Comments for The hidden treasure of piracy?

Piracy in the world over has become an industry, technology is allowing it to flourish. Today almost every king of product are concerned, especially Musics, Films, Series, Softwares and video games. thus provoking sharp criticism and threatening of these different industries.
The main danger of piracy lies in the insufficient remuneration of production and creation, which can be very harmful for these industries. Thereby, goods become non-exclusive and non-rival, that is, they are easily and speedy copied to different media, that consumers can easily trade them and that owning one does not prevent other consumers from owning it too.
As far as the film industry is concerned, the impacts are, as we have seen with you, very real. However, although the victims of the phenomenon are heard, some opinions on the subject diverge. Indeed, while copyrights or artists’ rights are often violated, some actors see their image enlarged, some producers aiming to convey a message prefer to make less profit but their film is transmitted and can be seen by a maximum of people.
If indeed illegal downloading is the cause of direct losses for these industries, its positive consequences are more important. This is also one of the main conclusions of a recent report related to the impact of the piracy of works in digital format (movies, music, video games) on the internet. Commissioned by the European Commission in 2015. Which shows that the effects are not the same on the sector concerned. Thus, It allows Internet users to access a wide choice of cultural goods, without it being necessary to move, for a price close to zero and discover products before buying later.
However, the arrival of legal offer online has become a severe competitor of illegal downloads. It is a good answer to illegal downloading because it respects the copyrights and allows a remuneration of the artistic creation by the payment of the downloads. And It presupposes a real differentiation by the quality of service (diversity of the offer, ease of use, legal certainty.. ) rather than quantity, which in my opinion, as a Spotify and Netflix consumer can be more advantageous that piracy.
Thus, Due to the different downloading techniques and advancement in duplication technology has made piracy easy, accessible to all, free and speedy. It revolutionizes the thinking of cultural industries and their financing because it makes copying a phenomenon of a scale that is currently out of control and difficult to prevent.
By the way, many solutions have been envisage to counter this transition to a new economic model of the cultural industries while motivating consumers by offering them an inexpensive and honest alternative.

To conclude, according to me, the question is not to know if ‘one become even worse than the other, since in reality it would be too unrealistic to imagine a world without piracy today or in the near future. But what would be the most efficiente solution for the actors concerned ?

Sources
Bibliography
Etude CNC « La piraterie de films : motivations et pratiques des internautes »
Sitography :

http://www.wipo.int/edocs/mdocs/aspac/en/wipo_ipr_pnh_11/wipo_ipr_pnh_11_ref_t1.pdf
http://www.wipo.int/edocs/mdocs/africa/en/ompi_pi_dak_15/ompi_pi_dak_15_cluster_ii_9.pdf
http://www.liberation.fr/ecrans/2009/01/20/le-piratage-et-ses-effets-positifs-sur-l-economie_958798

I feel like piracy is a new way of testing out music, movies and tv shows. It’s sort of having the option of test it without buying it, but of course, not everyone is going to buy the DVD just because he or she enjoyed the movie that’s been downloaded illegally. That being said it can push people to go to the movies and watch another movie by the same producer, or with the same actor next time. For bands or musicians I do believe it can be beneficial too. Some fans may not be buying the albums but they might go to the concert and buy the band/artist’s merchandise.
So yes, I do think the absence of piracy would smother the entertainment industry as it would narrow down the number of fans and future potential buyers.
For instance, I have a friend who’s a huge fan of Game Of Thrones, she always watched the show illegally, yet collects every game of thrones’ Pop figurine she can find. If it wasn’t for piracy she probably never would have been a fan of the show.
That being said, I do believe that piracy hurts small artist that still need to make their activity profitable.
“What many people don’t realize is that many up and coming artists are one missed paycheck away from homelessness”, “If we do not address and fix piracy many artists will not be able to make a living. And without artists there is no audience” says Eric Feinberg, one of the funders for #ProtectOurFutures, a campaign that promotes artists’ rights and to raise awareness on issues like internet safety and piracy. ( https://www.forbes.com/sites/nelsongranados/2016/02/01/how-online-piracy-hurts-emerging-artists/#a41541077741 )
Though downloading illegal content doesn’t hurt multi-million dollars making artists, we should remain smart as to weather we should illegally download content from an up-and-coming artist. Piracy is a real struggle and is discouraging the next generation of great talents, leaving us with the already established ones, and for the audience, that means a lack of renewal (new talents) in the entertainment industry.

While answering the question on whether the absence of piracy would make the industry a better place than it would if it existed, we need to analyze the exclusive value that piracy provides and whether these can be duplicated by other means.
First, we can ascertain that the biggest benefit of piracy is reach. Pirated copies of movies and TV shows reach foreign lands in their original and dubbed versions much faster than the producer of these can possibly release. Therefore, in the context of the market, piracy actually helps achieve greater penetration amongst the internal market and expands the reach of the content on a global market. For instance, Pokemon Go was widely played in countries like India and China well before its official launch. This led to the buzz around the game sustain for a longer period than it would if no action had been taken by pirates to release an early version of the game.

Second, we can identify that piracy tends to reduce the cost of acquisition of this content to a miniscule amount. Finally, we can see that piracy pushes firms to invest in more secure technological solutions to prevent further unauthorized copying.

On these three benefits, we realize that the incentives to improve security are strongest when the company is constantly under threat. However, instead of pirates looking to mine information, entertainment companies can instead hire ethical hackers to perform the same function minus the risk of stolen data reaching the wrong hands. Similarly, the cost of acquisition can be annulled if the firm decides to release the content itself for free and monetizes using advertisements or uploads short versions of content on streaming sites to achieve consumers’ aim of minimizing costs. Finally, we can see that reach is hard to emulate. However, with the increase in internet adoption and secure payment gateways, I believe that the opportunity available to reach more people becomes more useful when you have relationships with the consumers. This can happen even without social media as the word-of-mouth on the quality of the product is likely to trump in a few years either way.

References
[1] http://www.macrumors.com/2016/12/13/pokemon-go-officially-launches-in-india-tomorrow/
[2] http://lifehacker.com/how-piracy-benefits-companies-even-if-they-dont-admit-1649353452
[3] http://www.makeuseof.com/tag/4-ways-internet-piracy-good-opinion/

In my personal opinion, no piracy would be worst than the piracy itself for the artistic sector. To state that, I think we should more focus on the way people consume artistic goods instead of simply the amount of physical or legal numeric copies sold.

My point is that if someone is used to buy CDs and DVDs for a very long time and if this person does it because she absolutely wants to encourage the artists, then she won’t consider decreasing the amount she usually spends on such goods. She might however illegally download extra copies that she wouldn’t have bought anyway, as it is above her dedicated budget, there is thus no displacement here. A sampling effect could even appear here as piracy can lead this person to discover new artists which production she will afterwards buy legally. Piracy can be seen as a free trial for discovery in that case.

There are also some convinced pirats who absolutely refuse to pay for an information goods like music, movies or TV series. But the intrinsic characteristics of those goods makes those people keen to fall in a network effect and/or a complementary goods effect. Let’s illustrate by some examples. If you often listen to an artist and you have many friends appreciating the same artists, you will be much likely to accept to go to a concert to see him. The network effect of everybody listening to the same music wasn’t enough to make you buy a legitimate copy but it made you buy a complementary good such as a live performance. We can find another example for GOT, a lot of people started to watch this serie because they were one of the fewest who didn’t follow GOT in their social network. They end up watching it because of social pressure and because they can watc it for free. They wouldn’t have buy it otherwise so there is no displacement here also.

I like to think that piracy has shifted the consumption of information goods. As people don’t have to pay to watch or listen as much as they want (although they still can) they have the opportunity to discover more artists. As this is true for everyone the network effect, and the social pressure (especially nowadays when everybody like to show how we spend our personal time on social medias) can lead those people to shift their consumption from buying copies to buying concerts, festival, cinema tickets or exposition for their favourite TV serie entrance. Live performance and real experience is maybe the future greater revenue source for the music industry as well as for the movie industry and the TV show production.

While thinking about piracy, it is commonly thought that it is bad since it is illegal. Nevertheless, in this article it has been clearly shown that piracy can lead to positive effects for the companies.

Firstly, an advantage that companies might gain from the piracy is the “cultural buzz”. Indeed, the illegal practice permits to spread the word-of-mouth. Consequently, it might result in a bigger success compared to the absence of piracy.

Secondly, another benefit is the fact that illegal consumers will more likely purchase a legal copy later. Nowadays, one of the most downloaded thing is the digital music which became easily accessible to the consumers even for free: YouTube and Spotify are popular for instance. These platforms can be used as promoting tools. Concerning the consumers, they enjoy the accessibility of specific songs (they listen to the artists when and where they want) and the diversity of the songs. We can speak about the “freemium” versus “premium” option of Spotify. Some of them are ready to pay to access a wider range of music.

Thirdly, and most importantly, piracy allows companies to increase the demand for complementary products. Let’s take again the example of the music industry. Even if the physical sales of CD’s significantly decreased due to the online access to the music, artists will benefit from the revenue of paired “products” such as concert tickets.

In addition, it should be said that in the absence of piracy, the products would not be necessary purchased by consumers. As a matter of fact, some of the illegal customers would not invest money to get the “content of good”. For instance, every consumer of digital music (illegally downloaded) would not buy CD’s and they would prefer “free” alternatives like the radio.

To conclude, according to me for all the reasons mentioned above the absence would become even worse than piracy itself. Moreover, it should be underlined that piracy cannot be perfectly controlled. In my opinion, people continuously look after things with a minimum cost and they will always find a way to get illegal copies of a “good”.

References:
Bastard, I., Bourreau, M. and Moreau, F. (2014). L’impact du piratage sur l’achat et le téléchargement légal. Revue économique, 65(3), 573-600. Doi 10.3917/reco.653.0573

Scholes, W. (2014). Piracy’s Ripple Effect on the Global Economy. Retrieved from http://www.diplomaticourier.com/2014/01/14/piracy-s-ripple-effect-on-the-global-economy/ consulted on 21st of December 2016.

Tassi, P. (2012). You Will Never Kill Piracy, and Piracy Will Never Kill You. Retrieved from http://www.forbes.com/sites/insertcoin/2012/02/03/you-will-never-kill-piracy-and-piracy-will-never-kill-you/, consulted on 21st of December 2016.

A digital transformation of many labors has for the last couple years yields to a redefinition of industries. In fact, many companies have seen opportunities in the digitalization of our life to enhance and ease products and services as well as to serve them to more consumers. This extension of markets in some application is synonym of the interest of smarter player. At the time when the consumer had no access to massive information, product or service providers could control more easily their market. Nowadays the digitalization has opened up markets to global providers. As a result, multiple mechanisms appeared and required the redefinition of many business models. Large companies like Uber created businesses in which the scope of the service enabled its marketization at a lower price than the previous competitors. The sharing economy is a clear application of what the digitalization has permitted. In the banking sector for example, the cryptocurrency redefined the way of transacting money. In fact, the control of all transactions are validated by a network and there is no single entity to process the transaction and collect the profit. It makes the consumer the center of his action.

I would like to express after this small introduction that in order to succeed, industries in many cases may need to find new business models that put the consumer in the center. Indeed, in today’s digital economy, firms must find business solutions which give the value to the consumer and that still generate revenues. In my opinion, this is what is happening and what will become general in the movie and music industries.

Piracy has made traditional prices for physical and digital contents outdated. While many claims that piracy is a real problem that threatens most of creative companies and struggle to enforce intellectual properties rights, they could be right but they will have trouble to stop it. Recording industries must now find attached services to the traditional one to generate revenues. In fact, those industries cannot rely anymore on content sales to support their art and must innovate new business models that bring them value.

Nowadays, piracy could be seen as the free channel to get what was before payable. It inevitably binds more consumer to a product and therefore generates a positive network externality. If we consider the software industry for instance, the value of some services rely on the number of user. Illegal downloads help create a network of user and make the product mainstream. Consequently, the service provider will inherit a massive number of customer that would not have exist in the absence of privacy. And innovative management could find ways to benefit from this free marketing by monetizing parallel products to the initial one. Similarly, in the music industry, piracy cultivates popularity among artists. For smaller creators, it offers them a wider reach and can significantly leverage their opportunities of expansion.

To conclude, I believe that piracy has plunge the record industries in a redefinition of their market rather than harming it through a slow extinction. Indeed, it is not negligible that piracy has a negative effect on physical and digital content. But it could be seen as any other environmental threatens that every industry has to face in order to survive. Considering this feature, piracy with multiple mechanisms positively support the creation of value around the initial content.

Bibliography.

– De Castro, J.O., Balkin, D.B. and Shepherd, D.A. (2008) ‘Can entrepreneurial firms benefit from product piracy?’, Journal of Business Venturing, 23(1), pp. 75–90. doi: 10.1016/j.jbusvent.2005.07.003.

