Researchers: movie studios sold more after Megaupload was shut down

Study examines sales in 12 countries from two studios before and after closure.

Read the whole story

 

[TechGeek]

See what I mean TD. You're already calling people names.

 

[nomadofnorad]

All this talk about how they spend so much effort trying to stamp out piracy brings to mind something I read about back in the mid 90s or so. This was back in the days when most game software was played directly off the floppy disk it came on, on home computers that mostly didn't even have hard drives.

Games companies were detecting a certain amount of piracy going on, so they started fighting it by adding more and more complicated copy protection schemes onto to those floppies. What's interesting is, the amount of piracy remained mostly a constant. They kept putting more and more effort into more and more draconian copy protection, and yet the amount of piracy remained the same. Eventually they discovered they were actually spending more money developing the copy protection schemes than they were on developing the actual games themselves. Some particular games company one day just decided... "Screw it! We're not gonna spend money on copy protecting this game, we're just gonna *release* *the* *game*!"

So, they put out the game, with NO copy protection at all... and guess what. The amount of software piracy of that game *remained* *the* *same* *as* *it* *was* *for* *the* *other* *games*! In other words, they didn't have a sudden, great big SPIKE in piracy of THAT game just because it WASN'T copy protected. The same number of people who were pirating the game, in relation to how many games sold there were, remained exactly the same compared to all the other games!

And bear in mind, the software piracy level across the board was about at background-radiation levels. That is, it wasn't huge and debilitating to the games industry, it was a small percentage of it. And it was a constant rate that didn't go up or down much over time. So, the fact that copy protection or a LACK of copy protection made NO difference in the rate of game software piracy was.... quite a profound thing for the games industry find out..... but of course, they had to find it out the HARD way.

 

[jig]

interesting data. would like to make sure that the number of movies available didn't jump at about the same time that MU went down... or that the jump (I think it IS there, by the way) is addressed in the study in some way. increased sales could have just been related to an increase in good content. i think they took down MU right before the sales season, no?

as said above, correlation is not causation (but it can lead to a good hypothesis). i would love to see if movie ticket sales saw a similar correlation.

in my personal experience, MU was mainly used to host subtitle files, and maybe some screen shots (i.e., small-size files), not wholesale ripped content. copies of the ripped content may have been archived there (better there than on your personal compy, i guess), but i think it would have been extremely expensive to serve that content from MU (and, i don't think MU could support seeding a torrent). i guess what i'm saying is that client-side, i don't think MU was well-used avenue for distribution.

alternative - maybe, among all the user accounts, MU had undocumented slack space that they allowed some to use for torrent seeding. that's probably far fetched.

lets say that MU was viewed as a place to stick stuff you didn't want to get caught with. that could be ripping tools, encryption keys for blueray stuff - data that supported the piracy. or, instead, maybe rippers with small upload pipes (or nosy ISPs) would upload a ripped copy to MU, and then someone in their group would download that and then distribute. losing access to that stuff at the right moment (right before sales season) may have caused a bump in sales data.

this is just spaghetti against the wall. however, unless someone educates me otherwise, I don't think MU was the direct source of the pirated content for distribution (meaning, i don't think you could seed a torrent directly from content stored in MU, if only due to cost). MU could, however, have been used as an anonymous escrow-like service to connect rippers to distributors and/or tools for ripping. anonymously shifting 100+GB of babylon 5 rips is probably not as easy without a service like MU.

if the correlation holds up to scrutiny, then it will signal how the war will be waged for the next decade. unfortunately for the general public, we'll lose access to services like MU in the collateral damage, and piracy will find as-good or better alternatives.

 

[TechGeek]

T By your own definitions then the MPAA and RIAA are evil. So is taking something from someone who is evil, evil in and of itself? What if that item was misappropriated to begin with?

 

[SirOmega]

In other words:

People prefer not to pay for things when they don't have to. Details at 11:00 pm.

Correction: if you have the choice between free and non-free, most people choose free.

That said, that is not an indication of actual purchase, which makes me question this entire study.

 

[TechGeek]

Hey TD, I know you are a big fan of KDC and MU, so let me ask you this: MU only operated a few years and was then shut down. Something that you feel (assumption on my part) was a good thing. So how do you reconcile the fact that the RIAA is still in business yet was found guilty of not paying Canadian artists their due royalties for decades?

 

[Sixclaws]

I forgot about this. The Oatmeal couldn't have explained it better:

http://theoatmeal.com/comics/game_of_thrones

 

[greevar]

Arguing with Tit Drag is like yelling at a blank wall. It just reflects your words, but in lower fidelity and some cacophony added in. He's not worth arguing with, he doesn't compromise nor admit that he might be wrong. He's made up his mind and his viewpoint is the only correct one, in his mind. Just put him on ignore as a matter of course. Your life will be much more peaceful.

