Digital piracy not harming entertainment industries: study

A new study by researchersatthe London School of Economicssuggests the music and movie industries have been exaggerating the impact digital file sharing has had on their bottom line and found that for some creative industries, copyright infringement might actually be helping boost revenues.

Researchers within the British university's media department examinedsales data and found that the music, gaming, movie and publishing industries are all growing and adopting new business models based on digital sharing.

Contrary to the industry claims, the music industry is not in terminal declinebut still holding ground and showing healthy profits.- BartCammaerts, study author

The study found that internet-based revenues have been a significant component of the music industry'sgrowth since 2004 as the industry has slowly adopted methods of distributing and consuming content modelled on those used by file-sharing services and sitessuch as BitTorrent, Pirate Bay and the now defunct Napster, which pioneered music file sharing in the 1990s.

"Contrary to the industry claims, the music industry is not in terminal declinebut still holding ground and showing healthy profits," said study author Bart Cammaerts, senior lecturer in the LSE Department of Media and Communications, in a release. "Revenues from digital sales, subscription services, streaming and live performances compensate for the decline in revenues from the sale of CDs or records."

While it acknowledges that sales have stagnated in recent years, the report pointsout that theoverall revenue ofthe music industry in 2011 was almost $60 billion US,and in 2012,worldwide sales of recorded music increased for the first time since 1999, with 34 per cent of revenues forthat year coming fromdigital channels such asstreaming and downloads.

"The music industry may be stagnating, but the drastic decline in revenues warned of by the lobby associations of record labels is not in evidence," the reportsays.

Had the record companies adapted to a digital environment earlier, rather than resisting it, they could have witnessed growth much earlier, the authors say.

Box office revenues biggerthan ever

The same holds true for the movie industry, the researchers suggest. While sales and rentalsof DVDs have declined by about 10 per cent between 2001 and 2010 global revenues haveincreased by five per cent in that same period. The U.S. film industry alone was worth a healthy $93.7 billion in 2012, the authors said.

"Despite the MotionPicture Association of America's claim that online piracy is devastating the movieindustry,Hollywood achieved record-breaking global box office revenues of $35 billion US in 2012, a six per cent increase over 2011," the report says.

The video game and book publishing industries have also been successful at finding new revenue streams within the digital space and are making healthy profits, the report said. In2013, the global book publishingindustry was worth $102 billion,more than any of the other entertainment industries.

"Although revenues from print book sales have declined, this has been offset by increases insales of e-books, and the rate of growth is not declining despite reports lamenting the 'end of thebook'," the researcherswrite in their report.

Exclusive ownership outdated

The researchers make the argument that the digital culture that has sprung up around the file sharing of music, video games, movies and other content has spawned new models of producing and distributing creative content that don't rely on exclusive ownership of that content.

The increasing variety of online creative practicesmeans that some representatives of the creative industries are becoming less concerned about copyright infringement through individual file sharing.- Report

Creative Commons licences, for example, which allow artists to specify how their work is shared by the public,are increasingly being used by some musicians to release theircontenton music-sharing sites likeSoundCloud, the report said.

"The increasing variety of online creative practicesmeans that some representatives of the creative industries are becoming less concerned about copyright infringement through individual file sharing," the authors write. "Many musicians share their music and arevery happy for their fans to download their music, envisaging future sales.

The report points tothe 10 million user-generated videos ofGangnamStyle by South-Korean musicianPsythat were created on YouTube after the original song was releasedand went viral as evidence that digital culture thrives on the ubiquitous sharing of digital content.

Illegal sharing can boosts legal sales

Entertainment industries are beginning to realize that the sharing of films and music online generates marketing benefits and sales boosts that often offset the losses in revenue from illegal sharing of content, the authors say.

The report points to the results of a consumer trackingstudy by the U.K. communicationsregulatorOfcomthat found that file sharers in the U.K. spentmore on content than those who only consumedlegal content.

The growing use of streaming, cloud computing,so-called digital lockers that facilitate the sharing of content and sites that offer a mix of free and paid methods of getting content will, the studypredicts, spur theentertainmentindustriesto shift their focus from pursuing illegal downloadingto creating more legal avenues for getting content online.

The LSE researchers urge countries like the U.K. and the U.S. to reform theircopyright enforcement regimes, which they say are out of step with such developments and with online culture generallyand do not necessarily even serve the interests of the creators they claim to be protecting.

"Insisting that people will only produce creative works when they can claimexclusive ownership rights ignores the spread of practices that depend on sharingand co-creation and easy access to creative works; this insistence privilegescopyright owners over these creators," the report says.