Beyond Numbers of Doom: Effects of Film #Piracy, including Economic Benefits, Industry Re-structuring, and #Creativity?

Two fascinating pieces by @CarlBialik about efforts to better understand the effects of film piracy appeared in yesterday’s Wall Street Journal.  

Studios Struggle for Focus on Film Pirates’ Booty,” details how film studios, primarily through its industry association, the MPAA, is working to update the research basis of their insistent claims of the harmful effects of film piracy on the industry.  In recent years, the conclusions of two 2006 studies that estimated roughly $6.1 billion was being lost by the industry (and $20.5 billion lost by the overall U.S. economy) annually to piracy have been repeated and even used with multipliers to generate larger subsequent estimated losses.  The MPAA is pulling back from citing that number and seeking to collaborate with researchers, many academic, to assess more accurately the complex effects of piracy.  This is a welcome if guarded step by the industry, particularly in that it includes sharing some internal data with outside researchers.

Putting a Price Tag on Film Piracy” is a separate blog post in the Journal by the same author, Bialik (their Numbers Guy).  In it, he delves more deeply into some of the challenges of trying to fix a single number to capture the effects of piracy on the industry.  These include the rapidly changing film and wider entertainment marketplace, the notoriously secretive nature of industry financial reporting, and the elusively varied practices of piracy itself.  Not surprisingly, identifying the financial costs of piracy remain the primary objective of much of this research.

Yet at the end of the blog post, several other “related research questions” are identified.  In many ways, looking ahead and more broadly, these have the potential to produce much more revealing insights.  For Bialik, they are:

  • Potential economic benefits, such as boosting other industries like broadband or creating buzz around traditional film box office
  • The relative success, or its lack, of efforts to mitigate piracy
  • The effects of piracy on the supply of creative work
Without unduly embracing piracy, the first and third of these questions raise an important — if, for the industry, unsettling — possibility: namely, that there may be more to piracy than the MPAA allows in discussing the issue only in terms of declining revenues.  Underpinning both is the new reality, really the new media and entertainment eco-system, in which film is situated.  More research about the future of film and possible business models for film companies is crucial, and some would argue that it is pirates who are, in fact, most actively exploring those futures.  The relationship between piracy and creativity, especially, deserves more attention in a world where innovative productions and delivery strategies are celebrated (and later often co-opted by the industry).  Hopefully the industry will move beyond its halting steps and engage in more open-ended research on its own future — a future, as it happens, that includes potentially far-reaching new opportunities that have been illuminated by pirates but that the industry itself could lead.

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