– Karaganis, J. and Renkema, L. (2013) Copy Culture. Available at: http://piracy.americanassembly.org/wp-content/uploads/2013/01/Copy-Culture.pdf (Accessed: 21 December 2016).

– SAP, C. (2015) Digitalization: Driving Business Model Transformation. Available at: http://www.sap.com/docs/download/2015/10/bec5f1d4-4c7c-0010-82c7-eda71af511fa.pdf (Accessed: 21 December 2016).

Piracy is not new. This has been a subject of debate for several years. But with the arrival of digital the reproductions have intensified. Indeed reproductions thanks to digital are easier and cheaper. This motivates the counterfeiting of films on the Internet.

Let us return to copyright law. Copyright has created the concept of intellectual property to protect artists. However, it is important to emphasize that an idea will disappear if it is not shared. An idea persists through sharing.

Through piracy, we can see this as a digital sharing and not a theft. Piracy can therefore have a positive effect on culture because it allows its dispertion, its visibility, its promotion, .. Piracy makes it possible to discover contents before buying them later. Indeed, according to studies most of the respondents would never have bought the files if they had not downloaded them and tried before. Some copiers can indeed turn into buyers of the original product. Nevertheless, it is a part of the copiers, because the individual can also, due to the pirated copy, reach his satisfaction more quickly and decrease his propensity to buy an original version.

Authors can use piracy as a source of information. Piracy can be used as a means of exploring a risky market where demand is uncertain. Rather than invest heavily, producers can rely on piracy to estimate the importance of demand
Moreover the authors can use the creativity of the pirates to increase their own profit. The idea of creating certain products can grow thanks to the bold initiatives of the pirate. A climate of competition can be created by the pirates. They are likely to boost the firm’s innovation capabilities to levels higher than they would have been without piracy.

But it is clear that some people will continue emphasize that illegal downloading is a serious threat to the sustainability of this economic sector. The pirates deprive creators of the remuneration due to them, hampering innovation. They also hamper competitiveness.
There are positive and negative effects of piracy. In conclusion, good use must therefore be made of piracy

Sources
https://guillaumedeloison.wordpress.com/2015/04/23/pourquoi-le-piratage-est-bon-pour-les-artistes/
http://www.numerama.com/magazine/19504-un-studio-explique-que-le-piratage-est-positif-pour-les-ventes.html
http://www.liberation.fr/ecrans/2009/01/20/le-piratage-et-ses-effets-positifs-sur-l-economie_958798
https://www.cairn.info/revue-economique-2010-4-page-793.htm

It was interesting to read in this blog that piracy can actually be good for the economy. So I tried to read more about the topic. Internet opened up innumerable ways to benefit as well as harm the society. This allows a number of possibilities for users of the internet to undertake illegal activities, such as piracy of content and entertainment, at ease. The stakeholders in this business have been crying foul against the perpetuators of such a crime for the loss of revenue. However, recent studies have tried explaining how piracy actually boosts sales or leads to positive benefits for the media industry. It is difficult to ascertain the accurate impact of piracy, negative or positive, on the industry and its revenue. It is commonly believed that pirates are skewed towards the low income section, who would generally not want to or could afford to pay for the same things that they illegally download. Thus, the study shows that the people using the pirated content were actually never earlier consuming the product. The payers of music did not linearly shift to become pirates. The total consumers of the music essentially increased. This means more exposure to the artists and the content, greater network effects, more sales of complementary goods, and possibility of pirates becoming paying customers eventually.
It is also interesting to see what prompts people to become pirates. A research showed that legally unavailable content was pirated 11.4% more frequently than the legally available content. Thus, there is a relationship between content availability and pirating. This also works as a feedback mechanism to see what the consumers want and what they are willing to pay for. It was also surprising to note that closing piracy sites did not increase the sales of movies. Only the sales of the big movies increased, showing that people then chose to spend their money on something that has proved itself in the market. The free media online allowed people to check the content, spread good word about the movie, and then motivating others to go spend their moneys on the movie.
Piracy, therefore can have four benefits:
1. Discovering media that is unknown
2. Accessing products that are otherwise inaccessible
3. Innovating new technology
4. Discovering and forming opinions
Thus, it can be said that if the entertainment industry stopped piracy, its benefits to the society will also stop. Again, it is hard to ascertain the exact the benefits of demerits of piracy and in what way it should be allowed to operate in the economy. Although, illegal music sharing might help the industry in some ways, it is safe to assume that the rational consumer chooses the cheapest option available. Thus, there are evident damages that the practice of piracy does and the economic consequences for the people in the industry are very real. Internet piracy is still an illegal practice and should be condemned, but it’s clear there are definite benefits from its existence.

Sources:
Journal – The Economics of Video Piracy, Matthew Greenberg
https://www.rt.com/news/music-piracy-online-sales-572/
http://www.draytontribune.com/no-need-to-pay-the-impact-of-piracy-on-the-music-industry/

In agreement with the article, I also view piracy to be a positive. The act of piracy in and of itself is theft which I condemn, however I believe media piracy served as a catalyst for the industry to innovate the ways in which it delivers content, which by and large has been positive for both content producers and consumers.

When online media piracy first became prevalent in the early 2000’s with Napster, the music industry and later the film and television industry had reason to be alarmed. Their business model had been disrupted on a scale that seriously threatened the survival of the industry. Consumers no longer had to physically buy whole albums when they could simply download the songs they liked for free. The industry’s response was initially to try and save the traditional way they had done business which was largely ineffective and created animosity between content distributors and consumers at large with well-publicized court cases ruling that an individual had to pay hundreds of thousands of dollars for downloading fewer songs than a double album (Rolling Stone, 2012).Rather than using the legal system to pursue every person who downloaded music, the “if you can’t beat them, join them” mentality set in, and content producers and distributors began to go digital.

I view the advent of legal streaming services as the “democratization of content” in that as the new industry paradigm has matured, there is more content available at a price point accessible for more consumers. This new distribution system also benefits content producers who previously would not have had their projects financed and distributed, as traditional production and distribution methods were costly and relied on physical resources, such as capacity to produce CD’s, and space in music stores for example. Services such as Netflix and Amazon Prime are also heavily investing original content, which has brought about what many are calling the Golden age of television due to the higher quality of production and storytelling that can be attributed to producers being less risk averse in selecting which projects to produce. The most glaring evidence of the successful paradigm shift that content piracy started is that Bittorrent, the web’s foremost content piracy platform, has seen its web traffic consistently decline year over year as Netflix has grown. In 2008, Bittorrent owned 31% of total North American web traffic, where as they only accounted for 5% in 2015, while Netflix had grown to 37.1% (Ibarra, 2015).

In conclusion piracy has had a long-term positive effect for IP producers. Without piracy, one can argue that there would be less content produced and consumed, production and distribution would be controlled to a greater extent by a media cartel and many consumers would be maligned by a prohibitive pricing model, where consumption relied on expensive individual purchases of content, rather than having broad access as we now enjoy, to the benefit of the entertainment industry.

Ibarra, R. (2015, December 08). Netflix is killing pirated content. Retrieved December 21, 2016, from http://www.nydailynews.com/news/national/netflix-killing-pirated-content-article-1.2458904

Sandvine: Over 70% Of North American Traffic Is Now Streaming Video And Audio. (2015, December 7). Retrieved December 21, 2016, from https://www.sandvine.com/pr/2015/12/7/sandvine-over-70-of-north-american-traffic-is-now-streaming-video-and-audio.html

Smith, C. (2016, January 21). Netflix isn’t just hurting pay TV, it’s also slowly killing online piracy. Retrieved December 21, 2016, from http://bgr.com/2016/01/21/netflix-downloads-bittorrent-piracy/

Stone, R. (2012, September 12). Minnesota Woman Ordered to Pay $222,000 in Music Piracy Case. Retrieved December 21, 2016, from http://www.rollingstone.com/music/news/minnesota-woman-ordered-to-pay-222-000-in-music-piracy-case-20120912

Nowadays, Internet piracy is becoming more usual. Indeed, People are no longer afraid of having repercussions following an illegal download. To illustrate our remarks, we can take the case of the “illegitimate” viewers with the most popular TV series of the moment: “Game of Thrones”. The first episode of the new season of Game of Thrones was illegally downloaded a million times in half a day. Moreover, 95% of music downloaded online is illegal. In 2010, over $59 billion worth of software was illegally downloaded. The examples lead us to ask a question: “would the absence of piracy become even worse than piracy itself? Economists often answer: it depends. But it depends of what? To answer at this question, we will take the point of view of different actors who get pirated.

First of all, for the case of popular TV series, the piracy has not a negative effect on DVD sales (according to Michael Lombardo with the case of Game of Thrones). Moreover, this series has an advantage from piracy due to the “cultural buzz”. Indeed, people talk about the scenario and that can increase sales of the series in physical form in long run.

Second, we can take the example of music industry. The negative effect may be overcompensated by a positive effect. According to the conclusion of the International Journal of Industrial Organization: “in our model, profits increase for a certain set of parameters because consumers can make more informed purchasing decisions because of sampling and are willing to spend for the original although they could consume the download for free”. In my opinion, in that sector, some lose but others gain. One the one hand, musical artists must find others means of financing to compensate for the loss of cd sale. The artists have thus greatly increased their cachet for performances on stage as for concerts or festivals (for example, the cost for Adele, David Guetta or Katy Perry are respectively $750k, $150-200k and $500k). One the other hand, the online legal sales of digital music appeared thanks, among other things to piracy. This new form of listening gives a certain amount to the artists per cliques.
Third, piracy is one of the most challenging problems faced by the motion picture industry. In fact, the Motion Picture Association of America estimated that US studios lose more than $3 billion annually in box office revenue from piracy.

In conclusion, I believe that the Internet piracy can be a good or bad. That depends the sector where it is used. Our methodological approach about this question prove that there are more pros than cons for the music industry and for the TV series. Nevertheless, in others sectors as the movie industrialization “all in not pink”. Indeed, in 2010 the music industry lost $12 billion to online piracy of music and music videos. Not only is this affecting the music industry but it’s causing loss of jobs. Over 7,000 jobs are lost yearly in the US due to piracy.

My sources for my comment:

http://onlinepiracyisbad.weebly.com/
http://www.telegraph.co.uk/technology/2016/04/26/game-of-thrones-season-six-1-million-illegal-downloads-in-hours/
http://professorsavings.com/game-of-thrones-the-piracy-effect/
http://www.sciencedirect.com/science/article/pii/S0167718705001682
http://link.springer.com/article/10.1007/s11151-007-9141-0

The main issue of this article is to discuss if piracy is better than the absence of it or not. Since many years, this topic has become a subject of controversy, as there are people who think that piracy should be legalized, while others say that it must remain illegal.
On the one hand, the main reason why some people have the first view is beacuse piracy makes people stop buying information goods, reducing producers’ profits and discouraging production. Evidently, if consumers can have access to a particular good or service for free, they will not spend money on purchasing it. In other words, if producers cannot prevent others from consuming their goods, there will be a risk of underproduction due to the lack of incentives to produce. Therefore, content producers should be protected by Intellectual Property rights so that they can control and sale their products.
On the other hand, some people think that piracy is welfare enhancing, as it helps many individuals to have access to information goods otherwise they could not acquire in the market. If producers had the right of exclusion, in other words, they would become monopolists, they would price above the marginal cost and total welfare would decrease, besides that many consumers could not afford to buy those contents. In my opinion, digital piracy should be legalized, as it may have positive effects on creators’ profits and on social welfare.
First, it is obvious that unauthorized copies have a direct negative impact on creators’ sales as individuals will prefer to reproduce the illegal copies rather than purchasing the new ones. This means that, in the absence of piracy, consumers would buy more content goods. This is true, but the sales deplacement effect is away from one, so we cannot say that each illegal reproduction of a digital content substitutes one legal acquisition of that content.
Second, piracy has no negative effects on social welfare. As information goods are experience goods, pirated copies can allow potential consumers to know the characteristics of a certain good without any cost for producers, and this may lead to more consumption and higher profits. In addition, a lot of digital products’ utility increases with the number of other consumers of thhe same information good (network effects); a good example of it would be the music streaming service Spotify. As a result, piracy might increase the number of individuals who use or consume a certain product, and this may make it more useful. Finally, the idea of indirect appropiation suggests that copies can raise consumers’ willingness to pay for originals, so firms may get benefits from the value of those firms. In this case, through price discrimination, firms can identify those consumers who value more the capacity of copying and charge them a higher price.
As a conclusion, i think digital piracy can be a positive phenomenon for society and it can help creators to increase profits, and individuals to enjoy more from information goods. One very good example of this is the music industry, where it has been shown that illegal downloads may enhance the purchase of new legal copies.
Sources:
http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2010_60web.pdf
http://ftp.jrc.es/EURdoc/JRC79605.pdf

This paper aims to answer one question. Would the absence of piracy become even worse than piracy itself? In order to do so, we have to take into account various factors, namely the different medium, but also the different kinds of consumers.

