Debunking some major flaws in the LSE media brief on the impact of piracy

by Julia Jenks 10/07/2013 14:13 (UTC-08:00) Pacific Time (US & Canada)

Last week, the London School of Economics released a media policy brief suggesting that piracy isn’t harming the creative industries and in fact, may be helpful.  Unfortunately, the paper includes no new data and the authors’ arguments include some fundamental scientific flaws that undermine the paper’s credibility.  (This isn’t the first brief with these kinds of flaws that we’ve seen from these authors.)

Here’s our point-by-point look at some of the key flawed claims in the current brief.

Claim: Creative industry revenues are not declining (…therefore piracy isn’t doing any harm).

Reality: This argument, while common, is unsophisticated and misleading.  Apart from issues with whether the brief analyzes revenues correctly, from a scientific standpoint you cannot simply look at revenues either increasing or decreasing at the most general level and deduce the specific impact of piracy.  So many factors go into determining an industry’s topline annual revenue; the most obvious example being which films were released that year and how well did they do?  The success and popularity of creative content varies from year to year.  In order to isolate the impact of piracy, more sophisticated analysis is required.  You have to address the counterfactual question “what would sales have been in the absence of piracy?”  The real question is not whether the creative industries’ sales are up or down in a given year, but what the industries would have achieved without the damaging effects of piracy.

The majority of objective academic studies – particularly those published in top peer reviewed journals – that specifically address this question have found that piracy harms media sales. 

Claim: The Hadopi program in France has been ineffective.

Reality: The brief focuses on the Hadopi program in France and does not provide a balanced picture of the impact of Hadopi. The French Government is not abolishing Hadopi, it is simply making some changes to the way it is administered. The brief mentions the empirical, peer-reviewed evidence that consumer awareness of Hadopi increased digital sales while crediting this impact to the “education component of Hadopi,” as if that impact could be divorced from consumer awareness of the implementation of the entire Hadopi program.  (Incidentally, the first version of the brief the authors released actually came to the opposite conclusion of the paper they cited.  The original language on page 11, citation 22 read:
 

It has subsequently been edited and updated to read:
 

-- a significant change in findings.)

In fact, the evidence cited specifically states that the effects of the education campaigns “cannot be separated from the effects of the graduated response/penalty portion of the law, and our study must be about the combined effect of any and all education campaigns combined with the warningand penalty system.”

The brief also cites the European Commission’s Joint Research Centre report on online music consumption in order to underscore its point about Hadopi.  Unfortunately, that report is unreliable for the purpose of assessing how piracy impacts music sales because the methodology is missing a model or “experiment” that would help identify the key counterfactual: what would music sales have been in the absence of piracy? The report is structured to produce only a correlative, not a causal answer – consumers’ “taste for music” is partly unobserved in this study, but highly correlated with both legal purchase and piracy activity, creating a positive bias that actually makes it surprising the results are not more strongly positive.  In other words, the results from this paper would be more correctly stated as “people who like music tend to pirate more and visit iTunes more than people who don’t like music.”  While their data suggests this to be true, this result does not lead to the conclusion that piracy does not harm sales – in fact, most peer-reviewed research suggests that these same people who like music would be consuming more legally if piracy were not available to them.

Claim: The culture of online sharing is incompatible with strong copyright protection for creative works.

Reality:  This brief highlights a few examples of increased use of crowd-sourcing, crowd-funding and creative commons licenses to argue that exclusive ownership of intellectual works is not the only incentive that sustains their production, claiming that the use of exclusive rights ‘privileges copyright owners over these creators’. This assertion is unsubstantiated and reveals a bias against the whole concept of copyright.

The use of creative commons licenses and the application of exclusive copyright are not mutually exclusive concepts. It is up to the creator of a work to determine how they exercise their intellectual property rights – those who wish to make their work available under creative commons licenses are free to do so, as are those who choose to exercise their right to benefit from the commercial sale of their work.  Creators and audiences alike benefit from the creator’s right to choose how best to share their work. 

