary motivator for creative musical works. Because of the structure of the music business, even a gold record doesn’t guarantee a windfall to artists, and the ratio of gold records to all records suggest that success is distributed by a system that most resembles a lottery. People clearly seem willing to put time into producing music even if it’s not paying off, as the authors note, "even among those who spent at least thirty hours a week on music-related activities, only 22 percent derived at least four-fifths of their income from music."

Given that all the links in the causal chain are, at best, tenuous, the authors conclude that, while copyright infringement may be hurting the music business, that shouldn’t be taken as an indication that it’s affecting the theoretical basis of copyright law, the fostering of creative works.

It will be interesting to go back to see how the work evolves once the authors receive community feedback, as there are some interesting bits of trivia that the authors don’t develop well. For example, a random survey of over 5,000 consumers showed that, although their iPods contained an average of 3,500 songs, over half of these had never been played. They also cite statistics that show some songs that leak to file sharing sites ahead of their release don’t see many downloads until record company promotions start, leading them to conclude that "unless the industry drums up support for a new release, it is apparently difficult to give it away for free."

More generally, the authors seem to suggest that file sharing may be an inevitable outgrowth of the fact that copyright restrictions have been a one-way street. "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."