To start with, I would like to say that in my opinion, it is clear that the absence of piracy is a utopia. Therefore, the question loses a bit of coherency. I will try to answer it as if piracy had known a sharp fall in use.

Talking about the consumers of medium, I see clearly two kinds of people. On the one hand, people who have enough money to purchase what they want and as much as they want, but could also download illegally to save money. On the other hand, there are people who cannot afford to consume music and movies as they wanted to. The last category has two choices: they can download it illegally (if they know how to do it) or they can decide not to purchase or in a very small quantity.

The second category of people does not affect the physical or digital sales, because their purchasing power does not allow them to spend money on it. Without piracy, they will not enjoy it at all and that’s it.

The issue is therefore more linked with the first category of people which have enough money to purchase DVD’s or CD’s.

I will spit my answer in two parts. First I will talk about the music industry and afterwards, I will develop my thoughts on the movie and Tv industries.

As explained in the article, numerous studies have shown that illegal download had a no negative impact on music sales, and even the contrary. As described in the article: “the vast majority of goods that were illegally consumed would not have been purchased in the absence of piracy” I tend to think that the demand of music has just been displaced from physical sales to digital sales. Therefore, music majors don’t control everything anymore and their margin have decreased. ITunes which is the leading company in digital sales of music can now decide and put pressure on big music companies because they have a monopolistic position. Another issue, is that physical sales retailers have faced a lot of trouble. They have not predicted this change. As a result, retailers are the losers of digitalisation, whereas streaming services have created and gained a new market thanks to internet. They offer the same product but more convenient.

Let’s talk about the movie and tv industries, that is the real issue of piracy. We could think that piracy has a negative impact on sales because illegal downloading sites are closing down quickly. However, it is established in the article that piracy could have a positive effect on sales as the CEO of HBO said. Therefore, we should ask our self why anti-piracy authorities are still fighting against it? The problem of piracy is that is much more convenient to download it than to go to a shop and to buy to come back to watch and then realise than you don’t like it. The cost of DVD’s and series are expensive and many people don’t want to pay as much to discover. I agree with the ones who claims that thanks to piracy, people have discovered a new series that they will now agree to pay for it.

To conclude, in my opinion, prices were too high and that’s why piracy has arisen in addition with its convenience. However, a new kind of consumption has become very famous: it is the streaming services. I tend to think that it is the future of music and movie consumption. Because it is a solution of the two main motivations for illegal downloading, namely convenience and price. It is now possible to pay a fixed price which is very low, and to consume as much as you want. Nobody is anymore afraid of buying something that he will not like. We should not forget that piracy create a “cultural buzz” that allow companies to promote their products at lower cost. In addition, it increases sales of complementary products such as Mp3, speakers, …, but also merchandising products thanks to this cultural buzz. All these reasons make me feel that without piracy, sales would have decrease significantly.

Would the absence of piracy become worse than piracy itself?

This is a question I hadn’t thought about previously as the classical debate is focused on the assumption that piracy is bad. But it is worth to stop for a second and think if we should combat piracy or not. Putting aside the “lack of morality” associated with pirating a song or a movie, there could be good reasons to stop trying to eliminate piracy. Let’s dig into it.

To keep the same example: the Huffington Post stated that in 2012 Game of Thrones (GOT) was the most pirated TV show of the year, yet the profitability of this TV show seems to be correlated with its success. Indeed, since 2012 HBO has released 6 new seasons and the show’s popularity keeps on growing [2], thus we can assume that there are not financial problems. Some empirical data shows that illegal downloading of this TV show grows 45% from year to year. If we assume the conclusion from the Aguiar and Martens’ (2013) [4] study is generally true, we could say that GOT would have had even benefited this increase by around 0,9%.

In the scenario in which piracy didn’t exist, things might have happened quite differently. First, given that most of GOT’s audience downloads episodes illegally, the TV show wouldn’t have known its current global popularity. The three mechanisms mentioned in this article allow us to better understand what the lack of piracy would have led to:
1. No possible sampling, so loss of some potential buyers who can’t try the product that is being offered.
2. Having a diminished audience, the word-of-mouth effect (a guerilla kind of marketing) would have been less important, hence attracting fewer people.
3. Profits coming from complementary goods would have been significantly lower, as the audience (only legal) wouldn’t have been representative of the actual potential demand for the products. Because most of the potentially interested customers simply wouldn’t be relevant anymore.

All of this goes in favor of the fact that 1 illegal download isn’t equivalent to 1 lost sale, there is no displacement of demand. It rather shows that the lack of piracy could even be a worse scenario. This is the case of a TV show but I think it is also applicable to any other high potential cultural content, such as music. The more it becomes popular (through the mechanisms stated above), the more demand for the product increases, and the more value businesses can create. So, no-piracy could indeed make businesses be worse-off. That goes without saying that society would have also gone by an opportunity of enjoying a good cultural creation. So, there would be a poorer social welfare.

Besides, “you will never kill piracy” argues Paul Tassi, a contributor from Forbes, in one of his articles [5]. According to him, forbidding a pirating Business Model will only allow for others to emerge after an innovation process. Another post from this blog [6] presents this phenomenon in the music industry, after the shutting down of Napster many other ideas emerged to share music, leading to the current Youtube, iTunes and Spotify. So, pirating Business Models could also be a good source of inspiration for legal businesses’ development. Therefore, the non-existence of piracy could allow for monopolistic industries to exist using outdated Business Models that lack to address markets efficiently. With the current state of the art, piracy is covering for the unaddressed demand for content, while businesses might be passing by an opportunity of having their respective surpluses grow. Even though there are people acquiring offered contents through legal channels, there are millions of people ready to have the content but not under the current conditions. Maybe an enhanced price discrimination strategy could be considered? I am not an expert on the matter so is just a hypothesis I make based on my readings.

I personally think that the debate should refocus on WHY piracy is so common and WHAT businesses can LEARN about it. The massive number of illegal downloads clearly shows that there is an important demand for some contents, but businesses seem to be addressing this demand in the wrong way or not efficiently enough. In any-case I do think that the absence of piracy would be worse than piracy itself.

[1] http://www.huffingtonpost.com/2013/02/26/game-of-thrones-download_n_2765488.html?utm_hp_ref=entertainment&ir=Entertainment
[2] http://www.imdb.com/title/tt0944947/
[3] http://www.broadbandtvnews.com/2015/04/10/massive-illegal-downloads-of-game-of-thrones/
[4] http://ipts.jrc.ec.europa.eu/publications/pub.cfm?id=6084
[5] http://www.forbes.com/sites/insertcoin/2012/02/03/you-will-never-kill-piracy-and-piracy-will-never-kill-you/3/#246592e82957
[6] https://www.ipdigit.eu/2014/12/business-models-for-digital-goods-in-the-face-of-the-culture-of-free/

The empirical literature on piracy are mainly in the music industry, and the empirical studies show that illegal downloading has only slightly “displaced” physical sales and does not induce any “displacement” of the legal music purchase in digital format. However, when thinking about would the absence of piracy become even worse than piracy itself, I wonder, is it also the same story for other industries where piracy can be a big concern, for example, the movie industry? It seems that the empirical literature on the effects of illegal file sharing downloading on sales of DVD movies and box office revenue hasn’t reached a universal conclusion.

Adermon and Liang (2010) find that the Swedish implementation of the European Union directive IPRED in 2009, which suddenly increased the risk of being caught and prosecuted for file sharing, increased sales of physical music by 27 percent and digital music by 48 percent. Furthermore, it had no significant effects on the sales of theater tickets or DVD movies. The results indicate that pirated music is a strong substitute for legal music whereas the substitutability is less for movies.

Danaher and Waldfogel (2012) find that international release lags, which facilitate more local pre-release piracy, are associated with decreased box office returns. This relationship is much stronger in contexts where piracy is more prevalent: after BitTorrent’s adoption and in heavily-pirated genres.

Bai and Waldfogel (2012) find that three quarters of movie consumption is unpaid and that each instance of unpaid consumption displaces 0.14 paid consumption instances among Chinese college students, using a survey of Chinese college students’ movie consumption and an empirical approach parallel to a similar recent study of US college students.

Peukert, Claussen and Kretschmer (2013) compare box office revenues before and after the unexpected shutdown of the popular file hosting platform Megaupload.com on in 2012 to a matched control group of movies unaffected by the shutdown and find that the shutdown had a negative, yet insignificant effect on box office revenues.

Martikainen (2014) estimates the short-term effect of BitTorrent file-sharing on movie DVD sales using sales data on newly released DVDs and torrent file downloads during a 13-week period between March and May 2009 in the USA. The results suggest an upper bound of −0.21 of elasticity, indicating that the short-term sales displacement effect is moderate at worst.

Further empirical studies need to be conducted and if there were indeed differences between the effects of piracy on legal consumption in the music industry and the movie industry, it would be helpful to study what characteristics of the two industries and what factors of consumer psychology are driving the differences. Hattori Tatsuaki’s comment is of the same concern and gives some tentative explanations by comparing TV program industry with the music industry.

Also, when I was doing the literature research, I found some studies on piracy and the poor. For example, Asongu and Andrés (2014) examines the effect of software piracy on inclusive human development in 11 African countries and find that software piracy consistently improves the inequality adjusted human development (IHDI), and its constituents. These studies suggest that the positive effects of piracy are beyond the scope of effects on sales and innovation, which is also mentioned in Reeskamp Adriaan’s comment. However, the ethical concerns shouldn’t be ignored. The sellers and users of pirated products could think it is “fair” or they have the right to make use of those products and that can be very detrimental to the economy in the long run.

References:
Adermon A, Liang C Y. Piracy, music, and movies: A natural experiment[J]. 2010.
Asongu S A, Andrés A R. The Impact of Software Piracy on Inclusive Human Development: Evidence from Africa[J]. 2014.
Bai J, Waldfogel J. Movie piracy and sales displacement in two samples of Chinese consumers[J]. Information Economics and Policy, 2012, 24(3): 187-196.
Danaher B, Waldfogel J. Reel piracy: The effect of online film piracy on international box office sales[J]. Available at SSRN 1986299, 2012.
De Vany A S, Walls W D. Estimating the effects of movie piracy on box-office revenue[J]. Review of Industrial Organization, 2007, 30(4): 291-301.
Martikainen E. Does file-sharing reduce DVD sales?[J]. NETNOMICS: Economic Research and Electronic Networking, 2014, 15(1): 9-31.
Peukert C, Claussen J, Kretschmer T. Piracy and movie revenues: evidence from Megaupload: a tale of the long tail[C]//communication lors de la German Economic Association’s Annual Conference, Competition Policy and Regulation in a Global Economic Order, Düsseldorf. 2013: 4-7.
Hattori Tatsuaki’s comment
Reeskamp Adriaan’s comment

My first thought about the paper was : What means “the absence of piracy”?
We know that piracy is the unauthorized reproduction or use of a copyrighted item (book, patented invention, television program,…) .
Two assumption about the absence of piracy can be made.
You can “legalize” piracy, but the consequence would be the end of the copyright system. It would force the creator to let his work public. Is our economic system ready to drop all his copyright and intellectual property’s laws?
Another way is to erase it. The authorities are trying to do this now. Each country has his own legislation about the question , but globally the laws are quite soft. In fact, the authorities cannot set restrictive laws considering that most of their citizens are acting illegally.
So, it seems that we are in a deadlock. On the one hand, you cannot legalize piracy. On the other, you cannot erase it. We are in a kind of status quo since many years, fighting piracy in a soft way. Will this new economic approach, who says that piracy has positive effects, do moving things? We believe not.

This paper has to be taken with a pinch of salts (avec des pincettes).
It’s claiming that piracy can have positives effects, but it doesn’t speak about piracy itself. Does the end justify the means? HBO claim that they are happy with the illegal downloads of their episodes, arguing that it increases the buzz effects and their DVD sales. But if this is true, why didn’t they let their episodes on free access on internet? Because they are some sites where the owners authorize the download and the streaming of their products . On the opposite, when HBO says that piracy has a positives impact on their business, they downplay (il dédramatise) piracy. But we should remember that piracy is illegal and punished by the law.
A second argumentation is about the future forecast. Because arguing that piracy has positives externalities on DVD sales is an argument that become weaker each year. In fact, the DVD sales are downward sloping since 2005. For now, computers and television are sold without DVD player. So what for the future? We also know that the video on demand is hitting a plateau since 2012 . Where do the client disappears? Companies sell less and less DVD but VOD is not increasing in the same proportions.
To conclude, piracy can lead to higher income but until now it is done in an unethical way. If we could have an absence of piracy, benefits could increase for some time. But will it remain in the future?