 

[Wolvenmoon]

There's a really easy way to clear this up. Show the results in graph form showing a period from before the economic crash in 2008, to now. This could just be because of an improving economy, increased media consumption due to the election year - a number of other things could be behind this.

 

[nomadofnorad]

Thing is, depending on how complete the information the study contains... it may be possible to refute it. Another thing I read about in the early 90s or so was about a study someone did counting up deaths in places where people had guns in their household and in places where people did not... and the study came to the conclusion that there were way more deaths in places where people had guns in the house than in places where they did not have guns in the house.

Well, people started studying the statistical information given in the study, and noticed something highly suspect about the details given: It seems the study had placed the statistics for suicide by gun in with all the ones from murder and whatnot... and it didn't belong in there, since by definition if someone is going to commit suicide, and they don't have quick access to a gun, they'll use some other means. Hanging themselves, say.

Anyway, those examining the study then subtracted out all of the statistics of suicide-by-gun from the numbers, and discovered that it actually gave the exact opposite result to what the ones who released the study had claimed. Basically, instead of homicides being higher around households where they had guns in the house and lower in areas without easy access to guns, homicides were actually way lower in places where the households had guns. In short, the study was skewed, highly biased, but there at least they could detect and counter it.

I'm wondering if anything like that going on in THIS study. It wouldn't surprise me one jot. In fact, I'd say the likelihood of it rises directly in proportion to how much benefit it gives the ones who commissioned the study in the first place.

 

[UltimateLemon]

There's a really easy way to clear this up. Show the results in graph form showing a period from before the economic crash in 2008, to now. This could just be because of an improving economy, increased media consumption due to the election year - a number of other things could be behind this.

Looking at their prediction formula, it LOOKS like they took account of increase by trend but it also looks like they regarded the increase as linear function.

Anyone here statistician?

 

[stormbeta]

I hate it when I see this.

Not all of these movies (and TV shows) are available in every market around the world in a legal, digital format.

This is not a justification for piracy.

It is a RATIONALIZATION for piracy.

It is still wrong.

Almost, but it's not that black and white. There are situations where piracy is quite easily justified (if you define piracy as merely illegal access to content). If I buy an e-book, and need it in a different format, I see nothing unethical about finding a "pirate" copy in that format. If I buy a game, and the DRM blocks me from playing, I don't see anything wrong with finding a way to bypass it. If I can't access something just because I happen to be in a different country, I don't see a problem with using VPNs or proxies to bypass those blocks and buy the content anyways (mostly applies to directly purchased content, "free" content (e.g. ad or tax supported) is more of a grey area).

And there's lots of grey areas too. For example, when the final Wheel of Time book was released in Januarary this year, the author's widow made the decision to delay the ebook release until April. The reason wasn't even piracy fears, she just thinks e-books are the wrong way to read books. So many fans, including myself, bought the audio book and then read the pirated e-book that showed up less than 48 hours later. That's more than just a format conversion, and yet I think you would have a hard time arguing it was unethical to do, particularly given that the audio book cost significantly more than the hardcopy.

 

[jig]

i wonder if they normalized to the increasing number of people on the internet. as in, what's the year over year increase in overall internet penetration, and does it at all correspond to their unit sales figures?

 

[Bernardo Verda]

Pirates are their enemy. You aren't a consumer; you're a thief if you pirate. You're a leech.

That's the truth. You have to understand that before you can get anywhere.

But if you are a customer -- when you do buy their merchandise, you still get treated like you're a thieving leech (plus, the quality of the product is even, actually poorer, than if you "pirated" it).

 

[jerkopu]

That said, unless the paper provides ALL the data in a form where someone can independently examine it, it will be highly suspect regardless of what the numbers say.

Even with ALL the data, it is still far from a proof of a causal link between Megaupload shutdown and whatever "increase" they purport.

 

[nomadofnorad]

But if you are a customer -- when you do buy their merchandise, you still get treated like you're a thieving leech (plus, the quality of the product is even, actually poorer, than if you "pirated" it).

A) DRM is not "treating you like you're a thieving leech"

B) The only problem I've ever really had with DRM was losing CD keys back in the day.

C) If a game has DRM to the point where it is nearly unusable (SimCity comes to mind) then I simply won't ever purchase it, which sends a rather clear message. Not that I'm terribly interested in those games anymore; I've moved up to 4x, a much harder drug ;P

Many years ago, I deliberately chose to sign up for eMusic instead of one of the music-album services that had a DRM infestation, like iTunes, in order to send a message to the music industry: Give us more music without DRM, and people like me will BUY it.