***

Online infringement is a complicated problem, and finding solutions will require every player in the Internet ecosystem to come to the table willing to take meaningful steps to help ensure that everyone plays by the same rules online.  The creators and makers who work hard to make the movies, TV shows and movies you love deserve to be compensated for their work – and audiences deserve more choice online.  That’s why the film and television industry is calling on all stakeholders – media companies, ISPs, ad networks, search engines, payment processors and more – to work together to find meaningful solutions to protect an Internet that works for everyone.

Michael Lynton On The Revolution In TV Viewing And Production

by MPAA 10/04/2013 13:43 (UTC-08:00) Pacific Time (US & Canada)

Yesterday, the BBC posted an interview with Michael Lynton, CEO, Sony Entertainment, Chairman and CEO, Sony Pictures Entertainment, discussing the revolution in TV viewing and production that has occurred thanks to the explosion in online video services.

According to Lynton, with “more platforms getting involved,” it “has actually improved the quality of television.” And he attributes that improvement in quality to the ability of audiences to now watch, and catch up on their favorite television programs at their own pace thanks to new technology.  

Gone are the days of viewers giving up on a series after missing one or two episodes and getting lost in the plot.  Today, “catch-up television” through DVRs, on-demand, and streaming services ensures audiences can go back to watch episodes of shows they’ve missed.

At this moment there are 95 legal online streaming services available in the United States giving audiences the ability to stay up to date on their favorite shows. All of which can be found on the MPAA’s new site, http://wheretowatch.org

These services, according to Lynton, are what are improving the quality of today’s television programs.  They allow the creators and storytellers to bring us bolder and increasingly complex stories through longer arcs. And that ability to tell richer stories is drawing new voices and top talent – both in front of and behind the screen – to television.

Michael Lynton isn’t the only one who credits the multitude of available streaming services for the changing landscape of television. Vince Gilligan, the man who gave the world one of the most critically-acclaimed television series with Breaking Bad, was quoted in a recent Variety article as saying. “I’ve got to think a big part of what has changed is streaming video on demand, particularly with operations like Netflix, iTunes and Amazon Prime… It’s a new era in television, and we’ve been very fortunate to reap the benefits.”

Right now, Lynton believes we are in the midst of a television renaissance, and it’s his expectation that the types of programs we watch will only continue getting better.  For all the viewers out there going through withdrawal after last week’s Breaking Bad finale, that is definitely good news.    

Britain’s House of Commons Makes the Case for IP Protections

by Kate Bedingfield 09/30/2013 14:39 (UTC-08:00) Pacific Time (US & Canada)

A new report released last week in the U.K. further underscores the prevalence of online piracy and offers some suggested prescriptions for addressing it so that content creators can be appropriately compensated for their work. 
 
The report – aptly titled “Supporting the Creative Economy” – was released by the Culture, Media, and Sport Committee of Britain’s House of Commons and argues that government should be a “powerful champion” for the enforcement and protection of intellectual property rights. 

It noted that there is “a systemic failure to enforce the existing laws effectively against rife online piracy.”  To address this deficiency, the Committee recommends the enforcement of penalties that will help deter intellectual property theft.  It also condemned search engines for failing to take action to limit the role of search in facilitating piracy and said tech companies should take proactive steps to tackle the problem.
 
The report also pointed to the economic impact of piracy, which can be especially detrimental for those in the creative industries trying to make a living off the work they produce.  According to the Committee’s conclusions, “millions of pounds are being lost by the creative industries with serious consequences for the wider economy.”
 
The House of Commons report is further evidence that everyone in the Internet ecosystem must continue to work to develop collaborative voluntary solutions to the piracy problem so that creators and innovators can continue to thrive.

Parkland, The Ordinary Thrown into the Extraordinary

by Melanie Gilarsky 09/30/2013 12:18 (UTC-08:00) Pacific Time (US & Canada)

Last week the MPAA and Exclusive Media co-hosted an advance screening of Parkland with writer/director Peter Landesman. Parkland is the story of ordinary people thrown into extraordinary circumstances surrounding the assassination of President John F. Kennedy.  From the cameraman who happened to film the actual attack and whose name is now forever linked to the visuals from that day – to the local Secret Service agent responsible for organizing the President's security – to the young medical staff who found themselves battling to save the life of the nation's leader and then, just a few short days later, his assassin as well.
 