Bibliography :

http://www.dictionary.com/browse/piracy
http://www.bbc.co.uk/newsbeat/article/16839637/anti-piracy-download-laws-around-the-world-explained
http://www.riaa.com/resources-learning/about-piracy/
http://www.lemonde.fr/economie/article/2015/04/15/le-dvd-reste-le-support-privilegie-pour-l-achat-de-video_4614015_3234.html

My first research to react about this topic was finding some figures about this activity sector, to get an objective point of view about the way the market goes. I’ve chosen the USA’s market because it’s maybe the most famous and biggest producer for music and cinema around the world. The following paragraph give an overview about the fifteen last years, which is enough to get the impact of internet :

“Between 1998 and 2004, total GDP increased by 19.4% from $11.1 trillion to $13.3 trillion, but arts and culture GDP grew by 27% from $402 billion to $511 billion. This situation was reversed, in fact to an extraordinary extent as arts and culture GDP declined by 4.8% in 2007, the year before the crisis, and continued to fall in 2008 and 2009 by 1.3% and 5%, respectively. In 2010 and 2011, arts and culture GDP recovered to growth slightly above the total economy.”
The art and culture share has changed from 3.85% to 3.32% of united states’ GDP for the last 20 years. Isn’t a big change even if 0,5% of the american’s GDP is a lot of dollars, and we have to consider the 2008 crisis’ impact too.

During this period the most important change for this industry has been probably access to INTERNET for a huge quantity of consumers around the world and this number still increase everyday. For 2016 this number reach around 3,5 billions users, which is approximately 46% of worldwide population, compare to 2000, it was only 6.8%. And with internet, a lot of behaviors have changed and still change.

The first new impacting element for cultural industry was according to me, Napster, created in 1999 Napster had launched the “peer2peer” generation. Lime wire, Kazaa or eDonkey2000 was few of its unofficial successor. These programs, for me, answer to a new need that has been appear with internet: “get what you need from where you are without leaving your screen”. Its even more true today when you can get everything you could imagine on the web.
At the beginning platforms such as Netflix or Amazone Prime video didn’t exist yet so the answer was the “peer2peer”. Of course one advantage was the free aspect it wasn’t the most important because persons was paying before for this. Today much more persons are ready to pay to have access to an official platform, for several reasons.

Based on this reflection the problem for the industry was his “reaction speed” faced to a new kind of demand. For a few years now they had started to react with official streaming platforms for tv shows, movies but also for music with by example Apple music or Spotify. And mentality change too, more and more persons use that kind of platform everyday.

The most important role of piracy according to my opinion was its transition’s role to face the changing demand. But piracy still have a role today which is quite the same, allowing access to medias for everyone on earth without endless supply chain (necessary for physical supports), lot of persons today even in poor countries have access to internet but couldn’t earn enough money to pay for legal platforms. I hope that this industry will learn from the past and finding an answer faster for these too. And answering their new demand, even if they know that isn’t because they can’t pay for that today, that it will still be the same forever. And they have a solution for waiting, allowing them to watch with piracy keep them staying relevant and talking about what is produce till they can offer that kind of service to them.

Sources :

http://musicinaustralia.org.au/index.php?title=Arts_and_Cultural_GDP_in_the_United_States

https://www.theguardian.com/music/2013/feb/24/napster-music-free-file-sharing

http://www.internetlivestats.com/internet-users/

http://o.nouvelobs.com/high-tech/20140107.OBS1612/streaming-les-5-concurrents-du-tout-puissant-netflix.html

http://www.inc.com/justin-bariso/the-secrets-behind-the-extraordinary-success-of-netflix.html

In response to this article I would like to talk about my point of view on the true nature of piracy with regard to music, movies and other data illegally downloadable. I think the answer to this is that society, morals and the economy are constantly changing. For me, from my economic point of view, the production of all these digital goods gather the same goal: to be sold and to make money. We always made money where there was opportunity to make money. When a business is no longer profitable, we find another way to make money. I think we are in the same situation here. Indeed, as we can easily see, the industry of music and movies or more broadly of audiovisual is constantly changing with changes of media or format (DVD, CD, Blue-Ray, WAV, MP3, FLAC, …) and the question is or will I make money if my product or my way to supply my product no longer works? It’s about adapting. To illustrate my answer I will first take the music industry. Indeed, with the advent of illegal downloading and falling CD sales this industry seems to be wrong. However, we have seen a shift in revenue sources for singers or publishers. As a simple example, there is Youtube. The video clips of the artists are increasingly seen and there are more and more subscribers to the channels of some publishing houses or artists who make money through the ads included in the beginning of clips available on their chains. That sounds ridiculous but it can count in millions. People using Youtube to illegally download music see these adds and they are indirect customers. Added to this, we can see more and more mention of brands directly included in the videos. The use of advertising seems to become predominant. After these practices, we can see the growing use of services allowing streaming. Here we are moving the way of using the products and finding the way that my product remains profitable.
As a second example I would like to mention the film industry. Admittedly, the advent of illegal streaming or torrents is a problem for the sale of movies. But who is the minority who still buys DVDs? There is now the possibility to subscribe to services like Netflix for the same price as a few CDs per year. After that, if they want to watch a movie in high quality, what are we going to do? Well the Blu-Ray allows it and remains accessible as technology. If we take a film of the quality of a Blue-Ray, this format is much too big and tedious to be viewed directly in streaming or to be downloaded. It also need of the media to store the file.
The evolution of technologies and innovation thus seem to close doors but open a multitude of others.
I would like to conclude by saying that piracy is not a problem in itself but rather that it is a matter of adapting to changes. It is only the evolution of a mode of consumption that is constantly changing.

A decade ago, when we use to watch a French videocassette there was an advertising saying among others “Le piratage c’est du vol”. We’ve grown up surrounded by anti-piracy commercials and speeches while, at the same time, we had a lot of opportunities to have access to pirated items: movies, song, video games, software… And, maybe stunned by all these anti-piracy campaigns, I had never thought that piracy could be positive for the economy. After the reading of this article and of many others, I have changed my mind.

As a starting point, I want to express the fact that I don’t think the absence of digital piracy possible. Like in every sector, illegal entities and black markets always emerge. Furthermore, the digital sector is very difficult to control and to analyze in its entirely. Indeed, it is hard to put limitations concerning the Internet in place. And, this is exacerbated by the fact that more and more people in the world have access to the Web.
However, if that fictional story really happens, I think that it could have a balanced effect.

On the one hand, I think that the absence of piracy could boost online legal sales of digital music through online stores such as iTunes or via streaming services such as Spotify. Although there are studies proving that « 10 % increase in clicks on illegal download websites leads to an increase of 0.2 % in clicks on legal purchase websites » (Belleflamme, P. & Peitz, M.
, 2014), I think that a COMPLETE absence of piracy can have a positive effect on legal sales of digital music. Indeed, people are nowadays going everywhere with their smartphone and like to listen to music, online stores will be the best answer to their demand. Henceforth, it has positive impacts for creator and all the people surrounding him. Absence of piracy can also have a positive and major impact on the data control in the case of children for example. Indeed, nowadays a lot of kids are watching adult contents, for example in the case of pornography.
On the other hand, people will be less attracted by items that are poorly supported by intense merchandising. Those features are mostly new and less financed projects. In that case, absence of piracy will be in favor of big companies and not of little startups.
Due to no more free access to a wide selection of digital movies for example, people will discover fewer new things and so those non-discoveries will not turn into material purchases.

An interesting question would be to know if an absence of piracy would impact the television sector. I personally thing that it will not make people buy a TV, ex-user of piracy already had one, but it can increase the number of emission’s views.

To conclude, the question was “So, would the absence of piracy become even worse than piracy itself? » and my answer is yes. The current system is not perfect and often in disfavour of the creator (of music, film…). It could be great to change it by promoting the legal sales of online music for example. But make war to the piracy itself is maybe not the right answer because of the cost triggered and of the poor chances of success.

Before answering the question, we should ask ourselves about the pertinence of copyright law? Indeed, as for patents there is a deadweight loss to be paid by consumers, by the society in order to make sure that the innovation takes place. The copyright law creates the incentive to innovate and if it didn’t exist I doubt that companies like HBO would provide us which such a varieties of shows that allow us to escape reality (see other countries, landscapes, ways of living…).

However, Piracy has allowed a share of the population (mostly technology educated people) to access almost every content freely, without having to pay the deadweight loss we were describing before. That being said this practice can be seen as harmful for society as it threatens jobs and creativity, particularly in the audiovisual industry (which is the sector from whom most complaints come from). But on the other hand I share the feeling of Tim O’Reilly, CEO and founder of O’Reilly media that people around the world are being able to enjoy massive amounts of creative content without paying for it, which makes the world a richer place where even that guy who could never have afforded that CD is able to get it for free and listen to his favorite music. Moreover, there are places in the world where some contents are just made inaccessible by an authoritarian regime and there, piracy is one of the main tools, if not the only one to assure the diffusion of culture and knowledge. Which brings us back to what was said in the article concerning illegal copies of a content good that can then attract consumers and driving them to purchase a legitimate copy later, like the effect of advertising.

A study was published in 2012 trying to find evidence of a (negative) impact of piracy on internet music sales. To do so they took 12 of the major Music platforms and measured their usage before and after the adoption of the ADOPI law on copyright infringement. According to NetRatings audience measurements the usage of Itunes increased just slightly, along with QObuzz and Allomusic (but not as much as expected by the entertainment industry), and yes there was a jump on the use of two services: Spotify and Beezik, which both allow to listen to music for free. My interpretation if the study is that if Piracy really caused an harm to the audiovisual industry we should certainly see a more drastic impact on those site’s traffic (specially the paying ones) between before and after the adoption of the law.

So, despite all the harm the Audiovisual Industry claims it is enduring: if they weren’t ways to get it freely most of the downloaded content wouldn’t be bought at all, it is hard to see evidence of any economic harm. Without talking about the poorest areas in the world where some contents (CD’s, DVD’s…) would be far too expensive for average people to buy them. Even being a student in Belgium, a region that has one of the highest per capita income in the world most of the student wouldn’t be able to afford it if they had to pay for one tenth of the records/series that they listen to/watch. So to answer the question: Yes the absence of Piracy could become even worse that piracy itself, in this new Technological era music and film producers should stop lobbying to enforce more and more laws and copyright infringement and just adapt themselves to this new market like it was done in platforms like Deezer, Spotify or Itunes that are making available for customers both free and paying content.

https://www.ipdigit.eu/2013/12/the-hidden-treasure-of-piracy/
http://www.forbes.com/sites/erikkain/2012/01/15/does-piracy-cause-economic-harm-how-to-think-about-economic-frontiers/#acf5d141e793
https://www.techdirt.com/articles/20120330/18222718314/is-there-any-value-cracking-down-piracy-if-it-doesnt-increase-sales.shtml

Over the last two decades, the music and film industry has been impacted by tremendous change. The way of consuming music and film is completely different from the past. Physical purchase has been decreasing a lot and represents for example only 24% of sales in the USA for the music industry in 2015. This percentage isn’t homogeneous in all countries. In the same year physical purchase of cds in Japan still represented 80% of the purchase. More and more consumers are choosing to buy their music and films on the Internet. The Internet and its simplicity in downloading data and sharing content have facilitated this new way of purchase.
But this new trend has an impact on downloading illegal content. With all of the technology available, nowadays it is easy to download free content without copyright. Piracy is widespread and nobody feels very concerned about threat of illegal download. However, piracy represents a huge loss in revenue for editors. In 2015 this loss in revenue represented 56 billion € for the music, film and software industry in Europe. However, things are not so simple. Indeed, music and films are now much more easily available and people can enjoy entertainment at zero cost. People who in the past couldn’t spend a lot of money in this type of entertainment can now enjoy it for free. The consumer surplus is now far higher compared the past resulting in an increased social welfare. What about the producer surplus? If we make a simple model, we can assume that the producer sells fewer products and people have a willingness to pay far less than before. Therefore producers need to sell their product cheaper than before in order to preserve some consumers. We can easily conclude that the drop in the sales and in the price has considerably reduced their producer surplus.
However, some economists have examined this subject and have found evidence of some positive effects on profit for the producer. Indeed, listening or watching a copy can lead you to later buy the content because you have enjoyed this content and want to have it at home. Another aspect is the network effect. When a film and in particular a series makes some sort of cultural buzz like Game of Thrones, this leads to an increase of consumers interested in that good. In other words, network effects attract new consumers. The last positive effect is that a producer can « capture » your willingness to pay for a complementary product of the illegal content that you use.
Furthermore, empirical evidence shows that illegal downloading has no effect on legal downloading in the digital music industry. At least it might boost people who enjoyed new music downloaded illegally to possibly download it legally afterwards if they liked it a lot
In my opinion, I think that the absence of piracy may be worse than the piracy itself. If we assume that authority achieved to prevent illegal downloading, which is very unlikely to succeed because of the inefficiency of such policy, I think that producers will not recover their loss in revenue for several reasons. The first reason is that consumers has been used to having access to music and films for free. If tomorrow you forced consumers to pay for music and films, most of them simply won’t consume it anymore because their willingness to pay-which is near zero- is far under the price of the producer’s. The second reason follows the first. Producers of films and music need advertising for their product. The network effect is a very efficient way to access advertising virtually for free. Producers are not ready to let go of this free advertising.
These different aspects show us that the question of illegal or legal downloading is much more complex that it may appear at first sight. To analyze the effect of such a practice we must take into account the indirect effects of illegal downloading such as the network effect etc.