I am still with eMusic, even though the quality of their service has dropped off a bit (their download manager software, the thing you use to receive the music you've bought, lost some features the earlier ones had).

 

[NaturalPhilosopher]

The study asserts that the greatest increase in sales occurred in the countries with the greatest Megaupload usage. The article also noted that the USA, while Megaupload's largest market, was nowhere close to the greatest usage rate. Also, the USA, as part of our imperial capitalist plot, seems to get digital access to the latest films and shows first. (Correct me if I'm wrong, Ars-ians abroad!)

If all this is true, why would other countries see a statistically significant increase in digital sales, when the countries that had the greatest Megaupload penetration don't have equal access to digital sales? This seems like bad data, since people can't buy what isn't available to them.

Or am I going way too far into guesswork here?

 

[Stickmansam]

If my research design prof saw this, she would cry at their shoddy study design

After going through a semester of learning about how to design research studies, it always pains me when people who should know better design these shoddy studies either to to sheer incompetence or as a way to present biased results.

 

[gimfred]

All this talk about how they spend so much effort trying to stamp out piracy brings to mind something I read about back in the mid 90s or so. This was back in the days when most game software was played directly off the floppy disk it came on, on home computers that mostly didn't even have hard drives.

Games companies were detecting a certain amount of piracy going on, so they started fighting it by adding more and more complicated copy protection schemes onto to those floppies. What's interesting is, the amount of piracy remained mostly a constant. They kept putting more and more effort into more and more draconian copy protection, and yet the amount of piracy remained the same. Eventually they discovered they were actually spending more money developing the copy protection schemes than they were on developing the actual games themselves. Some particular games company one day just decided... "Screw it! We're not gonna spend money on copy protecting this game, we're just gonna *release* *the* *game*!"

So, they put out the game, with NO copy protection at all... and guess what. The amount of software piracy of that game *remained* *the* *same* *as* *it* *was* *for* *the* *other* *games*! In other words, they didn't have a sudden, great big SPIKE in piracy of THAT game just because it WASN'T copy protected. The same number of people who were pirating the game, in relation to how many games sold there were, remained exactly the same compared to all the other games!

And bear in mind, the software piracy level across the board was about at background-radiation levels. That is, it wasn't huge and debilitating to the games industry, it was a small percentage of it. And it was a constant rate that didn't go up or down much over time. So, the fact that copy protection or a LACK of copy protection made NO difference in the rate of game software piracy was.... quite a profound thing for the games industry find out..... but of course, they had to find it out the HARD way.

It would be nice to have this verified.

 

[jerkopu]

Pirates are their enemy. You aren't a consumer; you're a thief if you pirate. You're a leech.

That's the truth. You have to understand that before you can get anywhere.

Last week I saw video games being sold for the equivalent of 100 USD in Brazil, more expensive than in my own country, where I find them already overpriced (that's why I always buy used, after the games have been long been first released).

I thought they totally deserve to be pirated.

 

[jerkopu]

Why are you so dead set against the idea that piracy is harmful and that shutting down piracy sites is good for the movie industry?

What is "good" for the movie industry is to purposefully create rarity for their products, this allows for price gouging.

 

[nomadofnorad]

That said, unless the paper provides ALL the data in a form where someone can independently examine it, it will be highly suspect regardless of what the numbers say.

Even with ALL the data, it is still far from a proof of a causal link between Megaupload shutdown and whatever "increase" they purport.

Did either of you even BOTHER to read the paper?

I would recommend you do so before you complain about what it does and does not say or show.

The data is quite suggestive.

Why are you so dead set against the idea that piracy is harmful and that shutting down piracy sites is good for the movie industry?

What is YOUR agenda?

Because it is quite clear that you have one.

My agenda is.... I want DRM gone forever, and I want the official distributors of all content to give ubiquitous, simultaneous, worldwide, cheap access to all of it, and for them to not ever again to be able to charge deliberately inflated prices out of greed while they are at the same time often ripping off the artisans who are actually creating the content. This sort of thing will probably come about when all content makers can provide their creations directly to their customers, bypassing the big content-distribution corporations who are rapidly becoming obsolete.

 

[Joshmx]

I hate it when I see this.

Not all of these movies (and TV shows) are available in every market around the world in a legal, digital format.

This is not a justification for piracy.

It is a RATIONALIZATION for piracy.

It is still wrong.

Watching Thor is a priviledge, not a right.

also. having a society that even acknowledges "creative rights" is a privilege based on laws that are don't have to exist for a society to be successful. Creative types would be wise to nail down some reasonable rules so they don't lose everything.

 

[Titanium Dragon]

Pirates are their enemy. You aren't a consumer; you're a thief if you pirate. You're a leech.

That's the truth. You have to understand that before you can get anywhere.

Last week I saw video games being sold for the equivalent of 100 USD in Brazil, more expensive than in my own country, where I find them already overpriced (that's why I always buy used, after the games have been long been first released).

I thought they totally deserve to be pirated.

Why?

What right have you to the work of others?

What is "good" for the movie industry is to purposefully create rarity for their products, this allows for price gouging.

Not really, no. Because (again), you do not need movies to survive. If they charged $100 for movies, the correct thing to do is just not to consume them at all. That's the moral and ethical thing to do.

They don't charge that much for them though.

also. having a society that even acknowledges "creative rights" is a privilege based on laws that are don't have to exist for a society to be successful. Creative types would be wise to nail down some reasonable rules so they don't lose everything.

By that same logic, having a society that acknowledges your right not to have your brains spattered out on the wall is a priviledge based on laws that don't have to exist for a society to be successful.

Though really, let's face it - all successful societies have both IP law and laws against murder.

 

[rex86]

Badly written article and sub-standard science.

Minus one to ars.

 

[akurczyn]

I disagree, actually. The problem is that in a country with a high degree of piracy, there's something of a culture of it - meaning that my attempts at penetrating said market is more difficult because people steal my stuff. Thus not only do I not make as much as I "should be", but I am competing with all the other pirated works as well.

I wouldn't call it "a culture". Its more of a "custom" and the reason it exists is because (most/some) people are aware of the latest movies and games but they can't find a reliable/affordable source to buy them properly. They eventually find "alternate" means to get them and they get -used- to do it.

Any company who had neglected their customers in such places is facing not only the challenge of opening proper distribution methods to the country, but also to -announce- to people there is a -new- option to acquire their movies and games, or just wait for people to realize movies and games start to show up on store shelves.

As for pricing, if you get a reasonable equation between convenience/quality/price people WILL pay. I know this first hand.

Studios should take a close look at the Steam model. I can purchase a AAA game on release date anywhere in the world, I even buy some oldies -again- just to have a backup stored on Steam and get rid of carton boxes and CDs. Why movies should be different?

 

[Maxipad]

This is a truly crappy study.

The dataset is far too limited in timeframe and number of studios (2 studios? Really?) It doesn't cover the industry as a whole or a long enough time frame to be authoritative. It smacks of cherry-picking.

That said I suspect the MU episode will turn out to be a bit of a watershed moment in this whole debate. The industry execs are going to know finally whether file-sharing actually affects their bottom line, as they have the real numbers, not this limited dataset (I hope they do, at least.)

There's no doubt that they are going to eventually have to catch up to modern technology with their business model or else entrepreneurs are going to scoop up their artists, at least in the recording industry, and help them digitally sell their product/creations. I honestly don't know why they haven't created their own portals to digitally release their product and monetize this media-stream. It's a no-brainer really.

It's happening already at a grassroots level in the industry. KDC was moving towards a business model allowing recording artists to digitally market their material through his website. I think he still has plans for a service to do that. I don't know if the shutdown cowed him into ending those plans, but someone will do it eventually.

Lastly, to those responding to TD, don't bother and don't quote him. The earlier poster who mentioned he won't change his position, etc. was completely correct. TD acts as a Troll or paid astroturfer on this site regarding these issues. Quoting him just adds to the loudness of his megaphone to little positive effect.

Remember the meme, "Don't feed the Trolls".

 

[nomadofnorad]

Honestly this feels like a Propaganda report

The so-called study does, you mean?

 

[NewImage]

the stock market has gone up 15+% this year, if you have more money, your more likely to buy luxuries like movies and music.

 

[duncansil]

In other words:

People prefer not to pay for things when they don't have to. Details at 11:00 pm.

Actually people are quite willing to pay if they feel they are getting good value, and even more so if there is availability & variety.

It is the false scarceness of the media industry that drives 'piracy' more than anything else.

A self made boogeyman.

 

[Cheesewhiz]

T By your own definitions then the MPAA and RIAA are evil. So is taking something from someone who is evil, evil in and of itself? What if that item was misappropriated to begin with?

Uh, yes, actually, evil is evil regardless of whether you are targeting evil people or not.

There were probably plenty of absolutely horrible Jews who died in concentration camps. Does that mean that the concentration camps were justified? No.