The screening was followed by a discussion and Q&A with Landesman moderated by Chris Matthews, host of MSNBC’s “Hardball with Chris Matthews.” Matthews is a renowned authority on presidents and politics, and author of six best selling books, the latest being, “Jack Kennedy: Elusive Hero.”
 
During the Q&A, Landesman shared his vision and process with the audience. He approached this project as an examination of the human stories of everyday Americans who were thrown into American history by way of chance. In his discussion, he reflected, “When Tom Hanks and I first conceived this movie four years ago we decided on two things, two principals. One is there is nothing in the movie that anyone has ever seen before… and two everything in the movie be verified by truth.”
 
Throughout the Q&A Landesman stressed that this story was about all of us. MPAA Chairman and CEO Senator Chris Dodd wrapped up the evening by reminding the audience “that the 'us" is why film is important.”
 
Landesman spent more than four years researching and writing the screenplay for Parkland, which is based on Vincent Bugliosi’s 2008 book, Four Days in November: The Assassination of President John F. Kennedy. Landesman made the transition to film from a background as an award-winning novelist and investigative journalist for the New York Times.
 
Parkland will be released on October 4th to coincide with the 50th anniversary of the American tragedy that took place on November 22, 1963 in Dallas, Texas. The film premiered at the 70th Venice International Film Festival and was also screened at the 2013 Toronto International Film Festival. The cast includes James Badge Dale, Zac Efron, Marcia Gay Harden, Ron Livingston, Billy Bob Thornton, Jacki Weaver, and Paul Giamatti.

AEI Praises "The Exploding Diversity of Content and Platform Choices"

by MPAA 09/19/2013 15:21 (UTC-08:00) Pacific Time (US & Canada)

Earlier today, Bret Swanson, President of the strategic research firm Entropy Economics LLC, posted a piece looking at the explosion in online video services that has occurred in recent years, and what it means for both content creators and viewers. Featured prominently in the story is an infographic from a post last month on the MPAA’s blog highlighting the 95 legal online services available in the United States for watching your favorite movies and TV shows.

Swanson points to “the exploding diversity of content and platform choices, and growing access to both.” He goes on to state that this growth in innovative online services “argues for policies that allow for as much technological and business model experimentation as possible.”

Swanson posted his piece on the American Enterprise Institute’s new policy blog TechPolicyDaily.com. The AEI, a well-known and respected think tank in Washington, D.C., has just launched a new Center for Internet, Communications, and Technology Policyto advance policies that encourage innovation, competition, liberty, and growth, creating a positive agenda centered around human freedom.”

Leading this new center is Jeffrey Eisenach, an economist who previously worked at the Federal Trade Commission, and the Kennedy School of Government; and James Glassman, founding Executive Director of the George W. Bush Institute is joining as a visiting fellow. TechPolicyDaily.com will be key to the new center’s work, and will feature Mr. Eisenach, Mr. Glassman, and various scholars and policy experts.

With articles such as this one, the American Enterprise Institute and the Center for Internet, Communications, and Technology Policy are looking to make their mark on the ongoing discussion of tech policy and are a very welcomed voice.

Advancing Innovation Through Technology

by John McCoskey 09/19/2013 06:44 (UTC-08:00) Pacific Time (US & Canada)

I am excited to begin my work as the MPAA’s new Chief Technology Officer. Our six studios produce some of the world’s most captivating and imaginative stories, and have done so for decades. As technology advances, so do the ways these stories are created and viewed by audiences all over the world. Through constant innovation, the creative community is relentlessly working to dazzle moviegoers with new acquisition, production and distribution technologies.

But other companies have a role to play too. From the consumer perspective, there have never been more ways to watch your favorite movie or TV show, over 400 worldwide in fact, many of which are featured on MPAA’s www.wheretowatch.org. In addition to the many online platforms created by our studios, we have partnered with many other distributors, from Youtube to Netflix to Roku to Amazon- to safely deliver great content to screens of every size.

