Movie Piracy and Displaced Sales in Europe: Evidence from Six Countries

Herz, Benedikt and Kiljanski, Kamil (2016): Movie Piracy and Displaced Sales in Europe: Evidence from Six Countries.

Abstract

This paper presents estimates of lost movie sales due to unpaid movie consumption. We are the first to provide estimates that are recent, representative of the internet-using population, and cover multiple countries. Based on an online questionnaire with almost 30,000 respondents, we document that one unpaid (first) viewing of a movie displaces about 0.37 units of paid viewings. Using a back-of-the-envelope calculation, we show that this implies that unpaid movie viewings reduced movie sales in Europe by about 4.4% during the sample period. Lost sales differ substantially by country: they are in the range of 1.65% for Germany and 10.4% for Spain. We also find that 94% of lost sales are due to unpaid viewings by a small group of only 20% of consumers. Our findings have important implications for copyright policy.

• Item Type: MPRA Paper
• Language: English
• Keywords: movie piracy, copyright, displacement
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O34 - Intellectual Property and Intellectual Capital

References

Bai, Jie and Joel Waldfogel, “Movie piracy and sales displacement in two samples of Chinese consumers,” Information Economics and Policy, 2012, 24 (3), 187–196.

Danaher, Brett and Michael D Smith, “Gone in 60 seconds: The Impact of the Megaupload Shutdown on Movie Sales,” International Journal of Industrial Organization, 2014, 33, 1–8.

European Commission, “A profile of current and future audiovisual audience,” 2014.

Hong, Seung-Hyun, “Measuring the Effect of Napster on Recorded Music Sales: Difference-in-Differences Estimates Under Compositional Changes,” Journal of Applied Econometrics, 2013, 28 (2), 297–324.

Liebowitz, Stan J, “Economists Examine File-Sharing and Music Sales,” Industrial Organization and the Digital Economy, 2006, pp. 145–174.

Liebowitz, Stan J, “File Sharing: Creative Destruction or Just Plain Destruction?,” Journal of Law and Economics, 2006, 49 (1), 1–28.

Oberholzer-Gee, Felix and Koleman Strumpf, “The Effect of File Sharing on Record Sales: An Empirical Aalysis,” Journal of Political Economy, 2007, 115 (1), 1–42.

Oberholzer-Gee, Felix and Koleman Strumpf, “File Sharing and Copyright,” in Josh Lerner and Scott Stern, eds., Innovation Policy and the Economy, Volume 10, University of Chicago Press, 2010, pp. 19–55.

Peitz, Martin and Patrick Waelbroeck, “Why the music industry may gain from free downloading: the role of sampling,” International Journal of Industrial Organization, 2006, 24 (5), 907–913.

Rob, Rafael and Joel Waldfogel, “Piracy on the High C’s: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students,” Journal of Law and Economics, 2006, 49 (1), 2.

Rob, Rafael and Joel Waldfogel, “Piracy on the Silver Screen,” The Journal of Industrial Economics, 2007, 55 (3), 379–395.

Zentner, Alejandro, “Measuring the Effect of File Sharing on Music Purchases,” Journal of Law and Economics, 2006, 49 (1), 63–90.