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Harvard Study Finds Weaker Copyright Protection Has Benefited Society

Economists Felix Oberholzer-Gee and Koleman Strumpf have just released a new Harvard Business School working paper called File Sharing and Copyright that raises some important points about file sharing, copyright, and the net benefits to society.  The paper, which includes a helpful survey of the prior economic studies on the impact of file sharing, includes the following:

1.   The data indicates that file sharing has not discouraged creativity, as the evidence shows significant increases in cultural production.  The authors note that:

Overall production figures for the creative industries appear to be consistent with this view that file sharing has not discouraged artists and publishers.  While album sales have generally fallen since 2000, the number of albums being created has exploded.  In 2000, 35,516 albums were released.  Seven years later, 79,695 albums (including 25,159 digital albums) were published (Nielsen SoundScan, 2008).  Even if file sharing were the reason that sales have fallen, the new technology does not appear to have exacted a toll on the quantity of music produced. Obviously, it would be nice to adjust output for differences in quality, but we are not aware of any research that has tackled this question.

Similar trends can be seen in other creative industries.  For example, the worldwide number of feature films produced each year has increased from 3,807 in 2003 to 4,989 in 2007 (Screen Digest, 2004 and 2008).  Countries where film piracy is rampant have typically increased production.  This is true in South Korea (80 to 124), India (877 to 1164), and China (140 to 402).  During this period, U.S. feature film production has increased from 459 feature films in 2003 to 590 in 2007 (MPAA, 2007).

Given the increase in artistic production along with the greater public access conclude that "weaker copyright protection, it seems, has benefited society." This is consistent with the authors' view that weaker copyright is "uambiguously desirable if it does not lessen the incentives of artists and entertainment companies to produce new works."

2.    The paper takes on several longstanding myths about the economic effects of file sharing, noting that many downloaded songs do not represent a lost sale, some mashups may increase the market for the original work, and the entertainment industry can still steer consumer attention to particular artists (which results in more sales and downloads).

3.    The authors' point out that file sharing may not result in reduced incentives to create if the willingness to pay for "complements" increases.  They point to rising income from performances or author speaking tours as obvious examples of income that may be enhanced through file sharing. In particular, they focus on a study that concluded that demands for concerts increased due to file sharing and that concert prices have steadily risen during the file sharing era.  Moreover, the authors' canvass the literature on the effects of file sharing on music sales, confirming that the "results are decidedly mixed."

The authors were one of the first to challenge the early claims about the effects of file sharing.  Years later, many other economists have followed suit (including the study funded by Industry Canada).  This latest paper does a nice job of expanding the discussion, by using the data to examine incentives for creativity and the effects on aggregate creator and industry income.

32 Comments

  1. It never really was about lost sales
    But about the lost in power and influences the big corporate music and movie mouths have had.

  2. Jeff Shattuck says:

    As usual, the academics get it wrong.
    Alright, this guy went to Harvard, so he can’t be THAT stupid, and yet… at least from this blog post it would seem that the Haahvaahd academigods have completely ignored the obvious as to why creative output is up. It’s simple: the cost of doing stuff in film, music and fiction has dropped through the floor. Sharing’s got nothing to do with it. Christ, I’m sick of “smart” people trying rationalize stuff.

    Jeff
    http://www.cerebellumblues.com

  3. As usual, the earth is flat
    I’m also sick of these “scientists” and “researchers” trying to rationalize stuff! Where has their open minded thinking ever gotten us? How dare they think differently! Burn em at the stake I say!

  4. Did you read the thing?
    Among other arguments, he suggests that the music industry is fine, since increasing iPod device sales offset the decline in music sales.

    Great for Apple, I guess, but terrible for musicians. You’d think he might understand that’s hardly zero-sum when you’re talking about two completely different groups. There’s a lot of that loose logic in this thing.

    Harvard? Really?

  5. Woooosh!
    @Jeff wooosh! That’s the sound of the point of this paper flying right over your head. Sorry for the sarcasm, but I’m sick of “stupid” people trying to debunk things they haven’t taken the time to understand or even read. If you had responded with at least modicum of intelligence indicating that you had read the actual paper, I’d respect your opinion. But making sweeping, derogatory comments that over-simplify a complicated issue that someone has devoted significant resources in trying to explain is not only tacky, it’s just plain stupid.

    This paper is intelligent in its approach, careful in its language, and acknowledges its own shortcomings; much as any academic paper ought to. It is a free PDF download that is written in plain language. I highly recommend following the link above and reading the thing *before* commenting with criticism.