As MPAA CTO, I look forward to further building our relationships with all of the companies and organizations in the media and entertainment ecosystem to advance our shared interests. As Senator Dodd said last year to our Silicon Valley colleagues, “We call them audiences, you call them users…but in the end we all report to the same people.” Working together, I am confident that we can bring our content to consumers everywhere while protecting the hard work of our industry’s creators and makers, and fostering an Internet that works for everyone.  

MPAA Hosts Screening and Discussion of “Wadjda”

by MPAA 09/18/2013 12:19 (UTC-08:00) Pacific Time (US & Canada)

Last week, the MPAA and Sony Pictures Classics co-hosted a screening of Wadjda, the first full-length feature to be filmed entirely inside the Kingdom of Saudi Arabia. The screening was followed by a discussion with the writer and director, Haifaa Al Mansour, Saudi Arabia’s first female filmmaker and moderated by Elise Labott, foreign affairs correspondent for CNN. Al Mansour is an award-winning director whose voice is an inspiration within a challenging culture for women. The film is a close-up view of the daily struggles Saudi women face in a society designed to keep them silent.

Wadjda is a young school girl full of irrepressible spirit who strains against traditional rules by hatching various schemes to raise money to buy a bicycle. Even after repeated reprimands and threats of punishment from teachers and family, she continues her quest. “I have a niece, she is very bright and always wanted to do things, but her family is traditional and as she grew older wanted her to stay at home like everyone else,” said Al Mansour. “I based the story around her.”

Wadjda has won numerous awards at film festivals around the world, including the Toronto, Venice, Tribeca, Dubai and Los Angeles Film Festivals. The discussion following the screening focused on the intense isolation that Saudi women face and the small and growing ways with which they push back against their constraints. Al Mansour described some of those efforts since her upbringing in a small village, “Change is happening on a small level and that change is spiraling outward to society.”

Although Al Mansour grew up in a more liberal family, her world was confined to a small village until her father introduced her to the medium of film. Al Mansour watched many movies with her family as a child and discovered a world that she could have never dreamt of. “I fell in love with the medium and eventually learned to use it as my voice and my way to vent.” After the screening, Labott reflected that Al Mansour had “laid out the story with heart and soul and humanity.”

 

From Left to Right: Elise Labott and Haifaa Al Mansour

 

Haifaa Al Mansour

Photo Credit: Joy Asico

Phoenix Center Paper Debunks University of Munich and Copenhagen Business School Findings

by Kate Bedingfield 09/16/2013 12:47 (UTC-08:00) Pacific Time (US & Canada)

This morning, the Phoenix Center for Advanced Legal & Economic Public Policy Studies released a paper debunking the results of a recent study conducted by the University of Munich and the Copenhagen Business School which claimed that the box office revenues of mid-size films are helped by online piracy.  Dr. George Ford, author of the Phoenix Center's paper, argues that the improbable result of this study is “an artifact of a poorly-designed statistical model" and the researchers’ misunderstanding of the economics of the film industry.

As the paper points out, one problematic component of the Munich and Cophenhagen model is that “according to the analysis in the University of Munich Study, what the authors define to be a ‘blockbuster’ movie makes only one-fourth (1/4) of the revenues of mid-sized movies. Obviously, the math just doesn’t add up."

In order to conduct their study, the researchers in Munich chose to compare the opening weekend box office revenue  for various "sized" films in approximately 55 countries both before and after the last summer's shutdown of online piracy giant Megaupload.com. 

But this method failed to take into account that although some films only open in a handful of theaters during opening weekend, over the course of their time in theaters they will be shown on thousands of screens and make huge profits.  According to this study, these would be considered small or mid-sized films – regardless of their final total box office.

Individuals who watch pirated films online do not discriminate based on a film’s size, and a review of the academic evidence available finds that in fact online piracy does hurt sales. As Dr. Ford concludes in the Phoenix Center's paper, once you begin to dig into the methods and details that produced this questionable result, the Munich study "adds nothing constructive to the debate—save a little excitement.”


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