[LINK] SU: 'Downloads make little mark on box office'

[Roger Clarke]

Downloads make little mark on box office
Andrew Taylor
Arts reporter
Fairfax
August 24, 2013
http://www.smh.com.au/entertainment/movies/downloads-make-little-mark-on-box-office-20130823-2sh5l.html

The illegal downloading of films has little effect on box office 
revenue, and industry estimates of its losses are exaggerated, a 
study has found.

However, the analysis also found that the national broadband network 
would encourage digital piracy.

The examination of digital piracy in Australia, co-written by 
University of Sydney academic Jordi McKenzie, found illegal downloads 
did lead to lower ticket sales soon after a film's cinematic release.

But it said ''the economic significance of this displacement appears 
relatively small''.

The study, File-Sharing and Film Revenues: An Empirical Analysis, 
looked at 166 films released in Australia between January 2010 and 
August 2011, including Harry Potter and the Deathly Hollows Part 2.

http://ses.library.usyd.edu.au/bitstream/2123/9271/1/ECON%202013-14.pdf

The Australian film industry estimates it loses about $1 billion a 
year to digital piracy, which Dr McKenzie said was on the assumption 
that one download equals one lost sale. ''This approach is 
fundamentally flawed. Obviously not everyone who downloads an album, 
TV show or film would have actually been willing to pay the full 
price of the legal alternative.''

Dr McKenzie's analysis, which he wrote with W.D. Walls of the 
University of Calgary, concludes that illegal downloads affect 
revenues far less than claimed.

''If we consider all downloads for a particular film up to a month 
preceding a given week's box office for the median film, it would 
take between six and eight downloads to displace one paid 
admission,'' he said.

This is at odds with a 2012 review of academic studies of the impact 
of piracy by American researchers that found illegal file sharing 
caused ''statistically significant'' harm.

The executive director of the film industry lobby group Intellectual 
Property Awareness Foundation, Lori Flekser, said she was ''deeply 
cynical'' about Dr McKenzie's study.

[Many people are deeply cynical about Ms Flekser's organisation and its claims.
[But this is a study, with a declared method, data and results.
[Examine it, Ms Flekser, and explain what it's got wrong.

Dr McKenzie said technological constraints meant file-sharing was 
less likely to be an adequate substitute for films than for music and 
TV shows.

Australian internet speeds were often inadequate for downloading 
films, but the study said ''this will change dramatically in the very 
near future - especially with the roll-out of the national broadband 
network''.

The release gap between the US and Australian markets is a key 
contributor to piracy early in a film's theatrical life.

''Many content industries have attempted to hold onto old business 
models too long and have failed to adapt adequately to the needs and 
wants of the modern consumer,'' Dr McKenzie said.

''I am confident that most reasonable consumers would happily accept 
paying for content if it was priced fairly and delivered in a manner 
in which the consumer desires.''

The managing director of Sony Pictures Australia, Stephen 
Basil-Jones, said: ''You have to honestly say extended delays are not 
a positive in this regard.''

But Mr Basil-Jones said it was not always possible to co-ordinate the 
worldwide release of movies such as White House Down, an action film 
starring Channing Tatum and Jamie Foxx opening in Australian cinemas 
on September 5, more than two months later than in the US.

''Our vacations fall very differently to the US summer ones,'' he said.


-- 
Roger Clarke                                 http://www.rogerclarke.com/
			            
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Visiting Professor in the Faculty of Law            University of N.S.W.
Visiting Professor in Computer Science    Australian National University