    Thanks too Mr. Geist as usual.

  6. 093kdu3dnmi74fuyq23 says:

    Dave, you’re right
    It’s all about controlling the cultural channels.

    As a teenager in the ’90′s the media industry literally engineered every cultural movement we had, and the rare ones which it couldn’t (like independent music labels) were usually reactions against the status quo and consequently equally lacking in quality (degenerate?). What we knew was limited to commercial radio and MTV, and these simple marketing machines sold us unhappy teens massive amounts of low quality rubbish, often of a self-destructive nature. Needless to say they made money hand over fist.

    They’ve now lost control of the channels through which culture flows and are unable to mass manufacture pop phenomenons any more. Today is the day of user created content and of free and universal culture of all qualities from worldwide sources and non-Hollywood civilizations (and of non-hollywood marketing as well:)) – their day in the sun is ended and any new corrupt laws won’t make a difference.

  7. D’oh.
    @Mike:

    Terrible for musicians? I guess that’s why they’re producing more. The point you miss is that now there are many ways of distributing music and promoting performances that do not rely solely on the record companies and clearchannel. You won’t see superstar artists coming along this way, but you will see more and more “successful” music and film production. And by successful, I mean possible to make a living on (but not an extravagant one).

    It relegates music to those who do it for the art and fame, instead of those who do it for the cold hard cash.

  8. Misterbull.com says:

    Study Errors – The role of technology
    The study seems flawed as I skimmed through it, the authors main claim is that the loosening of copy right and piracy has increased creativity but it’s attributing this as the cause but the real cause of the increased creativity of music and video is technology and distribution. Did you ever hear of Youtube? What about MySpace? Seriously you has to normalize his data based on the lowering of technology cost to make music and video and distribute it since 2003. Is it a coincidence that independent music and video creation exploded with Myspace and Youtube? How many music stars and film stars were created by those sites? There are too many to count now. The study has too many flaws to be taken entirely for what it is.

  9. David is right, it’s all about control
    Copyright has been about benefitting the companies or individuals, never about benefitting society.

    THAT is what open source is all about!

  10. Bloggers, please post link to original material if available to encourage review
    Here is the published paper – http://www.unc.edu/~cigar/papers/File-Sharing_and_Copyright_2009-05-16.pdf

    The authors have been consistent with their viewpoint and not put the paper behind a pay wall :)

  11. Just noticed …
    … that the link was there, but barely visible to me. So here is the URL in full – http://www.hbs.edu/research/pdf/09-132.pdf

  12. Denis Linessey says:

    An echo from the past
    8 years ago, a Scandinavian music producer wrote a long article on his band site about the concept of “the battle against piracy” actually being “the battle to limit the amount of commercial culture”, with the target of transforming it into “the battle to maintain the commercial culture as the only option available as far as the average consumer knows – against non-commercial culture which is distributed free and legally through file sharing (which is therefore degraded to ‘piracy’)”. I’ve been looking for this article for quite a long time now, as it appears to have disappeared from the web years ago. The name of the producer was Viklund or Vikland, he was a member of a band that made instrumental club music and euro dance. If anyone can remember anything about the writer and producer, or even the article itself, please let me know! I remember that it sounded silly, but in retrospective it appears that he was right. I would want to find out more about this and what other conclusions the same writer and producer has made since then.

  13. @Denis Linessey
    I think you mean Andreas Viklund, found at: http://andreasviklund.com/

  14. I think that this is consistent with human progress throughout history. The more people have access to do things the more likey there is to be an explosion of creativity in that area. Russia’s great leap forward under Peter the Great was simply due to him ripping off technology from other countries – without which Russia would simply have remained a backwater.

    I think that IP is an evil in society and needs to be tightly controlled and hence this paper is well worth it.

    As an individual of course I would like MY ideas to be protected – but for society as a whole that is usually a bad idea.

    eek!

  15. And where do you think that came from?
    @Misterbull.com

    Your examples are “illegal” channels compared to traditional “all rights reserved” channels. If work is shared freely on those sites either hap-hazardly or more officially by affixing a Creative Commons licence to the work, then isn’t that exactly a “weakening” of copyright law (at least in ways that big industry would have you believe) and piracy (again, as industry trys to convince us)?