In my opinion, the answer of the question “the absence of piracy become even worse than piracy itself?” depends on the characteristics of the products and consumers of them. To explain it, let me take two examples; TV programs broadcasted by the pay TV, namely Game of Throne and music.
First, think about the case of Game of Throne. At first sight, it is wired that online piracy of it didn’t affect the sales of its DVDs. Over one million downloads seems to decrease the sales. Here, we have to consider the features of consumer who buy a DVDs. We can assume people who buy DVDs are core fans of that series. Although it is not free after season 3, originally, consumers can enjoy it in free. People who bought its DVDs when that series is free will buy that of after season 3. In other words, the sales of DVDs is not affected because most of consumers who bought DVDs of part 1 and 2 will continue to buy after part 3. From this point, piracy can act a sample role to rising the sales in the end.
Whereas, in the music market, from the start point, all of the consumers have to pay for it. It means that some of them will quit to buy it when they become be able to access to it in free through internet. Thus, the sales of music decreased by piracy.
This explanation is not sufficient. One can argue that core fan of Game of Throne will also quit to buy DVDs when they become be able to download it on the internet. But now, we have to think about the characteristics of them. In my opinion, whether preserving is easy or not is important. For music, preserving is very easy. You can download the music through the internet and preserve it on your pc, or you can transfer it to the other devises only with cables. On the contrast, preserving movie is little bit troublesome in some points. For example, the size of data. The data size of movies are far larger than that of music. Thus, people can’t preserve much of it in the pc. They can transfer such data to the other devises, but usually it takes long time. Thus, comparing with music case, people have less incentives to do.
To sum up, in this case, piracy harms sales or not is likely to depend on “the main source of revenue is additional goods (DVDs of free TV programs in this case) or not” and “preserving is easy or not”.
This explanation might be a conjecture because there seems to be a lot of factors which affects the sales such as resistance feeling on the ethical grounds, the number of core funs (in the Japanese animation market, lunatic fans spend large amount of money beyond the imagine…), an age group of consumers (young people seems to download music through the internet) and so on. Hence, to answer the question “the absence of piracy become even worse than piracy itself?” is hard to answer without observing features of that market.

For this comment, I decided to focus on the music industry to analyze the major implications of piracy. There is no longer any doubt that the impacts of the Internet throughout the economy and society are multiple and diversified. The widespread use of the Internet is clearly changing the traditional ways of doing business.

I believe the story began in 1999 when Napster, a file-sharing program, was launched. At that time, it greatly contributed to disrupt the traditional music industry. More recently, the National Research Council (2013) argued that “the relatively recent onset of the digital piracy threat can be attributed to the sheer informational magnitude of music and film and the inability, until about two decades ago, to bring to market affordable, high resolution means for listening to and viewing digital content”. Since then, the music industry has undergone numerous technical and structural changes. In this context, the music piracy can be defined as the unauthorized sharing of copyrighted songs.

As mentioned in the article, piracy may have positive and negative effects. On the one hand, piracy may increase profits thanks to sampling effect, network effect, or indirect appropriability. On the other hand, piracy damages the music industry in many ways. It deprives creators from the profit they need to survive and thus, reduces incentives to create new music. The Recording Industry Association of America (RIAA) stated “this theft has hurt the music community, with thousands of layoffs, songwriters out of work and new artists having a harder time getting signed and breaking into the business”. Also, piracy increases the competition from the consumers themselves. The cost to produce and distribute illegal music is extremely low, and the enjoyment they derive from it is the same.

Turning now to the question of the online legal sales of digital music, one may wonder what are the effects of streaming services such as Spotify? Streaming is not just about delivering music through a data connection. It is also not just about changing the way in which music is made, bundled, and delivered. Streaming is very convenient. It enhances content discovery, gives people access to the characteristics of the content, and informs content providers on the characteristics of the listener.

Let’s now examine how iTunes provided a legal way for consumers to download music. Apple is an example of a company that shifted away from the traditional music industry logic to the nowadays defined online stores. They initiated key changes in the traditional business model, which allowed the company to create and capture value. They began by modifying their value proposition with legal music downloads. They also modified the way they captured value by introducing a razor and blade strategy. They sell iPods at low margin and songs on iTunes at high margins.

To conclude, I think that the rise of digital distribution became a real challenge for many companies across different industries. I think that piracy will always exist and thus, companies should rethink their business model to escape cutthroat competition by changing the rules of the game.

SOURCES :

Belleflamme, P. (2016). Management of IPRs in the digital economy (LLSMS2374 slideshow). Louvain School of Management.

Bonacina, E. (n.d.). No need to pay? The impact of piracy on the music industry. Online http://www.draytontribune.com/no-need-to-pay-the-impact-of-piracy-on-the-music-industry/, consulted on 12/12/16.

Hiller, R.S., & Walter, J. (2016). The rise of streaming music and implications for music production. Online http://faculty.fairfield.edu/rhiller/Research/streamingmusic2.pdf, consulted on 12/12/16.

National Research Council. (2013). Copyright in the digital era : building evidence for policy. Edited by Merrill S.A., & Raduchel, W.J. Washington D.C. : The National Academies Press. Chapter 2 : Copyright law and economics in the digital era.

Russell, F.M. (2010). Apple’s iTunes and peer-to-peer file sharing. Online http://frankmichaelrussell.typepad.com/frank-michael-russell/2010/11/apples-itunes-and-peer-to-peer-file-sharing.html, consulted on 12/12/16.

Sundelin, A. (2010). The razor and blade business model. Online http://tbmdb.blogspot.be/2009/09/razor-and-blade-business-model.html, consulted on 12/12/16.

The New York Times. (2014). Napster : Culture of free. Online https://vimeo.com/113949334, consulted on 12/12/16.

So, would the absence of piracy become even worse than piracy itself? I’d be happy to hear your views about that.

The appearance of online piracy in conjunction with the rise of Internet has had profound consequences, consequences permeating within almost every industry. Here, I’d like to examine, deconstruct and dissect the impacts of piracy within the music industry – the first business deeply affected by such a phenomenon; from within which birthed the emergence of file-sharing programs such as Napster, Kazaa and Limewire. This has resulted in analogous complaints from, for example, big companies – forming an oligopoly associating each download as a lost sale as in the film industry – a loss of sales that would, in turn, affect and penetrate the film industry later on.

At the beginning of the rise of piracy, fears turned into reality, a reality which took the form of sharp decreases in record sales. Nevertheless, the emergence of internet and technological advances has shaped and improved a business classical model, based on an oligopoly that has ruled for more than 50 years, towards legal digital distribution, a better representation of the free market demand schedule for music. Indeed, record companies took most of the profit in music sales leaving not enough share of the pie to the artist – the real creator of value – who would made a predominant part of their profit performing at live venues. This can be seen with the Apple iTunes Store in 2004 or the phenomenon ‘Spotify’ that match much more consumer preferences and allow you to, for instance, listen to a song you like without having to pay the full price of the album.

Making all this set of music more affordable has allowed to raise the popularity of artists, and thus, to have a positive impact on the live music sector which has a huge impact on the welfare of artists. All this illustrates that piracy has acted as a vehicle catalysing a shift from the classic business model to something much more adapted to our time, with subsequent beneficial affect such as the improvement of the utility of the consumers, heightening the welfare of the artist and creating a more adaptable/perfect market by igniting the creation of new business models – such as those aforementioned.

In the film industry similar trends have been seen with the arising of services such as ‘Netflix’ or ‘HBO’ that are already reshaping and redefining the film industry, witnessing for example, a proliferation of blockbuster TV-Shows that weren’t Cash Cows some years ago, at the same time a generous number of movies available at a considerably better (cheaper) price.

To conclude, I would say that ‘piracy’ is essential to lead the market toward a decent equilibrium that in turn increases the utility of consumers and the welfare of the artists, who are, according to me, the most important shareholder of the music and film industry.

Sources:

http://www.huffingtonpost.com/2013/02/26/game-of-thrones-download_n_2765488.html?utm_hp_ref=entertainment&ir=Entertainment

https://www.ipdigit.eu/2013/12/the-hidden-treasure-of-piracy/

http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1501&context=cmc_theses

I will highlight my point of view, which happens to incorporate both stances regarding piracy, by primarily using TV shows as examples. I will begin by stating why I think that the absence of piracy may be beneficial to studios and content creators.

To begin with, it is worth stating that it is too difficult to deem the effects of piracy to be plainly good or bad. These effects vary according to the market and type of service provided. For instance, Game of Thrones may not suffer badly from piracy because demand for their show is great. As such, they make sufficient revenue from their legal viewers given the fact that a massive amount of people tune in legally to watch the show. A show like Game of Thrones therefore makes massive amounts of profit either ways and so piracy is beneficial as it guarantees extra exposure.

That being said, piracy may have more nefarious consequences for smaller shows that have a significantly smaller demand (viewership figures) than Game of Thrones. Piracy may even lead to a show’s cancellation. A perfect example of this would be the cancellation of the show « Hannibal ». Despite the fact that it garnered rave reviews and had a passionate fan base, the show was cancelled midway through the third season. Executive producer of the show, Martha De Laurentiis, stated that piracy led to the shows downfall. She said, “when NBC decided not to renew Hannibal for a fourth season … it wasn’t much of a leap to connect its fate with the fact that the show was ranked as the fifth-most illegally downloaded show in 2013. When nearly one-third of the audience for Hannibal is coming from pirated sites — despite the fact that a legitimate download for each episode was available the following day — you don’t have to know calculus to do the math. If a show is stolen, it makes it difficult, if not impossible, to fairly compensate a crew and keep a series in production.”

Furthermore, whilst morality and ethics are principles generally lost in the world of business and commerce, they should be considered nonetheless. Content creators should be remunerated justly for their services regardless of the potential positive externalities that piracy may or may not induce. Piracy remains an illegal action and in many of the cases does lead to a reduction in the just remuneration of people involved in creating the pirated content. Ethically, like all illegal actions, piracy should be frowned upon. In some cases, as the blogpost mentions, it may create a buzz and push people to purchase legal versions of the content, but in others it does not have that effect and hampers content creators.

On the other hand, I do recognize the fact that piracy may be beneficial to content creators in some cases, the most prevalent of which I will detail now. There exists certain geographical limits on content that make obtaining that content legally impossible for people living in a different geographical zone. For instance, Europeans may not be able to legally stream (or watch) certain American TV shows as they are aired. The only legal solution in this case would be to await the release of the DVD by which time storylines and events that occurred in the show will have leaked.

In this case, welfare may be maximized for both the content creators and European fans if the show is pirated. It is beneficial to the show producers because either ways they wouldn’t be expecting any revenue from the european market immediately and so they lose nothing on the short run if the European viewers of the show pirate it. If anything, the creators benefit clearly as piracy increases exposure. Similarly, it is beneficial for consumers who are able to keep up to date with the show as it goes on. Sometimes piracy may be the only way of allowing people of all nationalities to access the show. Until options are put in place allowing every citizen in the world to gain legal access to previously geographically restricted shows, then an anti-piracy campaign may be redundant as piracy is the only way for some people to access these tv shows.

To add to this, there is a case to be made that piracy may even spur innovation. This is a point raised by both David Y. Choi and Adrian Johns. They cite the example of the Napster (an illegal P2P file sharing service) which ended up highlighting the demand for digital music streaming. Furthermore, whilst it has not been explicitly stated, it is fair to assume that the immensely popular tv show and movie streaming service Netflix, was inspired by the massive demand for digital streaming. Many people may have always been happy to pay to gain access to shows or movies they cherish, but that option was simply not available until Netflix was launched.

In conclusion, it is undeniable that piracy may heed many benefits to all stakeholders involved with the content that is pirated. That being said, it is not always the case and depends heavily on potential geographical limits that may exist, a potential lack of legal ways to obtain the service and the ratio of legal to illegal downloads. In order for the impacts of piracy to be truly judged, a case by case approach must be adopted.

Sources:

Hannibal executive producer De Laurentiis’ comments: http://www.avclub.com/article/hannibal-producer-says-online-piracy-brutally-slau-233990

Piracy may be good for innovation article: http://www.hypebot.com/hypebot/2010/11/why-piracy-is-good-for-innovation.html

I actually never thought piracy could have any advantage, in my head it was always “piracy is illegal and unfair”. But this article shows us, what we experience in life over and over, that in most cases it is hard to find a compromise where we make everyone happy. While most people see piracy as an act of stealing or as an illegal act, others see piracy as an advantage.

I fully agree with both point of view. On the one hand, no matter how advantageous piracy could be for some people, it remains illegal. Although, you are not physically stealing anything (Cd, DVD, book…), you are still not paying for something that cost a lot of effort, time and money to someone.

