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Thread: Estimating displacement rates of copyrighted content in the EU

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    Estimating displacement rates of copyrighted content in the EU

    Commissioned by the European commission Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs

    Full report: https://cdn.netzpolitik.org/wp-uploa...ment_study.pdf

    EXECUTIVE SUMMARY

    Introduction: The extent to which digital consumption of pirated materials displaces legitimate purchases is of fundamental importance for EU copyright policy design. The European Commission has commissioned Ecorys to carry out a study on the relation between online copyright infringement (digital piracy) and sales of copyrighted content.

    This study adds to the existing literature in at least three ways. Firstly, it compares piracy rates in multiple EU Member States calculated according to the same methodology. This makes it possible to compare results between countries. Secondly, displacement rates are estimated in the presence of an important recent phenomenon, i.e. the widespread availability of a wide variety of services for downloading or streaming content. Thirdly, the study includes minors to assess the extent of piracy among this group.

    Research questions and scope

    This study aims to answer the following two main research questions:

    1. How do online copyright infringements affect sales of copyrighted content?
    2. How much are online copyright infringers willing to pay for copyrighted content?


    The study uses 2014 data and covers four types of creative content: music, audio-visual material, books and games. Contrary to many other studies live attendances of music and cinema visits are included in the analysis. The countries included in the analysis are:

    • Germany;
    • The United Kingdom;
    • Spain;
    • France;
    • Poland;
    • Sweden.


    These countries were selected because based on national socio-cultural characteristics (using the Esping-Andersen typology) they are as a group representative for the EU as a whole. In this report the words “legal” and “illegal” consumption or channels refer to copyrighted and pirated content, i.e. creative content offered with and without permission of the author.

    Main conclusions


    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.

    The remainder of this summary explains the basis for these conclusions.



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