    Further, the great technologies, like the Internet itself, is dominatingly freely shared technology that was a collaborative effort where the creators knew that open access to information is the core of human progress, and that if what you are creating is what is most important, then sharing it freely is the best thing you can do for everybody; from tcp/ip to apache and Underwriter Laboratories and Open Group, these companies represent a core of all of the technology you argue are “other factors” that you attempt to use to explain away the contributions of a culture that rejects the ownership and monopolistic control of culture (pirates) when they are really one in the same. These big companies are more and more taking from the free culture pool, and because it has been allowed (particularly the way Berkeley has treated its patents), they have also become more successful.

    And yet they still chant the same mantra that was rightfully rejected with the Statute of Anne. Current Copyright law was written by and for the purpose of supporting a particular type of distribution. Their past successes have granted them the kind of wealth that lets you buy the law that while being in conflict with the people and an abomination to the social contract means they have only bought themselves an extra decade or two as powerful lords have typically done.

    The current copyright law is anti-artist, anti-consumer, and maybe worst of all, anti-culture. Anyone who SAYS otherwise either makes a lot of money through the exploitation of the current system, or really doesn’t read much in the way of history after what is presented to them by The Ad Council.

  16. David Touve says:

    Helps to know something about Soundscan data
    Arguing that there are social benefits to the free flow of copyrighted stuff is spot on. This benefit of copyright is why we historically just transfer value, and don’t lock up files.

    Unfortunately, there were additions of retailers and distributors to the Soundscan data that were not previously included in Soundscan sample. The authors may not have known this. The addition of CD Baby alone would have added 20,000-35,000 albums each year – albums that very likely were already being produced, but simply overlooked since they were not included in major retailer inventory.

  17. Jeff Toast says:

    Missing the point
    The stupidity of the basing social law on simplistic economic maxims is well illustrated by the situation where someone invents a better mousetrap, which is simple and cheap to produce, but demands that IP laws give them total monopoly on it’s distribution and ultimate cost. The moral thing to do is to make and sell it as cheaply as possible so as to rid society as a whole of things like the black death, but with IP law, the motivation becomes to sell it at a high price to the upper strata of society that has no real need for it, as they have servants and pest control services and are unlikely to have rodents in thier manicured mansions. You see the same thing with cures for diseases now. Big Pharma thinks thier bottom line comes before the lives of millions of lesser off people in third world countries which thier remedies could cure.

  18. @Jeff Toast
    While I agree with you.. Medical Research cost a lot of mouths to feed. It’s understandable that those investing would want to make some money from it. But those profits should be limited to cost to produce + a small bonus (variable on time of research) and not profit from it indefinetely, so that the most people can have access to it. Pretty utopic idea, still.

    captcha: $50,000 hearsay

  19. Steven Rowat says:

    ‘Complements’ ignores Anonymous, Disabled, Whistle-blowers, Non-travellers
    Opening disclaimer: I’ve read this page and not the original study.

    Comments:
    1. The entire discussion and the quoted study sections fail to mention the two huge possible advantages to both society and individuals of fair direct payment for (digital) work:

    a) Efficiency: All work at-home people can get fair return for work done (disabled, rural, and ecologically-conscious non-travellers).

    b) Independence: Ethically-motivated independent researchers, artists needing anonymity, and whistleblowers can get fair return for work done (without external government, corporate, or personal/family pressures).

    Closing disclosure:
    a) I’m a partially disabled writer/musician who has a 35-year body of work that I’d like to make available on-line: and I’d like to have *some* level of control and payback for providing the work.
    b) I’ve been a member for several years of the ODRL working group (Open Digital Rights Language), which is attempting to solve this problem in an open standards, non-proprietary way. Going is very slow, due to the complexity of the problem, but it still seems like a possible solution to the entire issue. Version 2.0 has recently entered final stages, and an alpha Firefox plugin has been developed and tested. Both Creative Commons and Open Mobile Alliance have ODRL modules or joint working groups. See http://www.odrl.net/

  20. Number 3
    It should be “authors,” not, “authors’.”

    hehe

  21. So much to disagree with
    1. If the creator benefits from piracy, then how about this: they don’t put their works under copyright. Problem solved. Of course, this assumes that weaker copyright benefits the creator, and as a creator, I think the answer is definitely a “no”. Copyright helps us.

    2. If copyright was really about “controlling culture” by “big business”, then you should explain how piracy weakens their control. Obviously, the best way to weaken control of big business is to INCREASE the price of media because then people can’t afford it or be influenced by it. Piracy, by making digital media free, should actually INCREASE big business’ control over culture because small, independent media no longer have a price advantage over the “big media”. If you wanted independent media to succeed, you’d have them release their stuff as creative commons and “big media” would enforce paying for stuff. Then, people would begin to notice the independent stuff because it’s freely available. If you take a look at the major downloads on any piracy website, you’ll see it filled with stuff produced by “big business”. In that sense, piracy reinforces their control over “culture” rather than eroding it. I think the whole “copyright is really about controlling our culture” is bunk – it’s just a half-thought-out justification for piracy.