On the other hand, piracy can also have advantages. Take for example the English radio pirates in the 1960s who helped to establish the English pop radio. Indeed, piracy could have an impact on the development of new business models and innovations. Another good example where piracy lend to the creation of a new business is Napster, an online service where people could easily share their digital files with other participant, who helped in establishing a new market for online music. Although the company shut down in July 2001 because of legal complains on copyrights, later they became an online music store. YouTube could also be seen as a good example, they had some legal problems because of his consumers who uploaded illegal music, but eventually managed to solved it, giving royalties to their respective singers.

Having said the above, the absence of piracy could have some big consequence on the emergence of new business, technologies and innovations.

Sources:
http://www.hypebot.com/hypebot/2010/11/why-piracy-is-good-for-innovation.html
http://www.debate.org/opinions/is-internet-piracy-a-bad-thing
http://www.makeuseof.com/tag/4-ways-internet-piracy-good-opinion/

I think a lot of issues must be addressed when talking about piracy.

On the positive side, I personaly agree with the ideas expressed in the first paragraph. Piracy is not such a bad thing : illegal downloaders do free advertising for the product and it would not have been the case if they could not hack as we can assume that, for a large number of them, their WTP is not high enough to pay for TV, DVD or any paying way to watch the serie. So the TV show wouldn’t have that much success. I don’t watch GOT but all my relatives, at least most of them, watch GOT illegaly. I can say that I’ve been aware of the serie’s existence thanks to illegal watchers.

On the negative side, I think that piracy can hurt companies’ profits, as the demand is getting lower, and this might hurt in a dramatic way the film and the music industry in the long run. As more and more people won’t pay for their artworks, musicians and film producers get less incentives to produce music and films. So we can predict a lower supply in the future.

Also, as everything gets free, people tend to abuse of it and they are not getting as much pleasure they used to do before. I mean by that that their utility function are affected. But on the other hand they dont pay anymore for the products.

Another problem I have with piracy is that, I don’t see how we can measure the economic impact of this trend. In other words, how to assess piracy in economic terms ? Yes, GOT is kind of « free riding » on this infromal advertising campaign and it can be beneficial for them as the serie is now « anchor in the popular culture in the western world, but yet is it worth to let them continue downloading illegaly ? Does it makes more good than harm ? I think that deepest economic research need to be made on this, if it hasn’t been done yet.

The piracy in the Internet is a really important issue right now. I personally think that to answer the question if the absence of piracy become even worse than piracy itself we should think if it is possible to deal with piracy in the Internet.

In my opinion it is almost impossible to get rid of piracy, especially when the amount of data produced every year is getting higher and higher. Moreover, you can easily observe the cases of websites like 123movies, which after being banned had only to change the domain (from .org to .net).

I think piracy, which is obviously morally blameworthy, can be really beneficial for the music or movie industry for instance. Primarily, we cannot assume that the whole amount of the files which are illegally downloaded from the Internet would be simply purchased in shops if the absence of piracy. As the paper “Digital Music Consumption on the Internet: Evidence from Clickstream Data” reads, “It seems that the majority of the music that is consumed illegally by the individuals in our sample would not have been purchased if illegal downloading websites were not available to them”.

What is more, the piracy is an incentive for the companies operating in these industries to innovate. I believe that the success of Netflix or Spotify shows the evidence that customers do not look only for free music or films but primarily for comfortable use of music or movies and additional features such as playlists.

Finally, I agree with the article which reads that piracy can be a substitute of marketing of the music or movie producer. We all know that the word of mouth is probably the best way to promote yourself, therefore piracy can play significant role in the promotion process and surprisingly has a positive impact on company’s performance.

To sum up, I would like to answer the question if the absence of piracy would be even worse than its presence. Personally, I believe that the world without piracy is an utopia. Therefore, the question is for me only theoretical. But even if we assume that it is possible to ban piracy everywhere, I think it will not be beneficial for music and movie industry.

Sources:
https://torrentfreak.com/why-most-artists-profit-from-piracy/
https://www.rt.com/news/music-piracy-online-sales-572/

In this comment, I would like to highlight an additional mechanism by which movies and TV series might benefit from piracy. I will look at three questions: Do some movies generate substantial revenues from product placement? Are pirated copies taken into account when firms invest in product placement? Could product placement revenue be sufficiently high to compensate for lost sales?

The first question is whether product placement represents an important source of revenue for film and TV studios. Unfortunately, this information is hard to access. I found no reference to direct product placement revenues in the annual reports of the “Big Six” production & distribution studios.[1] Only Viacom mentions that product placement regulations may significantly affect its revenues.[2] The lack of references might be down to the fact that the Big Six don’t always produce films themselves. Instead, they often distribute films produced by smaller studios who aren’t required to publish annual reports. At the very least, anecdotal evidence suggests that product placement can generate vast revenue for producers. “The Man of Steel” allegedly rake in $170 million in product placements for a production costs of $225 million.[3] “Skyfall”, the 23rd Bond film, famously received $45 million from Heineken (compared to an alleged total budget of $150 million).[4] In exchange, viewers got to see Her Majesty’s secret servant sipping a frosty beer instead of a vodka martini. Other notable examples include the fourth “Transformers” movie [5] ; and “Cast Away” in which Tom Hanks spends most of his time speaking to Wilson, a branded volleyball [6]. All this to say that product placement can definitely generate significant revenues.

The second question is whether product placement investments take illegal viewers into account. The answer is not clear-cut. As Coase showed for the music industry, the ultimate goal of product placements is to boost sales of the “plugged” good.[7] The only thing that matters is the total number of viewers and the performance of the plugged good. In that regard, pirated movies are problematic. Studios might find it hard to estimate the number of people that view pirated copies because, by definition, piracy is often concealed. Some proxies might be of help, such as legal sales, Google searches, IMDB votes, or “torrent” activity. Moreover, it is notoriously difficult to monitor the effect of an ad campaign on actual sales.[8] As a result, advertisers might not be able to adapt their product placement expenses according to illegal viewing activity. If piracy reduces legal sales, it might thus have a negative effect on product placement investments and movie profitability. To try and test this intuition, I have searched for movies that were not screened in China (this is often the case for US movies [9]) but which contained placements of purely Chinese products (many US movies legally screened in China contain such placement). I could not find a single one. This tends to support the idea that advertisers do not think of illegal sales when they plug products. Of course there may be other explanations. Western audiences might simply feel alienated by Chinese products. In short, it is not obvious that product placements increase with illegal viewing because, as things stand, it is hard to know how many people have seen a pirated copy of a movie.

The final question is whether product placements might provide sufficient incentives to produce movies or TV series if piracy becomes even more widespread. It is theoretically possible that advertising could be sufficient to finance movies. Each movie can be thought of as a two-sided market with advertisers on one side and consumers on the other.[10] In this case, advertisers value consumers but consumers have a non-linear valuation of advertisers/placements. They might value them to a point, because they make movies culturally relevant (think of the Cast Away example). Beyond this point, however, placements might just become a nuisance (think of Transformers 4). In this type of setting, it is theoretically possible that the movie producer would choose to maximize its revenues by producing placement-heavy movies distributed for free. However, the fact that we don’t see many movies distributed this way suggests that producers make more profits with the traditional model (lost sales and decreased quality might outweigh the extra revenue from placements). Moreover, even if they became the most profitable option, placement-heavy movies might not be a “first best”. Collectively, viewers might prefer placement-light movies (which lead to higher valuations) and some fee. But because of free-riding, such a goal might be hard to reach (once a high valuation movie is produced, users would rather pirate it).

To summarize, I am not sure that product placement can replace legitimate sales if piracy becomes more widespread. Though placements can generate substantial revenues, it may be harder to justify them in a world where piracy is ubiquitous. Finally, even if this strategy did become profitable, it might be harmful because viewers would rather pay for placement-light movies than receive placement-heavy ones for free.

[1]There are currently six major studios in the US. See https://en.wikipedia.org/wiki/Major_film_studio#Current.

[2] See Viacom’s annual report for year 2015, p. 23.

[3] See http://www.independent.co.uk/arts-entertainment/films/news/superman-is-already-a-170m-brand-superhero-as-man-of-steel-tops-the-product-placement-charts-8651215.html

[4] See http://www.forbes.com/sites/moneybuilder/2012/10/10/bond-investing-james-bond-investing/#482002712905. The placement was confirmed in Heineken’s 2012 annual report, p 27.

[5] Though the actual product placement budget is unknown, a quick look at the film suggests that advertisers had a massive role in the movies’ financing. See this link for an overview of the placements [warning strong language] https://www.youtube.com/watch?v=bs5bbWSrzBQ.

[6] Wilson apparently didn’t pay to place their product. This example shows that including brands in films does not necessarily reduce their quality or appeal with audiences. See http://brandsandfilms.com/2011/02/product-placement-highlights-wilson-in-cast-away/.

[7] See Ronald H Coase, Payola in radio and television broadcasting, JOURNAL OF LAW AND ECONOMICS, 270 (1979).

[8] See Magid M Abraham & Leonard M Lodish, Getting the most out of advertising and promotion, 68 HARVARD BUSINESS REVIEW (1989). See also Magid Abraham, The off-line impact of online ads, 86 HARVARD BUSINESS REVIEW (2008). Both articles show that it is necessary to know which consumers have viewed an ad – or product placement – to measure its effectiveness. This would be difficult for pirated movies.

[9] See http://www.vox.com/videos/2016/11/29/13765398/china-movie-industry-changing-hollywood.

[10] On two-sided market, see Jean‐Charles Rochet & Jean Tirole, Two‐sided markets: a progress report, 37 THE RAND JOURNAL OF ECONOMICS (2006).

Piracy is a widespread practice in our society. Even if it is sometimes harder, people are more and more able to search and download what they want to. But piracy is illegal and causes damages. They are so two opposite opinions about this subject. The most obvious advice it to think that without piracy the media sector would be doing better. This is a logic argument: if they are no more theft, companies, artists, etc, will earn more money and it would encourage the development of these sectors. However, others have fit with this practice and are able to make profit legally thanks to piracy. And downloaders are also winning with this practice because they do not have to pay for anything. But should the absence of piracy become even worse than piracy itself?

On the one hand, as it is said on the article and above, some creators have fit with the illegal practice. Indeed, they have based their films or music’s promotions on the illegal downloading. Moreover, making accessible products is the best way to induce people to watch it. And the audience is what interests advertising companies. So I think that with downloading companies have to rethink the way they launch a product and should think about partnerships with other companies that could gain benefits with the big numbers of views. An example is given in the article with game of thrones that have three main advantages with piracy. Another one is given by people that play music and enjoy the free platform to become known. Or some are already known but they enjoy this use by promoting shows that allow them to earn money. These are good ways to use the practice and not to suffer because of it.

On the other hand, for some companies that sell products which are illegally downloaded are not able to fit as well as others with this practice. For instance, products offered by windows are often illegal downloaded but they are not able to gain benefits with the practice. Indeed, products like word, excel, PowerPoint,… are not free but some people think they are just because they are too illegally accessible to consumers. Moreover, some versions are damaged and give a negative image of the product while what they download was not offer by the company they thought it was. These downloads are harmful for these companies and should be fought.

Nevertheless, legal platforms exists to download music or to watch films and series: Netflix, iTunes,.. These platforms are used by a lot of consumers. This is why I think that these kind of platforms should be more promoting and known by users. I also think that the total absence of free access to music or films could cause the loss to a lot of artists because people won’t pay for something they don’t know. Some artists and companies could balance between setting their product on free access and on pay version. Whereas other should absolutely fight against the websites that allow their product’s downloading.
To conclude, I think that the absence of piracy’s opinion should be balanced. Indeed this is very useful for many companies whereas it harmful for others and these ones should be protected.

https://www.microsoft.com/en-us/piracy/
http://www.mass.gov/ago/public-safety/cyber-crime-and-internet-safety/cyber-crimes/illegal-downloads-copyright-file-sharing-and-.html

Piracy is not as negative as we can think. This is why I’ll talk about some pros and cons.

First of all, it’s understandable why people use piracy to watch their movies because in our society with all the social networks everyone wants to be the first to watch the last episode of our favorite series. We want to watch it at the same time than the Americans on their TV because we want to be equal to them. If we have to wait that the series go out on DVD in Belgium we have to wait at least 3 months and during this time we will have spoilers from every social network.

Secondly, when people are watching directly on their computer they can talk about it and then there is a word-of-mouth effect because the entire world can watch it at the same time. This can then increase the demand. Moreover it’s not the same feeling to watch a movie on our computer with usually a bad quality than on our television with a DVD, which has a great quality. So even if we watch a movie on our computer it doesn’t mean that we will not buy it later. It just means that we want to be sure that we like the movie before buying it.

