London School of Economics Finds That Piracy Helps Hollywood’s Bottom Line


This new report from the London School of Economics does a great job of cutting through Hollywood’s lobbying bullshit and using numbers to make a case that piracy actually helps Hollywood’s bottom line.

Piracy Isn’t Killing The Entertainment Industry, Scholars Show

The London School of Economics and Political Science has released a new policy brief urging the UK Government to look beyond the lobbying efforts of the entertainment industry when it comes to future copyright policy. According to the report there is ample evidence that file-sharing is helping, rather than hurting the creative industries. The scholars call on the Government to look at more objective data when deciding on future copyright enforcement policies.


Over the past years there have been ample research reports showing that file-sharing can have positive effects on the entertainment industries.

Industry lobbyists are often quick to dismiss these findings as incidents or weak research, and counter them with expensive studies they have commissioned themselves.

The London School of Economics and Political Science (LSE) jumps into the discussion this week with a media policy brief urging the UK Government to look beyond the reports lobbyists hand to them. Their report concludes that the entertainment industry isn’t devastated by piracy, and that sharing of culture has several benefits.

“Contrary to the industry claims, the music industry is not in terminal decline, but still holding ground and showing healthy profits. Revenues from digital sales, subscription services, streaming and live performances compensate for the decline in revenues from the sale of CDs or records,” says Bart Cammaerts, LSE Senior Lecturer and one of the report’s authors.

The report shows that the entertainment industries are actually doing quite well. The digital gaming industry is thriving, the publishing sector is stable, and the U.S. film industry is breaking record after record.

“Despite the Motion Picture Association of America’s (MPAA) claim that online piracy is devastating the movie industry, Hollywood achieved record-breaking global box office revenues of $35 billion in 2012, a 6% increase over 2011,” the report reads.

Even the music industry is doing relatively well. Revenue from concerts, publishing and digital sales has increased significantly since the early 2000s and while recorded music revenues show a decline, there is little evidence that piracy is the lead cause.

“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 report concludes.

Music industry revenue


The authors further argue that file-sharing can actually benefit the creative industries in various ways.

The report mentions the success of the SoundCloud service where artists can share their work for free through Creative Commons licenses, the promotional effect of YouTube where copyrighted songs are shared to promote sales, and the fact that research shows that file-sharers actually spend more money on entertainment than those who don’t share.

“Within the creative industries there is a variety of views on the best way to benefit from online sharing practices, and how to innovate to generate revenue streams in ways that do not fit within the existing copyright enforcement regime,” the authors write.

Finally, the report shows that punitive enforcement strategies such as the three strikes law in France are not as effective as the entertainment industries claim.

The researchers hope that the U.K. Government will review the Digital Economy Act in this light, and make sure that it will take into account the interests of both the public and copyright holders.

This means expanding fair use and private copying exceptions for citizens, while targeting enforcement on businesses rather than individuals.

“We recommend a review of the DEA and related legislation that strikes a healthy balance among the interests of a range of stakeholders including those in the creative industries, Internet Service Providers and internet users.”

“When both [the creative industries and citizens] can exploit the full potential of the internet, this will maximize innovative content creation for the benefit of all stakeholders,” the authors write.

Now you may be asking yourself — why do you care so much? Why would you — a Hollywood screenwriter — not only be pro-piracy but feel so strongly about how important piracy is to keep the back channels of our social connections, our ability to share art and our political freedoms alive? Here is why:

Here’s the bad news: the World Wide Web Consortium is going ahead with its plan to add DRM to HTML5, setting the stage for browsers that are designed to disobey their owners and to keep secrets from them so they can’t be forced to do as they’re told. Here’s the (much) worse news: the decision to go forward with the project of standardizing DRM for the Web came from Tim Berners-Lee himself, who seems to have bought into the lie that Hollywood will abandon the Web and move somewhere else (AOL?) if they don’t get to redesign the open Internet to suit their latest profit-maximization scheme.

Danny O’Brien from the Electronic Frontier Foundation explains the wrangle at the W3C and predicts that, now that it’s kosher to contemplate locking up browsers against their owners, we’ll see every kind of control-freakery come out of the woodwork, from flags that prevent “View Source” to restricting embedded fonts to preventing image downloading to Javascript that you can’t save and run offline. Indeed, some of this stuff is already underway at W3C, spurred into existence by a huge shift in the Web from open platform to a place where DRM-hobbled browsers are “in-scope” for the WC3.

So what does this mean? It means that the folks in charge of the internet’s infrastructure are buying into the corporate propaganda put forward by Hollywood’s big money lobbyists who are promoting the idea that internet freedom is dangerous and bad. However, the research finds the opposite is true — internet freedom actually helps Hollywood’s bottom line. Not to mention the basic ethics of not letting corporations control the means we have to communicate with each other. Maintaining a free internet is vital to political discourse, to artistic exchange (and yes, there have been many times when I’ve been working on a Hollywood project and tried looking up a clip online to watch for professional reference, only to find those stupid take-down copyright violation notices) and to building audience for your Hollywood product. Don’t be short-sighted guys.

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