The 84 page IVIR
Global Online Piracy Study report by Martin van der Ende, Joost Poort, Anastasia Yagafarova, João Pedro Quintais and M Hageraats
deals with the acquisition and consumption of music, films, series, books and games through the
various legal and illegal channels that exist nowadays, in a set of 13 countries in Europe (France, Germany,
the Netherlands, Poland, Spain, Sweden), the Americas (Brazil, Canada) and Asia (Hong Kong, Indonesia,
Japan, Thailand). The illegal channels studied are downloading and streaming from illegal sources (including
via dedicated technical devices), and streamripping.
The authors
comment
The purposes are (i) to provide factual information about the state of authorised and unauthorised
acquisition and consumption of content; (ii) to assess the underlying motives and mechanisms and the link
with enforcement measures and legal supply; (iii) to assess the effect of online piracy on consumption from
legal sources. At the core of the study is a consumer survey among nearly 35,000 respondents, including
over 7,000 minors, in 13 countries.
Legal analysis
Comparative legal research was performed on the basis of questionnaires on the legal status of online
copyright infringement and enforcement, completed by legal experts in the 13 countries studied. It was
found that, despite some legal uncertainty, the majority of acts studied are qualified as direct copyright
infringement by users or give rise to liability for intermediaries. Moreover, ISPs are often subject to
injunctions and duties of care even when they benefit from safe harbours. On the whole, copyright holders
have a vast arsenal of legal enforcement measures to deploy against end users and ISPs. There is a trend in
many countries toward copyright enforcement through civil or administrative measures aimed at blocking
websites that provide access to infringing content. Notices to infringers and to platforms hosting or linking
to infringing content with the aim of removing/blocking such content are likewise regularly used, the latter
in the context of notice-and-takedown systems. Criminal measures are less popular.
Still, despite the abundance of enforcement measures, their perceived effectiveness is uncertain. Therefore,
it is questionable whether the answer to successfully tackling online copyright infringement lies in additional
rights or enforcement measures, especially if these will not lead to additional revenue for copyright holders
and risk coming into conflict with fundamental rights of users and intermediaries. Instead, it might be
sensible to search for the answer to piracy elsewhere – in the provision of affordable and convenient legal
access to copyright-protected content.
Growing markets
Sales data for music, film and video, books and games reveal that across all content types and formats, per
capita income appears to be an important driver of expenditures. However, above an annual income level
of € 30,000 per capita, this relationship no longer seems to apply and national preferences dominate income
effects. Zooming in, it is clear that physical sales are in continuous decline for almost every content type and
in almost every country. Despite the decline in physical sales, the increase in digital sales led to net growth
for total recorded music, audio-visual content, books and games between 2014 and 2017. Expenditures on
live concerts and cinema visits are growing.
Survey outcomes
The percentage of the Internet population consuming content from legal sources varies between 61% in
France and 93% in Indonesia. In most European countries, this percentage decreased somewhat between 2014
and 2017 – primarily due to a decrease for physical carriers – while total legal consumption volumes grew.
Consuming content from illegal sources – online piracy – is most prevalent in the Internet populations of
Indonesia, Thailand and Brazil, followed by Spain and Poland. As a percentage of total population, Spain,
Canada and Hong Kong are the top three countries for piracy, while piracy is the least common in Germany,
Japan and Indonesia, the last due to low Internet penetration. Between 2014 and 2017, the number of
pirates decreased in all European countries except Germany.
The per capita consumption volumes per legal and illegal content channel that follow from the survey do
not always match these developments: for most countries and content types, an increase in the per capita
volume of illegal content consumed is observed, despite a decreasing proportion of the population engaging
in online piracy. This implies that the issue of piracy is gradually becoming confined to a smaller group: fewer
people consume more on aggregate via illegal channels.
It might be tempting to argue that an increase in the use of certain enforcement measures against obviously
illegal platforms has contributed to the decreasing number of pirates in Europe. However, a lack of evidence
concerning the effectiveness of most enforcement measures and the strong link between piracy and the
availability and affordability of content suggests otherwise: at a country level, online piracy correlates
remarkably strongly with a lack of purchasing power. Higher per capita income coincides with a lower
number of pirates per legal users.
Moreover, pirates and legal users are largely the same people: demographically, pirates resemble legal
users quite closely, although on average they tend to be somewhat younger and more often male. More
importantly, for each content type and country, 95% or more of pirates also consume content legally and
their median legal consumption is typically twice that of non-pirating legal users.
Displacement of legal sales
This study confirms earlier studies in finding statistical evidence that illegal consumption of music, books and
games displaces legal consumption. However, the displacement coefficients are surrounded with substantial
uncertainty. Separating these results between minors and adults suggests that displacement occurs for adults
and not for minors.
The results for music indicate that illegal consumption primarily displaces legal downloads and physical
carriers. The effect on streaming is not statistically significant. For live concerts and music festivals, a positive
sampling effect is found. For audio-visual content, no such sampling seems to occur for the cinema, which
suffers from statistically significant displacement, as do digital streams. No significant effects are found for
physical purchases and digital downloads. For rentals, a marginally significant positive coefficient is found.
For books, the results are contrary to those for music and audio-visual in the sense that large and statistically
significant displacement rates are found for books bought in print and borrowed from the library. These
displacement rates may be overstated by people who have shifted from consuming print books to digital
and others who have not. For games, the effect found for free games is particularly high, but the coefficients
found for the other channels are also statistically significant. Just like for books, the large coefficient for free
games may be overstated.
Using time-structured data for blockbuster films, an average displacement rate was found of –0.46 of first
legal views by first illegal views. This effect is smaller in Japan and the Netherlands and larger in Thailand
and Brazil. The largest effect occurs on cinema visits. From these estimations, it is possible to calculate an
upper bound for the relative sales loss of total film views per channel and per country. Overall, a maximum
of about 4.1% of all legal blockbuster views is displaced by illegal views.
An analysis of individual changes in consumption for respondents in six EU countries between 2014 and
2017 reveals significantly positive correlations. Apparently, substitution effects – ‘Shall I buy or shall I pirate?’
– occur on the spot. Over a longer time span, improvements in the availability from legal channels are
dominant and changes in personal preferences affect legal and illegal consumption alike.
