Thursday, March 06, 2008

Thanks piracy for boosting the Movie Industry 5.4% in 2007

Piracy is so bad, according to the MPAA, that we need special legislation to target the dastardly college pirates who are destroying the business. It's so bad that Weekly Reader subscribers will learn about the $7 billion a year "lost" to Internet piracy. It's so bad that the MPAA wants ISPs to ignore years of common carrier law and the promises of "safe harbor" and start filtering their traffic, looking for copyright violations.

The real world isn't quite this simple, of course. It turns out that the MPAA's college numbers were off by a factor of three, a revelation that came after years of hiding the study's methodology but continuing to lobby Congress with its numbers. There's no possible way that the MPAA can truly know what it "lost" to piracy, either, as it has no real idea what percentage of downloads would have resulted in sales. And, with the notable exception of AT&T, no other major US ISP has publicly entertained the idea of filtering traffic.

Certainly the MPAA has the right to fight illegal downloads of its material, and it certainly has the right to go after those making a profit by ripping off its DVDs. But the rhetoric around "piracy" (a term used far too broadly) simply doesn't fit with reality. If piracy is killing the movie business, it's doing so in exactly the same way that home taping killed the music business in the 1980s.

Swapping movies over the Internet was more of a niche practice back in 2001 as bandwidth constraints made it impractical for many. Certainly it's much simpler now, and advanced P2P protocols like BitTorrent (combined with free trackers like The Pirate Bay) make it relatively simple. But the movie business did $9.63 billion at theaters alone in 2007, a substantial increase over 2001's $8.13 billion. US box office has also risen for the last two years, and international growth rates have been much higher and more constant.

DVD piracy and file-swapping pose problems for the industry, no doubt about it, but the entire issue deserves to have the rhetoric scaled back a bit. As Dan Glickman, the MPAA boss, admitted, "Ultimately, we got our Hollywood ending. Once again, diverse, quality films and the timeless allure of the movie house proved a winning combination with consumers around the world."

So break out the champagne (for the MPAA execs) and the dog biscuits (for Lucky & Flo); home taping didn't kill the music business, and file-swapping isn't destroying theatrical revenue.

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