EU Buried Its Own $400,000 Study Showing Unauthorized Downloads Have Almost No Effect

from the but-the-truth-is-finally-out-now dept

One of the problems in the debate about the impact of unauthorized downloads on the copyright industry is the paucity of large-scale, rigorous data. That makes it easy for the industry to demand government policies that are not supported by any evidence they are needed or will work. In 2014, the European Commission tried to address that situation by putting out a tender for the following research:

to devise a viable methodology and to subsequently implement it in view of measuring the extent to which unauthorised online consumption of copyrighted materials (music, audiovisual, books and video games) displaces sales of online and offline legal content, gathering comparable systematic data on perceptions, and actual and potential behaviour of consumers in the EU.

The contract was awarded to Ecorys, a "research and consultancy company" based in the Netherlands that has written many similar reports in the past. The value of the contract was a princely €369,871 -- over $400,000. Given that hefty figure, and the fact that this was public money, you might expect the European Commission to have published the results as soon as it received them, which was in May 2015. And yet strangely, it kept them to itself. In order to find out what happened to it, a Freedom of Information (FOI) request was submitted by the Pirate Party MEP, Julia Reda. It's worth reading the to and fro of emails between Reda and the European Commission to get an idea of how unhelpful the latter were on this request. The European Commission has now released the report, with the risible claim that this move has nothing to do with Reda's FOI request, and that it was about to publish it anyway.

The 304-page document (pdf), made available on the netzpolitik.org site, contains all the details of the questions that were put to a total of 30,000 people from Germany, France, Poland, Spain, Sweden, and the UK, their answers, and exhaustive analysis. The summary reveals the key results:

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.

That is, there is zero evidence that unauthorized downloads harmed sales of music, books and games. Indeed, for games, there was evidence that such downloads boosted sales:

the estimated effect of illegal online transactions on sales is positive -- implying that illegal consumption leads to increased legal consumption. This positive effect of illegal downloads and streams on the sales of games may be explained by the industry being successful in converting illegal users to paying users. Tactics used by the industry include, for example, offering gameplay with extra bonuses or extra levels if consumers pay.

The research did find evidence that there was some displacement of sales in the film sector. Another result of the Ecorys work provided an explanation of why that might be:

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 other words, people turn to unauthorized downloads for films and TV because they feel the street prices are too high. For books, music and games, by contrast, the prices were felt to be fair, and therefore people were happy to pay them. This is exactly what Techdirt has been saying for years -- that the best way to stop unauthorized downloads is to adopt reasonable pricing. A new post on the EDRi site points out something rather noteworthy about the research results concerning video and TV series:

Interestingly, these results concerning the film industry found their way to a publication of an academic paper by Benedikt Hertz and Kamil Kiljański, both members of the chief economist team of the European Commission. Yet the other unpublished results, showing no negative impact of piracy in the music, book and games industry, were not mentioned in the paper. Beyond that, the original study itself is not referred to either.

This seems to substantiate suspicion that the European Commission was hiding the study on purpose and cherry-picked the results they wanted to publish, by choosing only the results which supported their political agenda towards stricter copyright rules.

The European Commission was quite happy to publish partial results that fitted with its agenda, but tried to bury most of its research that showed industry calls for legislation to "tackle" unauthorized downloads were superfluous because there was no evidence of harm. This is typical of the biased and one-sided approach taken by the European Commission in its copyright policy, shown most clearly in its dogged support for the Anti-Counterfeiting Trade Agreement -- and of the tilted playing field that those striving for fair copyright laws must still contend with on a regular basis. Sadly, it's too much to hope that the European Commission's own evidence, gathered at considerable cost to EU taxpayers, will now lead it to take a more rational approach to copyright enforcement, and cause it to drop the harmful and demonstrably unnecessary upload filter it is currently pushing for.