What's The Figure?

When you hear about Internet Piracy and how the entertainment industry suffers great economic losses, are you sympathetic to the losses? Or do you shrug it off with reasoning like, “Hollywood makes enough money, they can lose some with illegal downloads”? I have to say that I’ve had those exact thoughts in the past. I’m fairly certain that Brad Pitt can afford a few million illegal downloads of World War Z (Lifetime Gross of $202 million[1]). But it’s not Brad that is feeling the economic loss. It’s the editors, camera operators, lighting technicians and other behind-the-scenes employees that are feeling the biggest loss.

These employees derive substantial portion of their health and retirement contributions from the revenue that their work generates in “secondary markets.” These are the foreign distribution, DVD sales and TV airings, which provide revenue long after initial distribution on television or in theaters. When television shows and motion pictures are pirated, the downstream revenue dries up causing the health and retirement plans of thousands of working men and women to suffer[2].

All content creators, including the music, book and movie industries suffer from piracy. For the purposes of this blog, I’m focusing solely on the movie/film industry. Studies have been inconclusive in the numbers of estimated U.S. jobs that have been lost due to online piracy. There have been plenty of numbers thrown around regarding the cost of internet piracy[3].

A 2012 study erroneously stated that the number was around $750,000 a year but the truth is that there is no way to know the exact data without more recent research. Researcher Stephen Siwek conducted a 2007 study for the Institute for Policy Innovation that revealed the member studios of the Motion Picture Association of America (MPAA) lost $6.1 billion due to movie piracy in 2005[4]. This is not a simple value to interpret as it does not include the cruel effect of piracy that devalues the work of an ‘artist’ as being something unworthy of payment.

File sharing services, like BitTorrent, allow users to share large files, like videos and software. An older example of pirated film, Avatar, was illegally downloaded 17 million copies from the 2010 debut. In July 2014, a high-quality copy of The Expendables 3 was leaked online[5]. Within one week, over a million copies were downloaded traced back to the original stolen digital file. The film company, Lionsgate, sued several torrent site operators for the theft. There are no dollar figures available to show the financial loss that Lionsgate experienced due to this piracy, however, the three pirate sites were sued for $450,000 for violation of copyright infringement[6].

This raises the question as whether it matters when the pirated work is stolen, either before or after the official release date. There has been little research to analyze whether pre-release movie piracy diminishes legitimate sales. In a 2014 Carnegie Mellon University paper, An Empirical Analysis of the Impact of Pre-Release Movie Piracy on Box-Office Revenue, found that, on average, pre-release piracy causes a 19.1% decrease in revenue compared to piracy that occurs post-release[7]. Although it is great to have empirical data and sufficient conclusions to determine financial loss on a granular scale, there still isn’t cold hard facts of the financial impact overall. 

Legal content distribution services like Netflix, Hulu and Amazon have made accessing entertainment content legally more convenient. However this does not create a viable market for small independent films. These filmmakers often self-finance their work as they are not usually seen as Big Box Office Winners. When unlicensed copies of their films become freely available online, these filmmakers lose their ability to monetize and their investment can disappear in an instant.

Does internet piracy cause financial loss to the content creators? Yes. How MUCH does it actually cost? Someone please tell me, because I can’t figure it out.

Jocelyn Z.A. Kelley

Emerging Media Graduate Student

Loyola University Maryland

 

*Photos courtesy of unsplash.com