The English translation of the Ups and Downs report on the Economic and cultural effects of file sharing on music, film and games is out [thanks Natali!]. You can download the 130 page report written by a research consortium formed by TNO, SEO & IvIRon the IVIR website [pdf].
I just finished reading ‘Ups and Downs – the economic and cultural impact of file sharing for music, film and games’ (see my earlier post for context). All in all the full version does not contain a lot of surprises when compared to the executive summary (which my first post was based on): It is a well written report that, although it makes a lot of sense to someone familiar with the subject, does not really come up with much new insights either. The strength of the report is that it places file-sharing within the wider social and economic context (as opposed to placing it solely within the economic logic of the entertainment industry). While they sometimes appear naive (it does not seem to occur to them that buying CDs or renting DVDs from the video-rental-shop is rapidly becoming obsolete from a technicals point of view) the researchers do seem to have a fairly good understanding of what is going on.
The core of their argument (to be found in sections 5 & 6) is that there is no direct causal relationship between file-sharing and the decline in revenues in the music industry. On top of this the researchers argue that even tough it is likely that there is a substantial decline in revenues for the recording industry as a result of file sharing, this is offset by an even more substantial increase in welfare for the general public (or at least that proportion of the general public that downloads musical works). This finding is based on an economic model that is summarized in figure 6.1:
Figure 6.1 from ‘Ups and downs’ – blue boxes and grey arrows and labels mine (personally i am a bit surprised by the relative amounts of lazy and smart peple implied by this figure. life experience tells me to expect the opposite distribution).
The orange block represents the revenue generated by selling recoded music in the absence of file sharing, which equals the maximum possible revenue for the recording industry. In this situation the rich people(a.k.a stupid people) profit (save money) because they would have been willing to pay more than the market price. All the people to the right of the orange colored block simply could not afford to buy recorded music.
With the possibility of file sharing available to consumers we see a shift: a certain amount of people who used to buy recorded music now download it for free (‘cheap people‘). In addition the smart people (a.k.a poor people) now have the same access to recorded music as all the others and finally there also is a group of lazy people who simply cannot be bothered to download because they perceive the process as too burdensome.
When comparing the changes between (1.) and (2.) in economic terms the researchers conclude that while there is a negative impact on the recording industry (caused by the cheap people) the fact that the smart people now also have access to recorded music represents a much bigger increase in economic welfare (and does not hurt the recording industry as it is ‘demand without purchasing power’ that is being met)1. As mentioned in my earlier post the researchers value the damage to the recording industry at a maximum €100 million p.a while they value the socio-economic gain caused by the increased access to recorded music at at least €200 million p.a.
Personally i am not sure if this will be of any consolation to the recording industry, but as far as i can see it is a fairly adequate description of the current transformation process: A business model anchored in an outdated means of distribution is (partially) being replaced by a social practices that are (a) more in line with the technological state of the art and (b) provide greater socio-economic benefits to society at large.
For the rest the report does not contain much news: Chapter 3 (‘the legal framework’) gives a solid and up to date (it even includes last years legislative battle around the EU’s telecom review) overview of the legal implications of file sharing (in the Netherlands) and Chapter 5 gives an overview of recent studies on the economic impact of file sharing2. Apart from the economic model described above chapter 6 also lists a number of ‘dynamic and indirect’ effects of file sharing that are fairly obvious but nevertheless worthwhile to repeat: The researchers argue (p.123) that while it is likely that file sharing hurts big successful artists (as cheap people will buy less CDs from them) it has a positive impact on smaller artists (as it allows more people to sample their works, which will turn some of these people into buyers of their CDs or make them attend concerts). More interestingly the researchers also argue (p.125) that acceptance by consumers of the substantial increases in ticket prices for live-concerts has to be seen in the context of file-sharing: The increased willingness to pay high prices for concert tickets may be due to the fact that consumers are aware that they are spending less on recorded music (or the other way around: as they have to pay more for concert-tickets consumers are less willing top pay for recorded music and resort to file sharing).
When it comes to their conclusions the researchers note that file-sharing is here to stay and that we (the recording industry) are beyond the point of no return: It is impossible to build a successful business that is solely based on trading recorded music. According to the researchers is is also highly unlikely that there will be a point in the future where all music will be obtained from authorized sources (p.136). Given this they argue (inter alia, their official recommendation comes down to a pathetic paragraph where they make a plea against criminalization of end users and for more awareness building among file sharers) for a model where internet service provides offer internet subscriptions that include a fee for the access to copyright protected content (a.k.a the content flatrate).