Thirdly, Spotify and Netflix are two streaming services, which work very well around the world. On the one hand, Spotify is free if we keep the advertising and is a good solution because it decreases music piracy but it has no impact on the revenue because it doesn’t increase the legal track sales. On the other hand, Netflix is not free and has a huge success. It decreases online piracy but unfortunately it is also killing pay TV. People prefer to watch movies or TV series of their choice without any advertising than to watch the TV program that is imposed by the channels. The streaming services are then a good idea but it still has some issues.

Finally, the sector that suffers the most from the piracy is the movie rental. There are less and less shops that rent movies because it doesn’t work anymore. Nobody wants to rent a movie that can be watched easily on lots of websites.

https://www.theguardian.com/film/2016/aug/10/movie-film-piracy-us-interpol-extradition
https://torrentfreak.com/spotify-helps-to-beat-music-piracy-european-commission-finds-151028/
http://bgr.com/2016/01/21/netflix-downloads-bittorrent-piracy/

Piracy is illegal according the current law, it’s a fact. However, does it mean that is something immoral? Imagine if piracy always has a positive impact, like a hidden treasure, on all its stakeholders (legal consumers, pirates, content producers/copyrights holders, government). Would it still stay illegal, immoral, and compared to an IP theft? In fact, I don’t believe it, but the issue is more complex. Indeed, several studies have shown that piracy have also some negative impacts. So the question “Would the absence of piracy become even worse than piracy itself” is meaningful.

To answer the question, let’s take the example of illegal music downloadings and their pro and cons regarding the music industry.

Firstly, from an economic point of view, illegal music downloadings have most of the time a negative impact on CD’s sales. However, a huge number of illegal downloadings may have a positive impact on the profit of copyrighted music holders. The example of Game of Thrones and HBO demonstrates that a cultural buzz feeds by illegal downloadings can bring positives effects. For many content goods and especially for Game of Thrones, network effects have helped to create the buzz. But the fact is, we can’t easily determine the success parameters of network effects. Means to attract the demand and the consumers ‘interest are subjective. Therefore, it’s difficult for copyright holders to rely on a brief buzz. Moreover, it’s impossible for them to compare the losses due to piracy and the possible gain brings by this buzz, since it’s subjective.

Secondly, the introduction of legal sales of digital music on the market can either help the music industry or hurt it. Indeed, legal sales of digital music are competitors of physical sales. And they are also serious competitors to the illegal downloadings. As the famous quote says “the enemy of my enemy is my ally”, piracy could become an ally of copyright holders in order to resist to the competition with legal sales of digital music. But the fact is that legal sales of digital music represent only a few part of the revenues of the music industry. Piracy should therefore be considered as a bigger competitor of physical sales than the legal digital ones. In that case, the absence of piracy is thus better.

Thirdly, consumers will always benefit from piracy, in my opinion. Simply because they can have music for free. For example, it’s a mean for poor people who can’t afford lots of CD’s and those who are not ready to pay the market price to enjoy music. These people will always find means to listen to music. It started with Napster, a peer-to-peer music file sharing system, in 1999. Now, we can say that other means, like Youtube, supports this “culture of free”. In fact, Youtube is used like a legal sharing means to listen to music. It is therefore a good solution to satisfy both artists and listeners expectations. Indeed, they can both benefit from it since artists are remunerated for each music video and since Youtube is seen as a promotion tool.

Finally, I would say that piracy is something impossible to stop in a constantly connected world like ours. Therefore, finding the optimal welfare for all the stakeholders is the main issue of piracy, but knowing that copyright holders and content producers will certainly adapt their business models (because they suppose piracy can happen) if they want to make profit.

Sources:

https://www.ipdigit.eu/2012/02/network-effects/
https://www.ipdigit.eu/2013/04/lor-cache-des-pirates/
https://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2014_19web.pdf
https://www.youtube.com/yt/copyright/

So, would the absence of piracy become even worse than piracy itself?

Firstly I would like to point out that the eradication of the practice (piracy) all together seems very unfeasible. The US – one of the countries in the world with the strictest anti-piracy laws, which are updated as often as almost every two years receives the same result time and time again: copyright infringement continues unperturbed. However, I will assume that piracy can be absent in the market.

Below I examine the effect of the absence of piracy in the music and film industry.

Personally, I don’t think that the elimination of piracy would help to increase the sales of music CDs. Because there would still be so many ways to enjoy the music of your favourite artists for free. For example, many official websites of performers have a section where you can listen to the artist’s music, or you can visit the artist’s page on YouTube and listen to it there. Or by simply subscribing to a streaming service (Spotify). I am a big fan of streaming services as they provide benefits such as: diversity, accessibility and quality for little to no cost to consumers.
Moreover, CD sales are decreasing all over the world: in countries such as Spain with lax anti-piracy laws; but also in Germany- a relatively low-piracy market.
In the case of the music industry I believe the lack of piracy will have a negative effect on demand of goods that benefit from the three mechanisms mentioned in the article above.

An example from the film industry: the price of the DVD – ‘’The Dark Knight” in Russia was equivalent to $75 per copy. With this huge discrepancy in price between the Russian and US market and assuming there is no piracy, I can safely come to the conclusion that Christopher Nolan’s film would not have reached as many supporters of the trilogy as it currently has in that region. Furthermore, I have no qualms about claiming that the sales of merchandise related to the movie franchise would have been dramatically lower. The lack of piracy in this case would certainly not push consumers to spend $75 for a DVD, but it would have simply lost its customer base, therefore piracy is a necessary evil in this case, that does more good than harm.

As illustrated in the cases above piracy is better for the music and film industry than no-piracy.
What we need to understand is that people will always find ways to cheat and bend the system to their advantage. For instance, the online streaming service – Netflix; offers its new users a one-month free trial period, and many people have taken advantage by deleting their account at the end of the period and creating a new one immediately after, providing different data to avoid detection. This practice is not illegal, nevertheless, I am sure that Netflix representatives are not happy about it.
And even though illegal, piracy serves a role of attracting consumers through sampling content, increasing recognition of the product and raising sales of complementary goods. In conclusion, I would like to say that I support the existence of anti-piracy laws, but looking at the facts I believe piracy is better than the alternative.

References:
http://www.bbc.co.uk/newsbeat/article/16839637/anti-piracy-download-laws-around-the-world-explained
http://www.economist.com/node/21526299
https://www.techdirt.com/articles/20140329/08050226728/russia-admits-its-strict-anti-piracy-laws-arent-working-so-theyll-just-try-some-more.shtml
http://www.wired.co.uk/news/archive/2012-10/02/japan-strict-copyright-law
http://secureknow.com/how-to-guides/netflix-free-trial-forever/

To resume this article, piracy have not a significant negative impact on physical and digital sales but on the contrary it promotes and gives a boost to the movie, the TV show or the music in question.

The question I ask myself now if what would happen if there were absolutely no piracy in this world? What would be the impact on legal sales?

First, since few years, we are in a continued transition to the digital media according to official stats. Indeed, global physical sales declined by 8,1 % in 2014, even though it still represent a huge source of revenue.

In a very nearly future, the absence of piracy might still have a positive impact, because physical sales still represent an important part of the market and as we saw before piracy has mainly a negative effect on physical sales. But still, as it is quote in the article piracy have a positive impact on complementary products. Meaning that the level of pirated product is related with the sell of paired products. Then avoiding it could actually lower the total amount of physical products legally sold.

In a more distant future, the absence will have a fewer impact, because the physical sells will represent a minor part of total revenues and as we have seen in the article, illegal downloading has no or little influence on the digital sales. Then the only impact that will occur is the free advertise that piracy procures thanks to the its networking effect, buzz effect which will soon be compensated by the fact that people will be forced to purchase digital services. At the end, companies involved in the market will lose their free-benchmarking power, so it will be harder for them to create famous differentiated products and to sell more. Although, the global demand will raise and thus the final effect will be balanced.

To conclude, I think piracy will always exists and according to few websites, illegal downloading is not decreasing even though online legal purchase websites have evolved a lot since few years e.g Netflix. Even if government everywhere in the world would combine their forces to stop Internet piracy, people will always find a way to get their needs for free. Therefore, it is a bit utopic for us to imagine a world without piracy…

References:

http://www.ifpi.org/facts-and-stats.php
http://www.digitalmusicnews.com/2015/07/16/if-you-think-piracy-is-decreasing-you-havent-looked-at-the-data-2/

http://www.digitalmusicnews.com/2015/07/16/if-you-think-piracy-is-decreasing-you-havent-looked-at-the-data-2/

http://www.forbes.com/sites/insertcoin/2012/02/03/you-will-never-kill-piracy-and-piracy-will-never-kill-you/

Piracy is today totally part of our society. But is it an advantage for us ? Does piracy really have a positive effect on the social welfare ? To answer this question, we must first weigh up the pros and cons.
We have seen in this article that illegal downloading has displaced physical sales. This effect is confirmed by some studies (1). In the same study, we can see that the repartition of the price of a physical disk is not the same as the repartition on a digital legal downloading. The biggest change here is that the revenues which were previously left to the retailers have now totally disappeared. These revenues have been spread and are now given mostly to the record label and the online platform. The point I want to stress here is that number of these retailers have probably stopped working in this industry (there are fewer online platform than the number of small retailers existing before the “downloading era”). This represents a large loss as maybe not all of these retailers have found another job.
So, what is the role played by illegal downloading here ? In my opinion, it has accelerated the shift from physical to digital sales.
Of course, one can argue that this effect is just a displacement of the revenues. And it is probably true as the money lost by retailers is now for the record label or the platform. The problem is that this money is now far less fairly spread as the revenues are now given to a few actors.
Would the absence of piracy be worse than piracy itself ? From a purely economic point of view, probably. We have seen the three positive effects of piracy in the article. We can also add to the “sample effect” that piracy has changed our way of consuming music : where people used to buy one album and enjoy it for a long time in their car, piracy has indeed given to us the possibility of getting every pieces of music quickly, which is also probably a boost for legal downloading.
However, social welfare should not only be about money. In my opinion, the way that the revenues are now spread has had a terribly negative effect on a lot of actors. Personally, I think that piracy is now inescapable and that, on a long term, it will have a positive or at least neutral effect on our economy as we see that many actors have adapted very well (e.g. Spotify,…) to these new conditions. However, as said earlier, it has been one of the leverage of the “physical to digital shift”, which should have been better managed/braked. It would have left time to people to adapt, and so limited the negative aspects of this shift.

(1) http://www.droit-technologie.org/upload/dossier/doc/179-1.pdf

I personally find this subject very interesting and I completely agree with the 3 positive impacts you sketched here. While searching for inspiration, I found an old comment of an Erasmus friend, Yasuhiro Minami, which reminded me good memories. I decided thus to develop more his subject, show how strong these 3 impacts could be found in 2 different kind of Japanese industry and detail some in-depth situations. I really want to share here my personal experiences and thought about the economic impact so I must warn you that I will mainly use my own knowledge and data acquired during these last past years and especially when I was a member of the Kotmanga (one of the LLN’s Kot-à-projet).

My first focus will be on the “Anime” industry, which is basically Japanese animation series. Usually, a new “anime” has one of its episodes broadcasted every week only on the Japanese TV network. However, nearly immediately after its diffusion, on the internet, a lot of non-Japanese forums are already full of comments about the newest series, saw by people around the world. It is indeed really easy to download illegally the new episode, already subtitled by fans teams. But this situation, in my point of view, is very profitable for the anime industry. The high rate of piracy and comments on social networks show that a high demand exists outside the border of Japan. Moreover, there are even “Anime conventions” (they are big events or gatherings of people promoting animes) where a lot of complementary and derivate goodies are sold, such as at Made In Asia in Belgium or at Japan Expo in France. Of course, if the anime should be sold outside Japan, piracy will cause an impact on the sales, but not necessarily negatively. If you know there is an enough demand, you know that selling a license to other countries’ broadcasters could be rentable. You can use online platforms as a distribution method to let “foreigners” buy and add the series in HQ version to their collection if they really love it and want to share with other people. Knowing the demand, you can also be sure that the next season or a sequel movie could be interesting to sell in others country. Solid method must still be put in place, but some online platforms such as Wakanim in France succeed to make some series legally sold (to people that agree on this method) or to diffuse sequel movies in France.

The second focus is on “Doujinshi”, which is the category of private works made mostly by amateurs and usually based on animes, games or even their original ideas. It can take a lot of different forms, such as books, comics, pictures, music’s, animations or games. Their distribution method is mainly during “Anime convention” where amateurs are selling their work at their stand. These “doujinshis” are also very much subject to piracy (but can we still call it piracy…) and do not have any patent to defend themselves. But again, I think they really gain benefits of this situation. Like small freelance companies, “Doujinshis” encounter issue to promote themselves; however, it is not or not yet the main job of the creator. Letting the possibility for the piracy is thus an opportunity to become more famous by mouth-to-mouth. I am myself downloading some of these and when I discuss with the creators, they are always happy to see their works being world spread. They often say that if their works is downloadable, it increases the number of followers, sales, and the possibilities to attract a producer or an editor headhunter.

