A Note on TERA’s “The Economic Contribution of the Creative Industries to EU GDP and Employment”

TERA Associates has released a follow up to their 2010 study on the impact of “piracy” on creative industries in the European Union.  The new study, entitled “The Economic Contribution of the Creative Industries to EU GDP and Employment,” makes three arguments:

1)     That the creative industries include 8.3 million “core” creative jobs and 5.7 million “interdependent” and “non-dedicated support” jobs, totaling 14% of the EU27 workforce and contributing 6.8% of GDP (€ 860 billion).

2)     That between 2008 and 2011, piracy “destroyed” € 27.1 – 39.7 billion in economic value, resulting in a loss of between 64,089 and 955,125 jobs.  According to TERA’s forecast, these numbers are likely to climb to € 166-240 billion by 2015, with 600,000 to 1.2 million jobs lost.

3)     That although economic depression and other factors may play a role in some sectoral changes (such as retail), these job and economic losses are primarily attributable to the failure of EU member states to adopt stronger IP enforcement measures.

As a researcher responsible for several studies of the impact of piracy on creative economies, I was asked by consumers’ and citizens’ rights groups in 2011 to provide an independent review of the first TERA study.[1]  In those comments, I argued that the report offered a selective account of the economics of infringement that overstated the impact of piracy.  Since the new report doubles down on those findings and introduces some new methodologies, I have prepared new comments.

Download the note.

Continue reading “A Note on TERA’s “The Economic Contribution of the Creative Industries to EU GDP and Employment””

NPD Confidential 3: In Which We Defend Ourselves Against Charges of Drunk Blogging and Practicing Math Without a License

Some weeks ago, we published a lengthy blog post called Where do Music Collections Come From?  which discussed findings from our Copy Culture survey of 1000 Germans and 2300 Americans.

Some of the data demonstrated that P2P file sharers (who own digital music files) buy more music than their non-P2P using peers (who also own digital music files).  Here’s the chart again:

To me, this was a fairly innocuous finding, well in line with other studies.  For my money, the more important findings were that personal sharing ‘between friends’ is about as prevalent and as significant in music acquisition as ‘downloading for free’, and that together they are outweighed by legal acquisition.

But the public spoke and the P2P finding went viral: the biggest pirates are the best customers.   Headlines like this generated pushback from record industry groups RIAA and IFPI—mostly centered around the work of NPD, their survey firm in the US.  The exchange, I think, is an interesting window on the state of the empirical debate around file sharing. Continue reading “NPD Confidential 3: In Which We Defend Ourselves Against Charges of Drunk Blogging and Practicing Math Without a License”

Die, Substitution Studies, Die II: Well, OK, Maybe Some Should Live

Let’s return to the arcane but, for IP debates, important subject of substitution studies, which try to clarify the extent to which piracy substitutes for or displaces legal sales.  We’ve argued that the media ecology has become so complicated that nobody has a handle on what substitutes for what.  Does a pirated MP3 file substitute for a $1 purchased file, a $12 CD, some number of listens on YouTube or Spotify or radio? Does Spotify substitute for MP3 purchases?  Or YouTube listens? Should we take stagnant discretionary income into account, and rising costs for other media services, like cable TV, Internet access, and data plans.  Do national differences matter–including major differences in digital markets and services (In Germany, CD sales represent over 80% of the market; in the UK and US, under 50%).  What about differences in law (in much of Europe, private copying is legal)?  Which of these factors get priority?  How do we model their interaction? