Van Eijk, Poort and Rutten (2010)
|Van Eijk, Poort and Rutten (2010)|
|Title:||Legal, Economic and Cultural Aspects of File Sharing|
|Author(s):||Van Eijk, N., Poort, J., Rutten, P.|
|Citation:||Van Eijk, N., Rutten, P., & Poort, J. (2010). Legal, economic and cultural aspects of file sharing. Communications & Strategies, (77), 35-54.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||A representative survey of a sample of the Dutch population was conducted in April 2008. A total 1,464 respondents completed questions about music (98% of the sample), 1405 about films (94%) and 778 about games (53%). The same data set was used in the previous study, Huygen, Helberger, Poort, Rutten and Van Eijk (2009), also known as Huygen, Rutten, Huveneers, Limonard, Poort, Leenheer, Janssen, Van Eijk and Helberger (2009).|
|Data Type:||Primary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
This contribution seeks to identify the short and long-term economic and cultural effects of file sharing on music, films and games, while taking into account the legal context and policy developments. The short-term implications examined concern direct costs and benefits to society, whereas the long-term impact concerns changes in the industry's business models as well as in cultural diversity and the accessibility of content. It observes that the proliferation of digital distribution networks combined with the availability of digital technology among consumers has broken the entertainment industries' control over the access to their products. Only part of the decline in music sales can be attributed to file sharing. Despite the losses for the music industry, the increased accessibillity of culture renders the overall welfare effects of file sharing robustly positive. As a consequence the entertainment industries, particularly the music industry, have to explore new models to sustain their business.
Main Results of the Study
The main results of the study:
- Turnover in the recorded music industry is in decline, but only part of this decline can be attributed to file sharing.
- Conversely, only a small fraction of the content exchanged through file sharing networks comes at the expense of industry turnover. This renders the overall welfare effects of file sharing robustly positive.
- For example, the authors state that the consumer surplus created by music sharing in the Netherlands amounts to an estimated minimum of €200 million per year; a conservative estimate. At most half this amount is generated at the expense of the producer surplus and therefore constitutes a transfer of welfare. The remainder constitutes welfare gains.
- The film industry is feeling the file-sharing pain less than is the music business, but this looks about to change as broadband is rolled out further.
- The 'digitally native' games industry would seem better positioned to respond to the impact of file sharing, although some segments of the market, particularly the one for PC games, witnesses effects similar to the music industry.
- The survey held among Dutch Internet users has shown that file sharing is here to stay and that people who download are at the same time important customers of the entertainment industry; therefore criminalising them makes no sense.
Policy Implications as Stated By Author
Policy implications include:
- For a considerable amount of time, the industry remained unable to stem the tide of unlicensed music file sharing with their conservative strategy of abstaining from innovation, promoting legal measures against supposed offences and digital rights management. This strategy resulted in the current backlash, providing space for a new entrant establishing a major brand in the online music business: Apple's iTunes.
- Reinvention of the business model looks like the only way out for the traditional players in the music industry. The music economy appears to be facing a shift in spending away from recordings to concert tickets and, to a lesser degree, merchandise. The advance of so called 360-degree artist contracts is a step towards greater diversification of sources of income and underlines the clear connection that exists between various revenue sources in different music markets: recordings, live music and merchandise.
- The entertainment industry should step outside the box of the traditional value chain and venture into a host of other markets through the creation of value networks.
- A strategy that focuses solely on lawsuits and digital rights management (DRM) is not the best response, in particular as it remains to be seen whether a fully authorised, paid-for downloading market would generate sufficient revenues to stay in business. Even in a hypothetical future without file sharing, a hybrid business model would appear to be the solution.
- And so the entertainment industry will have to work actively towards innovation on all fronts. New models worth developing, for example, are those that seek to achieve commercial diversification or that match supply and end-user needs more closely. In such a context, criminalising large parts of the population makes no sense. Enforcement should focus on large scale and/or commercial upload activities.
Coverage of Study
|Level of aggregation:||Individual|
|Period of material under study:||2008|