DeVany and Walls (2007)

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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

De Vany and Walls (2007)
Title: Estimating the Effects of Movie Piracy on Box-office Revenue
Author(s): De Vany, A. S., Walls, W. D.
Year: 2007
Citation: De Vany, A. S., & Walls, W. D. (2007). Estimating the effects of movie piracy on box-office revenue. Review of Industrial Organization, 30(4), 291-301.
Link(s): Definitive
Key Related Studies:
Discipline:
Linked by:
About the Data
Data Description: The dataset consists of pirate sources the measurement of which is based on a study commissioned by a major studio. Data crawlers were sent out over the Internet to detect sites that had a file of the movie available for download. Numerous protocols were included into the search, including eDonkey2000, BitTorrent,Gnutella, FastTrack, Hotline, FTP, Usenet, and Internet RelayChat (IRC). The source of the files was an incomplete working print sent by the studio to an advertising agency. The DVD was apparently given by an agency employee to a person who loaded it onto one or more of the sites set out above. Detailed weekly data on pirate supply were collected over a seven week period beginning one week before the movie’s release and continuing for six weeks into its theatrical release.
Data Type: Secondary data
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: No
Comparative Study?: No
Literature review?: No
Government or policy study?: No
Time Period(s) of Collection:
  • Seven week period in 2007
Funder(s):
  • None

Abstract

Piracy is one of the most challenging problems faced by the motion picture industry. The Motion Picture Association of America estimates that US studios lose more than $3 billion annually in box office revenue from piracy. They have launched a major effort to prevent these losses. Yet their efforts are hampered by the ex post, counterfactual, and indirect methods by which losses are usually estimated. This paper addresses these issues directly. We develop and estimate a statistical model of the effects of piracy on the box-office performance of a widely-released movie. The model discredits the argument that piracy increases sales, showing unambiguously that Internet piracy diminished the box-office revenues of a widely released motion picture. The model overcomes a major weakness of counterfactual or “but for piracy” methods widely used to estimate damages. These counterfactual methods violate the “nobody knows” principle because they forecast what the movie would have earned in the absence piracy. The model we present does not violate this basic principle of motion picture uncertainty. We estimate that pre-release and contemporaneous Internet downloads of a major studio movie accelerated its box-office revenue decline and caused the picture to lose about $40 million in revenue.

Main Results of the Study

This paper develops a model of piracy and revenue dynamics that permits early detection of piracy, directly tests the competing hypotheses regarding the effect of piracy on box office revenue dynamics, and does not violate the “nobody knows” principle. More specifically, this paper shows that:

  • The magnitude of the decline in weekly box-office revenues is positively related to the number of pirate download sites that are active before and during its run.
  • Piracy has a substantial effect on motion picture revenues.

Policy Implications as Stated By Author

Based on this study of a single widely-released movie, piracy has a substantial effect on motion picture revenues.



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)
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)
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: 131,509
Level of aggregation: Internet Sites
Period of material under study: 2007


Sample size: 1.000.000
".000" can not be assigned to a declared number type with value 1.
Level of aggregation: Downloads
Period of material under study: 2007