Telang and Waldfogel (2014)
|Telang and Waldfogel (2014)|
|Title:||Piracy and New Product Creation: A Bollywood Story|
|Author(s):||Rahul Telang, Joel Waldfogel|
|Citation:||Telang, R. and Waldfogel, J. (2014) Piracy and New Product Creation: A Bollywood Story. Available at SSRN: https://ssrn.com/abstract=2478755|
|Key Related Studies:|
|Linked by:||Sprigman (2017)|
|About the Data|
|Data Description:|| The article uses a compilation of secondary sources across two datasets:
• IMDB and IBOS network (to determine relationships between quality and revenue generated at movie-level).
• Entertainment tax data from Uttar Pradesh combined with IMDB rankings (to determine aggregate revenue at country-level).
|Data Type:||Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
While copyright research in the decade following Napster focused mostly on whether file sharing undermines demand, research has more recently asked how piracy and other aspects of digitization affect the supply of new products. Although revenue has declined sharply, evidence that weakened effective copyright protection undermines creation has been elusive. Instead, because of cost-reducing effects of digitization, the number of new recorded music products – and their apparent quality – has increased. This study examines movie production in India during a period of technological change that facilitated large-scale piracy. The diffusion of the VCR and cable television in India between 1985 and 2000 created substantial opportunities for unpaid movie consumption. We use this episode to study possible impacts of piracy on supply. We first document, from narrative sources, conditions conducive to piracy as these technologies diffused. We then provide strong circumstantial evidence of piracy in diminished appropriability: movies’ revenues fell by a third to a half, conditional on their ratings by movie-goers and their ranks in their annual revenue distributions. Weaker effective demand undermined creative incentives. While the number of new movies released had grown steadily from 1960 to 1985, it fell markedly between 1985 and 2000, suggesting a supply elasticity in the range of 0.2-0.7. Thus, our study provides affirmative evidence on a central tenet of copyright policy, that stronger effective copyright protection effects more creation. We contrast our findings with evidence from other contexts.
Main Results of the Study
Using the Bollywood industry as a case study, the authors find that during times of low demand due to piracy there is a negative impact on incentives for creators, effectively reducing supply. Using a combination of tax, revenue, and production data, the authors find:
• Between 1960 and 1985 figures hold steady (or increase) for all factors.
• Between 1985 and 2000, revenues fell by one-third to one-half, and production decreased substantially (suggesting a supply elasticity of 0.5-0.7). The authors attribute this change primarily to increased rates in piracy, (as a result of a combination of poor quality theatres, and high diffusion of VCR and cable equipment).
• Production increased post-2000, which the authors attribute to a variety of factors, namely: stronger enforcement; high quality multiplex theatres, and; introduction of alternative revenue sources (including foreign revenues and television).
Policy Implications as Stated By Author
• The authors note that, due to lack of research because of difficulty in accessing data, this collation and analysis from multiple sources should in itself aid policy-making in India.
• A combination of factors can encourage creative output, including stronger enforcement, multiple revenue sources, and better quality platforms to access entertainment goods.