Note how the rich people profit in both scenarios: they always pay less then they could (or should). this is probably why the distribution model the Nine Inch Nails used for Ghosts I-V worked so well. ↩︎
Chapter 4 ‘Downloading in the Netherlands’ is a bit of a disappointment. If presents the results of a representative survey that was conduced (by an external research-firm) among Dutch internet users. While the researchers repeatedly mention that the survey shows that file sharers have no clear understanding of what they are doing the data presented by them also underlines that the researchers (or the company contracted to carry out the survey) lack a clear understanding of their research object: see table 4-9 (usenet and newsgroups are two synonyms for the same source of files) or table 4-13 (most sites listed as sources for paid-for downloads do not offer downloads to users based in the Netherlands). Given this Chapter 4 casts a shadow on the otherwise high methodological standards claimed by the research team. ↩︎
Early last year the Dutch government (the ministry for Economic Affairs, the Justice Department and the ministry for Education Culture and Science to be precise) commissioned a research report on the socio economical aspects of (peer 2 peer) file sharing. Last week the research consortium formed by TNO, SEO & IvIR published the final version of the report titled ‘Ups and Downs – the economic and cultural impact of file sharing for music, film and games’. This 141 page report looks into the economic and cultural consequences of file-sharing for the music, movie and games industries. The central conclusion of the report is that:
The research shows that the economic impact of file sharing on the Dutch economy is strongly positive when viewed from both short term and long term perspectives. As a result of file sharing consumers get access to a wide range of cultural products. This has a positive impact on the economy […] According to estimates the positive economic effects for consumers amount to 200 million euro per year. On the other side the maximum decrease in revenues for producers and publishers of sound recordings is 100 million euro per year. [page 3 of the report, translation mine, an official english translation hereof the entire report is forthcoming]
It is refreshing to see a government sponsored report that recognizes that while one part of the entertainment industry (music) suffers some losses, these don’t necessarily outweigh other – positive – effects of file-sharing: According to the researchers, file-sharing gives access to a wide range of cultural goods and is often used to sample works that are bought later. Most file-sharers would have never bought all the content they downloaded, and having access to such a large media library has positive effects on the social well and economic position of downloaders and the society as a whole.
One of the most interesting observations in the report is that while revenues related to the sale of music are steadily declining, the overall amount of money spend by consumers on media for entertainment (ie music, videos and games) is relatively steady. It appears that money that is not spend on music is instead spend on video games. This can be seen as an indication that the real cause of the decline of revenues in the music industry is not primarily caused by file-sharing consumers, but by intra-industry competition: people simply spend their entertainment euros differently.
Instead of music CDs consumers buy Guitar Hero or Rock Band (plus extension) packs these days. This is one more reason why the recording industries’ push for stricter IP enforcement will probably not do them much good: It gives consumers little reason to not spend money on games and go back to spending it on music CDs. From the consuer perspective a €50 game is much better value for money than a CD that contains one or two really good tracks.
After the presentation of the report on Saturday in Groningen a Buma/Stemra representative called the report ‘scary’ [‘greizelig’ in Dutch]. One can only hope that his fear will transform itself into the insight that the industry will need to change if it wants to ensure it’s survival. But if the past is any indication the most likely reaction to this fear will be a counter study that comes to the conclusion that downloading is extremely bad for the economy and that we need much stricter IP-enformcement. In the meanwhile one third of the Dutch citizens will continue to download and go to concerts and buy CDs and buy DVD and go to the movies and fail at becoming Guitar Heros…
The league of noble peers has just made available the raw footage of 19 interviews filmed for steal this film 2. the footage is not only available online but also fully text searchable based on the transcripts of the interviews:
Thanks to the magic of 0xdb and Pad.ma, plus the hard work of a number of Peers in transcribing STEAL THIS FILM II footage over the last six months, we are able to offer a full text search of the base material from which we made the film. If your search term is found, you are taken to the frame/s at which it occurs and given its immediate context. Try it out! You can also browse the whole list of clips, if you don’t know what you’re looking for in advance.
Even better, the entire material on footage.stealthisfilm.com is available in the original resolution (1080i HDV) and under a Creative Commons Attribution Share alike license. As far as i can tell, this is the first time such a comprehensive set of raw materials for a film has been made available under a open content license:
We are making this footage available in high quality format (HDV 1080i), having cleared permission from the interviewees to release it under an attribution share-alike license from Creative Commons. Practically this means that you can use this material for your own projects, including commercial work, provided you credit us and make your work available in turn under a share-alike license.
It will be interesting to see if this really works. my hunch is that there will be very few filmmakers who have use for these interviews (although most of them are quite informative if you are interested in the politics of information) and are willing or able to release films that incorporate footage from these interviews under a CC-BY-SA license themselves. Personally i would assume that it would be more useful/realistic to ask others using parts of the interviews to make available (parts of) their footage as well (instead of the finished film). This would be in line with how free software licenses operate: if you use freely licensed source code (footage) you have to make available the resulting source-code, but you can do whatever you want with the binary code (finished film).
Rright now that does not seem to be possible as it would be very hard to define which part of their footage downstream users should make available (and making all raw material available is pretty much impossible given the enormous amounts of bandwidth/discspace/work this would require). Given this the attribution share alike license does not seem that bad of a choice and of course filmmakers who, in exchange for using some of the STFII footage, do not want to make available their films under a BY-SA license can probably just pay jamie/the league of noble peers for separate permission…
So Jamie more or less forced us to watch iron man on Thursday in some nondescript multiplex cinema in Swansea, Wales. Definitely not the worst film i have ever seen but for some reason these comic book adaptions fail to really excite me (except for film versions of comic books by enki bilal that is).
