Is Piracy Damaging Recording Industry? - Fordham Intellectual Property, Media & Entertainment Law Journal
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Is Piracy Damaging Recording Industry?

Is Piracy Damaging Recording Industry?

There has been an ongoing battle between the music and movie industries and pirates who use peer-to-peer networks and file-sharing methods to share copyrighted files.  While the both industries have bemoaned the damage pirates are doing to the industry, there are some studies that suggest this claim is not accurate.  In 2011 and 2013, researchers at the London School of Economics (LSE) released papers asserting that file sharing is not actually harming the creative industries, and can in fact be helpful to them.

The first LSE report, from 2011, criticized the U.K. Digital Economy Act and praised the synergetic potential of peer-to-peer technology.  The 2013 paper gave further proof of this synergetic potential, claiming that the creative industries have held their bottom line, and that file sharing can encourage increased sales.  Bart Cammaerts, LSE Senior Lecturer and one of the authors of both reports, had this to say: “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.”

According to the reports, file sharers spend more money on entertainment than those who don’t share.  They claim pirates are some of the industries’ best customers, with music pirates spending 30% more and movie pirates spending up to three times more than the average customer.  In fact, the Recording Industry Association of America (RIAA) admitted that this was true, but claimed it was simply because pirates are more engaged fans.  The report goes on to explain that the entertainment industry’s claims that piracy is devastating their business are exaggerated.  The reports point to the record-breaking profits in the movie industry and stable sales in the recording industry; further, they claim there is no evidence that piracy is the cause of stagnation in music profits.

These reports are in stark contrast to the claims of the music and movie industries.  The Motion Picture Association of America (MPAA) took issue with both papers, calling their arguments “unsophisticated and misleading.”  The entertainment industry asserts that even if profits have increased or been stable, the real number to consider is how much more business it could have done without piracy; any profit or stability is really due to increased prices and an uptick in concert sales.

The MPAA also used a report from Phoenix Center for Advanced Legal & Economic Public Policy Studies to debunk a study by the University of Munich and the Copenhagen Business School.  The German study claimed that revenues for mid-sized, non-blockbuster films were increased because of file sharing.  The Phoenix Center report claimed that the Germany study used a “poorly designed statistical model” and that the study’s authors did not understand the economics of the film industry.a

Ultimately, it may be impossible to measure the impact – positive or negative – of piracy on the entertainment industry.  Another important issue related to piracy is the ethics of distributing another’s intellectual property.  Either way, making unauthorized copies of copyrighted music and movies is against the law and may subject you to civil and criminal penalties.

Anne Mary Ciminelli

Anne Mary Ciminelli is a 2L at Fordham Law and a staff member of the IPLJ.