The idea that I want to point out here with these examples is that piracy can really help big and small companies to promote their works, especially if you want to sell outside your home country. Big companies can thus discover some unforeseen niches and small ones can become famous and/or keep contact with their main customer. Of course piracy already destroyed some companies, such as CD sellers, but on the other hand, I think that a lot of stakeholders can find a win-win situation.

In my comment, I will focus on digital piracy on music and movies because it’s the two domain of digital piracy that I know better.
To begin, let me say that I agree with the assumption that says that the consumption of illegal product is not directly related to a sales decrease of legal product. In fact, peoples buying legal products (CD or DVD) do not have the same needs than the others downloading illegal products. There are therefore two kinds of end users: The “primary amateurs”, i.e. people buying legal products. Those kind of amateur could be motivated by the sake of remunerating artists, by a collections habit, by a desire to detain physically the products or because of a lack of IT expertise. The other consumers, “secondary amateurs” are those who will never pay full price for CDs or DVDs. Furthermore, Aguiar and Martens (2013) and Waldman (2013) have highlighted that the age as one of the factors influencing decision piracy. That implies that roughly, young people would be more in the “amateur side,” and the oldest in the category “primary amateur”. Since the download trend concerns the younger generation accustomed to consume mass free, and given that this trend seems to be growing (and Waldman. 2013), it seems difficult to imagine in the near future (when younger generation will replace the generation of “secondary amateur”), the suppression of illegal downloads. According to me, this downloading growth is directly linked to an easier access generated by the free of the service and the direct “at home” accessibility. This ease of access has helped create cultural buzz effects of network effect, two big two which lead to an increasing greed of musical or film knowledge or curiosity. By removing completely illegal downloading, we would go in an opposite side compare to the current habits of “mass consumption”. I think that remove piracy will maybe weakly affect the sales of legal products like we saw in the Aguiar and Martens (2013) study but I mainly think that will have a significative impact on the sales of complementary products. I truly believe in this cultural effect buzz and in its “benefits”.

To conclude, the generational factor, the trend according to which we are accustomed, and especially the younger generations, to have an easy access to a huge quantity of information or data, the benefits coming from the network effect thanks to the cultural buzz, are factors that show that the digital piracy is an integral part of the today’s world. Therefore, it seems more relevant to focus on the alternative and innovative strategies that could permit to find a compromise between illegal issues and profits concerns. One way to avoid legacy issues could be to open the digital access of those products. By doing that, like Facebook, this could lead to a huge flow of information about the consumer that could be used as a new source of revenues.
The limit of this comment resides in the subjectivity of my arguments directly related to my sociodemographic data. Indeed, I am one of those young “secondary amateur” who do not know half of what they know in music or film if they had no free access.

At first sight, piracy has every characteristics to be interpreted as destructive for the industries involved. Knowing that the most downloaded movie during the period June 21-Sept 9 2015 (Mad Max: the fury road) counts more than 22.90 million shares on torrent networks (1), everybody has the right to be afraid about this popularity for illegal downloading, especially music and film industries. Indeed, only few people can assure that they have never downloaded nothing illegally.

However, piracy may not be as destructive as many people may claim. In fact, as a report carried in 2013 by the site TorrentFreak showed: “Contrary to the industry claims, the music industry is not in terminal decline, but still holding ground and showing healthy profits. Revenues from digital sales, subscription services, streaming and live performances compensate for the decline in revenues from the sale of CDs or records”(2). Even more than that, as the reports also says: “Despite the Motion Picture Association of America’s (MPAA) claim that online piracy is devastating the movie industry, Hollywood achieved record-breaking global box office revenues of $35 billion in 2012, a 6% increase over 2011”.
So would the piracy have a lower negative impact than we tend to think? Would it even have a positive impact? Those statements are maybe not as crazy as they may seem… The proudness of Michael Lombardo about Game Of Thrones being that much illegally downloaded supports that idea.

In fact, by watching the past, we notice the fact that the piracy concept has been existing for many years. Even if it wasn’t in the same form as we may find today (online downloading), it existed for example by copying tapes, by copying CDs… Of course the evolution of internet has made that trend more and more popular to achieve the tremendous number of downloads we see today.

In practice, even if it may sound as a paradox, piracy can have many good impacts. The benefits lost by industries caused by illegal downloading can be erased by the popularity gained in return by those downloads. Being hugely illegally downloaded allows the increase of the popularity of the product and then the profit lost by people not paying for it can quickly be compensated by other indirect products linked to the original creation. Game Of Thrones, for example, would have probably not been as popular without the help of illegal downloading. As Jeff Bewkes (CEO of Time Warner) said: “Our experience is, it all leads to more penetration, more paying subs, more health for HBO, less reliance on having to do paid advertising…”(3). Money lost on sales of episode can be regained by other ways, piracy can be profitable!

To answer the initial question, I would say that the absence of piracy wouldn’t necessarily be even worse than piracy itself but, as piracy exists and won’t ever disappear, it is the role of the industrials to take advantage of that trend. As Paul Tassi claimed “You Will Never Kill Piracy, and Piracy Will Never Kill You”. Being pirated a lot means that people are interested into your product and it tells you that you can put in place derived products or ideas that will be profitable because there is a real interest.

Another point I would like to mention about piracy is that it can also be indirectly legally profitable for consumers. Indeed, the competition will be increased by illegal downloading as companies will see what are the most demanded products and will put in place some solutions to use it as a way to make a profit. Cheap subscription fees like those on well-known websites like Netlfix, Spotify… answer to that need. Many illegal downloaders wouldn’t be against to pay a little fee to stop downloading and some companies understood it and reduce they price to attract those potential consumers.

Piracy exists, that’s a fact that will never change. It is up to creators and industrials to find a way to take advantage out of it by being creative and aware of this phenomenon.

(1) http://variety.com/2015/digital/news/summer-movie-piracy-mad-max-fury-road-2015-1201589991/
(2) http://news.yahoo.com/blogs/sideshow/new-study-says-online-piracy-isn%E2%80%99t-hurting-entertainment-industry-220006729.html
(3) http://www.forbes.com/sites/insertcoin/2014/04/15/game-of-thrones-sets-piracy-world-record-but-does-hbo-care/
(4) http://www.forbes.com/sites/insertcoin/2012/02/03/you-will-never-kill-piracy-and-piracy-will-never-kill-you/

In order to distinguish between the advantages and the drawbacks of piracy especially in the case of films, music and some softwares, we should make a difference between piracy in developed countries and this in developing countries.
On the one hand, population has a high living standard in the developed countries, consequently citizens have -in overall- the capability to buy a given software or a kind of music without any problem. This general observation doesn’t mean that all citizens have enough money to buy the licensed product, so in this case I think that is preferable to practice a price discrimination notably a third degree with the piracy ban. This kind of price discrimination means charging a different price to different consumer groups. For example students and unemployed people could buy a kind of music with a low price however the persons with high revenue should pay the full price.
On the other hand, the living standard in the developing countries is too low and then it is more difficult to buy a licensed product even to the persons who work. In this kind of these countries the unemployment rate is too high and the life is hard where meeting basic needs has more priority for people than buying a CD for watching a film or listening to music. For my part, it is tolerable to accept a little piracy for those who don’t have any revenue and practice a single low price for the rest of population. Certainly the implementation of this proposal remains difficult but if we do that, the part of the piracy in the developing countries will decrease and the intellectual property owner profit will increase.
Finally, I think that the presence of a little piracy in the developing countries is better than its absence because of its benefits on poor consumers and on intellectual property owners. However, it is bad to have it in the developed countries as the population is financially able to buy the licensed product.

Some years ago, the piracy became a new phenomenon of consumption. Movies, series, music, books or yet electronical programs were the first casualties of it. Nowadays, this phenomenon is completely anchored in our habits. But is really the piracy as bad as the majority of the media try to make us look at it?

Sure, the piracy causes many problems. Firstly, as mentioned in this article, the piracy caused a negative impact on the musical industry, especially for physical music (CDs). Then, by storing an impressive amount of information, the user trusts in a security that is not developed as nearly enough as it should be. At last, we could speak of the economic repercussions that are diminishing. But who are the actual losers here? The state does not get taxes on the material, the stores reduce their margins and the people who made money thanks to the artists may be losing money too.

That’s why I think that the piracy also possesses many perks. The illegal download can for example help an artist to get famous without having to invest a lot of money for it. It is also a good thing for the consumer because he gets more choices. Then, I quite agree with the Belleflamme’s and Peitz’ mechanisms that are the sampling, the network effects and the indirect appropriation. We just have to look around us to notice those effects. For the first one, if I like an artist who is yet to get known, I am likely to encourage him by purchasing a CD or something else. The second mechanism is to be found when a friend of mine gives me a recommendation to watch a new movie. Finally, the third mechanism who is about the complementary goods seems to be less obvious but nonetheless totally understandable.

As a conclusion, would there thus be worse piracy than the lack of piracy? It is complicated enough to answer this in an affirmative way. I don’t mean to sing the praises of the illegal download, i would simply like to finish through this sentence: in what discovering a new artist through the download is illegal?

Reference:
http://filipe.f.ferreira.free.fr/dlst/spip.php?article237

The hidden treasure of piracy?

Illegal in most countries because of the economic losses it can occurred, Piracy is here meant as the act of copying and procuring computer data without any permission. Game developers and music producers spend months and years in the creation of new products that will in the end be more stolen than sold. But why do they continue to produce them then? Is piracy as immoral as the society want us to perceive it?

The people disposition to acquire free-items is utterly different than their willingness to pay for it. It means that a person who choose to illegitimately download a game, a movie or a music was not likely to purchase it anyway. Formerly it demonstrates that the total amount of sold games without piracy is not equal to the amount of stolen games plus the amount legally procured games.
Actually, in some case, this number can rise thanks to piracy. Economists talk about a network effect, meaning that the total quantity of consumer grows in parallel with the attractiveness of a product, regardless, of course, of the total volume of sold and stolen items.

Besides, concerning music’s and movies, piracy has never stopped people going to gigs or movie theatre. Indeed, piracy as explained in the blog has contributed to the popularity of all those works and hence the consumption of derivative products which are not the music or movie itself but could be t-shirt, concerts or just the act of going to the cinema.

Even if the the act of illegally download movies or music’s is directly relied to steal, it does not only have negative effects on the economy. Undeniably, illegitimate downloaders steal artist products, but they also indirectly help the artist getting renowned. Moreover, in certain kind of industry, piracy has incidentally lead to the development of lucrative app such as Netflix, Apple Music or Spotify.

Therefore, in my opinion, illegal downloaders are nothing more than burglar. But as long as piracy stays a minimum under control, meaning keeping it forbidden, it will succour artists or companies to raise their profit.

• https://www.ipdigit.eu/2013/12/the-hidden-treasure-of-piracy/
• http://www.eurogamer.net/articles/2011-09-30-how-bad-is-pc-piracy-really-article
• http://bigthink.com/the-moral-sciences-club/does-internet-piracy-really-hurt-the-economy

Piracy as we all know is not ethically correct. There are different scenarios where piracy has destroyed media artists,companies by robbing their share of profit by illegal usage and there are instances where piracy has the helped to create a buzz for a particular product/artist/business, increased branding, expanded outreach of the business to different consumers across the world. Both the views are quite interesting and contrasting.

In this current internet frenzy generation and fast paced lives, people no longer have time to explore and find goods that they find interesting. Nobody no longer goes to a store to see what’s new. Social media, online websites, word of mouth are the sources that consumers depend on to find out about new things. These days consumers have a “If i like it, I’ll pay for it” mindset. Piracy in these cases, acts a catalyst in spreading the word out in the open. Not every consumer is ready to pay to find out if a particular product is interesting or not for him/her.The availability of illegal content makes it viable to try out various choices, which otherwise would not have been even tried or tested by consumers. Piracy like mentioned earlier also helps to reach out to a larger and wider audiences in different parts of the world, a good example of this can be ‘The Breaking bad’ tv series. Being an American TV series, it had viewers from all over the world. This was possible only because, the illegal content websites allows viewers to download and view anytime they wanted to instead of watching it at fixed show time. When it comes to music industry, piracy provides novice artists a platform to showcase their talents and share between friends if they like the artist increasing popularity. There is a decline in physical sales of the product because of pirated versions but it also has helped business areas like gaming where the gamers try different games and once they get addicted to a particular game and find it interesting, they tend to buy the originals for complete access to all the levels.

In an research article by Wharton business school, it has been seen that
piracy attracted the most price sensitive ones in a competitive market. It was observed that piracy was beneficial to firms in this case because it removed the price sensitive consumers from the market and this helps firms to have less incentive to engage in self-destructing price competition.

To conclude, piracy provides a means to get access to materials which otherwise would not have had a chance to be even explored and would have been dead. Absence of piracy will only make it tougher for any good to survive in the market and expand to wider audiences.

Sources:
https://www.rt.com/news/music-piracy-online-sales-572/
http://www.opim.wharton.upenn.edu/wise2004/sat612.pdf