Out of curiosity i also bought a DVD version of some DVD hawker in the restaurant Hai Ha (they do make really nice special roast duck in that place) on Mare street in hackney on Friday. As one could have expected it turned out to be a really bad (as in having chairs and the ceiling in the picture for three quarters of the film) chinese cam version.
Still kind of amazing that they get DVDs out into london restaurants in a bit more than 24 hours…
I think i bought my last CD (‘Original Pirate Material‘ by the Streets) in 2002 only to rip it to my computer and then to leave it in a train running along the river rhine from Cologne towards Karlsruhe (in the hope that someone else would find it and enjoy it). I have not bought a music CD ever since (with the exception of a couple of baile funk CDs in Rio de Janeiro in 2006, but these don’t count because they were burned on demand by the sellers).
EMI has announced that “unsold copies” of Rudebox, by British pop star Robbie Williams, “will soon be used to resurface Chinese roads.” More than a million copies of the CD “will be crushed and sent to the country to be recycled,” we read, where they “will be used in street lighting and road surfacing projects.” […] In any case, does all this imply some strange new infrastructural claim to fame? “You know that CD they used to pave the King’s Road?” a man asks you, putting his coffee down as if to emphasize the point. He crosses his arms. “I played bass on that.”
Guess those CDs won’t make it very far beyond the year 2008…
This experience reinforces the main point of the film: file-sharing – a technologically super-charged, deep cultural practice – is beyond the point where it can be stopped. The old media industry has lost control over the distribution of content, radically reducing the power of the current gate keepers to determine who can access the archives, who can produce new works, and who can reach an audience with those works.
The film’s premise is that file-sharing is transforming the basic mechanism of how culture and information is distributed with consequences as profound as the transformation brought about by the printing press. Now, for anyone who remembers the late 1990s, this introduces a certain deja-vu, since this argument was pretty much what fueled the dot.com boom back then. But here, it is delivered with a twist. It’s not the happy venture-capital infused entrepreneurs who turn the wheels of change, but the pirates who expand the scope of the possible for the masses, and the teenagers who have already claimed this new space as their natural cultural environment. This is not a top-down revolution.
Meanwhile Jamie has written up some thoughts about the amount of donations The League of Noble Peers is receiving as a result of their call for support. Seems like suggesting to donate a higher amount of money ($15 as opposed to 1$ as they did for when they released the original Steal This Film in 2006) works rather well. In his blog post Jamie is combining these first experiences with research about the spread of Sexually Transmitted Diseases (a gonorrhea epidemic to be precise) to come up with the expectation that it is perfectly possible to produce profitable documentaries based on voluntary donations:
What is also necessary is a spreading of the “generosity virus”, not just for STEAL THIS FILM (although boy, could we use it!) but for all independent creators who’ve dispensed with the restrictive, punitive, retrograde commodity model and chosen to work with a new, more far-sighted paradigm. In these first days of distributing STF II, we have learned that by setting aside the artificial barriers of DVDs, cinema tickets and pay-per-download, the way is cleared to a new world of voluntary, supportive donations. The sooner we all stop moaning about how “no one is going to make any money” after P2P, we can get on with encouraging each other to look after our cultural environments. No one is saying we’re there yet, but like the man said, we’re beginning to see the light.
The second installment of Steal This Film has just been released. you can download it in 4 different resolutions) here and Torrentfreak has an interview with Jamie. By now i have seen it it numerous times (in different stages of production) and i will probably watch it again just for the sake of it (i am downloading the HD version right now).
Now it does not really matter if i watch it again or not but this movie is essential viewing for all those out there who still believe that file-sharing, and distributed communication and growing up in an age without scarcity (when it comes to media) does not constitute a fundamental break when it comes to cultural (re-) production:
These are strange times indeed. While they continue to command so much attention in the mainstream media, the ‘battles’ between old and new modes of distribution, between the pirate and the institution of copyright, seem to many of us already lost and won. We know who the victors are. Why then say any more?
Because waves of repression continue to come: lawsuits are still levied against innocent people; arrests are still made on flimsy pretexts, in order to terrify and confuse; harsh laws are still enacted against filesharing, taking their place in the gradual erosion of our privacy and the bolstering of the surveillance state. All of this is intended to destroy or delay inexorable changes in what it means to create and exchange our creations. If STEAL THIS FILM II proves at all useful in bringing new people into the leagues of those now prepared to think ‘after intellectual property’, think creatively about the future of distribution, production and creativity, we have achieved our main goal. [from the STFII website]
Oh, and if you have not yet seen Steal this Film I yet you can download it here…
This photo (by Rasmus Kopimi) is just too good not to blog. I am not even sure when it was taken but it is timeless (or very early 21st century) anyway:
“Nobody is crying that people who used to go around selling ice to people do not have a job anymore because of the fridge,” says Peter. “It would be stupid but it is the same thing.
“Technology has changed. You can’t go back, there’s no way to go back. And I don’t think there’s a will to go back.”
meanwhile... is the personal weblog of Paul Keller. I am currently policy director at Open Future and President of the COMMUNIA Association for the Public Domain. This weblog is largely inactive but contains an archive of posts (mixing both work and personal) going back to 2005.