The Soviets and the Nazis fought and killed TONS of each other. The Japanese slaughtered tons of people in China.

None of this makes any of it good.

In any case, you are not stealing from the MPAA and the RIAA. The MPAA and RIAA are NOT media companies; they are advocacy groups. Most advocacy groups are in fact evil, ranging from the MPAA to the people who advocate for disabled children, because they push their own agendas at undue cost to others - they care about getting what they want, and screw everyone else. Just about the only good advocacy group is the ACLU, and even THEN they screw up at some frequency by failing to consider conflicting rights or by buying into paranoia or other unreasonable arguments.

Who you are stealing from is the actual movie studios who support the MPAA. These are the people who actually make the money, and they DO compete with each other - the idea that the MPAA is a monopoly is a bit silly if you ever look at all the competing movies that happen. It is arguably an oligarchical group which excludes others to some extent - the ratings board, for instance, is probably harsher on independent films than MPAA ones - but the truth is that the ratings board isn't actually the entity which causes the problems, the problem is caused by Wal Mart and the various theater operators who force everyone to get a movie rated between G and R to show it or sell it.

Thus who you are actually harming is not the MPAA but the various constituent members of the MPAA, who are not, in fact, unduly evil. Sure they're not happy fun entities - they certainly do some bad things - but that does not justify stealing from them, nor hurting them. No one is absolutely good, so any argument based on the fact that its okay to do evil things to people who do evil things ends with your head on a stick.

Oh come on. Peter Berg and Universal Studios should have paid people to WATCH Battleship, not the other way around. Drivel like that deserves to be pirated. Then again, even the pirates probably don't want to watch it.

And the whole thing about the studios. So what. They are businesses. They make a product. If it is good, they make money. If it is junk, they lose money. And you are talking about a corporations profits. Everyone involved in the actual production of a movie gets paid. Film making is not a charity. And unless you are above the line, and maybe not even then, you aren't going to get any more or less money if a movie does well or not. Or even gets released.

Every business and product in the world has loss due to shrinkage. No company ever has 100 percent sell through rates. It is a simple cost of doing business. I find it funny that in the case of the entertainment industry a simple fact of doing business has become some sort of moral question.

 

[hpsgrad]

Well, the fact that they don't show their actual methodology means there's no real proof they didn't simply make up their numbers, or doctor the results in some way to give the results they wanted to find.

Paging Hpsgrad. BTW it's only "making up things" aka "lying" when you're calling into question studies that say piracy is a benefit, not a liability.

It's not Deneher and Scott who didn't release their methodology (the ars article was unclear about this, IMO). AFAICT, their results are unsurprising, and of very little practical importance.

I've also never asserted that piracy was an economic benefit.

 

[sonolumi]

Just as correlation does not necessarily imply causation, the fact that Professors Danaher & Smith can come to a media industry friendly conclusion based on statistically insignificant shifts in revenue on a tiny and unnamed set of data does not necessarily imply that they are media industry shills.

 

[arcadium]

I'm sorry. The outcome of this study is not a surprise. The only people arguing that media sales will not increase if piracy is ended are thieves and liars.

The real (nay, only) questions are:
1) Is it even possible to legislate piracy away?
2) Will the cost of ending/reducing online piracy (in terms of reduced freedom and greater govt oversight) exceed the benefits of retaining those rights? It's pretty clear that the increased revenues from ending piracy don't currently outweigh the costs of the reduced freedom, etc.

However, that is it. In an ideal world, people would choose not to pirate, so our rights to do legitimate things won't be constrained. However, this ain't an ideal world, and we aren't going to win by pretending that the illegal and immoral act of piracy is not illegal/immoral.

 

[gimfred]

Oh come on. Peter Berg and Universal Studios should have paid people to WATCH Battleship, not the other way around. Drivel like that deserves to be pirated. Then again, even the pirates probably don't want to watch it.

And the whole thing about the studios. So what. They are businesses. They make a product. If it is good, they make money. If it is junk, they lose money. And you are talking about a corporations profits. Everyone involved in the actual production of a movie gets paid. Film making is not a charity. And unless you are above the line, and maybe not even then, you aren't going to get any more or less money if a movie does well or not. Or even gets released.

Every business and product in the world has loss due to shrinkage. No company ever has 100 percent sell through rates. It is a simple cost of doing business. I find it funny that in the case of the entertainment industry a simple fact of doing business has become some sort of moral question.

Actually I heard it was so bad I had to watch it. (I paid, twice. $17AUD and sat through it!)

 

[Arsinius M]

Wait, wasn't 2011 reportedly a down year for studios and theatres and 2012 a somewhat better year for most of them regardless?