    3. I can think of plenty of reasons why music and movie production has increased in the past seven years without invoking “piracy” (like lowered costs, and spread of the internet). It’s funny, whenever you point out the fact that music sales have dropped 40% since 2001 while piracy has increased, the pirates immediately shout “correlation does not equal causation”. But, point to an increased number of music albums or movies produced over the same period, and suddenly the pirates claim “yes, correlation does equal causation”.

  22. Alternative solutions
    For all those who pitty the “poor artist”, there could be an alternative sollution (it exists still only as an idea):
    http://www.adequateincome.eu
    For one, culture shouldn’t be steered by or dependent on big companies.
    For two, free exchange will always benefit culture and extensive copyrights do slow this process down…

  23. @Bret
    Then explain to me the huge success of some independant labels? Of so many webcomics? (yes comics artists are artists too), the big boost in doujin games development and sale, unknown bands becoming popular on MySpace and such. People like AVGN that are now “internet stars” without the help of anything else then their own talent, and now his videos are watched by millions of people.

  24. @David
    > Then explain to me the huge success of some independant labels? Of so many webcomics?…

    I don’t know what your argument is. My argument is simple: piracy is not the reason for their success, the internet is. The internet allows artists and creators to have a direct-line to their audience. Is there anything that suggested otherwise? I don’t understand how your argument disputes what I was saying. In fact, it sounds like you’re agreeing with me.

  25. @Bret
    Hmm.. I guess I misunderstood your point. We seem to do agree on some points.

    ‘Piracy, by making digital media free, should actually INCREASE big business’ control over culture because small, independent media no longer have a price advantage over the “big media”.’

    It’s that part I don’t agree with. I think it levels the playing field. I never saw the cheap price of independant media as their advantage. Maybe that’s just me, though. I haven’t really watched TV for the better part of this decenny, I went only once to the movies since the beginning of the year. (I don’t pirate movies either).. I know fairly well that not everyone is acting like me, but there’s more and more people that do, and they certainly don’t like it.

  26. copy
    The problem isn’t that copyright laws exist, it’s that they are entirely out of proportion and set up in such a way that they are easily abused. It should be about a balance of supporting the production of new creative content and providing access to it. Current copyright law instead promotes what we have:
    Huge companies that buy and sell existing copyrights like stock since they last forever and nearly all “new” material being commisioned or sought out based on how much money it is proven it will make the huge companies rather than any sort of creative inspiration.

    There are of course people who are trying to do new things, but it seems these individuals are almost fighting against the current system in order to accomplish this rather than benefitting from it.

    At least thats what I see when I switch on my radio/tv/computer/etc… maybe it’s just me

  27. eaglespottedearlybirdgettingsomeworm says:

    Culture & File-sharing? You’ve got to be joking
    Anti-Hollywood this, lose of control that, “creativity” improved? Oh, give me a break.

    What are you talking about? 99.99% of file-sharing is of American television hogwash and Hollywood blockbusters, on a daily basis and equally mediocre material on all other categories.

    The study is serious and well intentioned, but a monument to the big void.

    Piracy, not file-sharing is the issue and piracy is not in any way reconcilable with the capitalist model we all (should) follow.
    and piracy has always been there for a happy few, when in came this wretched P2P protocol called BitTorrent which empowered even chimps and amoebas to trade pirated music and video, a no-brainer ‘point-and-click’ technology.

    But that didn’t make them less chimpy nor more sophisticated amoebas over the years. Nope, it’s still Britney Spears and Big Brother, not Beethoven and BBC 4 programmes that dominate file-sharers’ interests.

    And there’s quite a few pirated files providers, laughing all the way to the bank, right now, 0day, everyday, far away.

  28. stats..
    99.99%? Where’s your proof?
    International movies, tv shows, from Canada and Europe also gets pirated fairly enough.
    There’s a huge “industry” of Japan animation being file-shared all over the world.
    Don’t get me wrong, Hollywood is still the center of the Entertainment world, but it’s also losing its edge.

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  30. Benefit?
    Fewer professionals and more ‘refrigerator art’

    that’s the net “benefit” to society

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