Danaher and Waldfogel (2012)

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1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare 2. Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)? 3. Harmony of interest assumption between authors and publishers (creators and producers/investors) 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption) 5. Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

A. Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right) B. Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction) C. Mass digitisation/orphan works (non-use; extended collective licensing) D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability) E. Fair remuneration (levies; copyright contracts) F. Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Source Details

Danaher and Waldfogel (2012)
Title: Reel Piracy: The Effect of Online Film Piracy on International Box Office Sales
Author(s): Danaher, B., Waldfogel, J.
Year: 2012
Citation: Danaher, B., & Waldfogel, J. (2012). Reel Piracy: The Effect of Online Film Piracy on International Box Office Sales. Available at SSRN 1986299.
Link(s): Definitive , Open Access
Key Related Studies:
Discipline:
Linked by:
About the Data
Data Description: The data used in this study consist of the weekend box office returns for the top 10 Hollywood movies each weekend in 17 countries before and after the adoption of BitTorrent (July 2003 to July 2006). Only Hollywood movies are included. This comes to 678 films and 19,518 movie-by-weekend-by-country revenue observations.

The dataset contains the studio distributing each film, the genres associated with each film, the total box office returns each film earned, and the foreign release date of the film.

Data Type: Primary and Secondary data
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: Yes
Comparative Study?: Yes
Literature review?: No
Government or policy study?: No
Time Period(s) of Collection:
  • July 2003 to July 2006
Funder(s):
  • Not Stated

Abstract

Hollywood films are generally released first in the United States and then later abroad, with some variation in lags across films and countries. With the growth in movie piracy since the appearance of BitTorrent in 2003, films have become available through illegal piracy immediately after release in the US, while they are not available for legal viewing abroad until their foreign premieres in each country. We make use of this variation in international release lags to ask whether longer lags – which facilitate more local pre-release piracy – depress theatrical box office receipts, particularly after the widespread adoption of BitTorrent. We find that longer release windows are associated with decreased box office returns, even after controlling for film and country fixed effects. This relationship is much stronger in contexts where piracy is more prevalent: after BitTorrent’s adoption and in heavily-pirated genres. Our findings indicate that, as a lower bound, international box office returns in our sample were at least 7% lower than they would have been in the absence of pre-release piracy. By contrast, we do not see evidence of elevated sales displacement in US box office revenue following the adoption of BitTorrent, and we suggest that delayed legal availability of the content abroad may drive the losses to piracy.

Main Results of the Study

  • The longer the lag between the US release and the local foreign release, the lower the local foreign box office receipts.
  • This relationship is larger after the widespread adoption of BitTorrent than before: a movie release 8 weeks after the US premiere has lower returns by about 22% in a given country in 2003-2004. This increased to nearly 40% in 2005-2006.
  • From 2003-2004, the relationship between length of release lag and box office concerns was generally consistent across all film genres. From 2005-2006, each week of lag decreases returns for science fiction and action genres by an additional 1.3% per week over any decrease for other genres.
  • The writers estimate that international box office returns in the sample were at least 7% lower than they would have been in the absence of such piracy. This was determined by using the 1.3% reduction per week as the estimate of effect of pre-release piracy on box office sales.
  • The finding that the cost of delaying a film's foreign release is increasing has a strategic implication for the movie industry. Studios already appear to be reacting to this by shrinking the average release window. Studios should continue to reduce the length of the release lag, especially for genres more heavily pirated like science fiction and action films.

Policy Implications as Stated By Author

  • Findings are potentially important to policymakers choosing policies to combat piracy, as policymakers need to know whether piracy is depressing sales. Results from this study suggest that piracy depresses the international box office.
  • Several countries have recently implemented strong legal policies against Internet piracy, such as the graduated response laws in France (HADOPI) and South Korea. These laws are highly controversial, and similar laws have been considered in the US and England.

Coverage of Study

Coverage of Fundamental Issues
Issue Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Green-tick.png
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)
Green-tick.png
Coverage of Evidence Based Policies
Issue Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Green-tick.png
Fair remuneration (levies; copyright contracts)
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)
Green-tick.png

Datasets

Sample size: 17
Level of aggregation: Country
Period of material under study: July 2003 to July 2006


Sample size: 678
Level of aggregation: Film
Period of material under study: July 2003 to 2006


Sample size: 19,518
Level of aggregation: movie-by-weekend-by-country revenue observations
Period of material under study: July 2003 to 2006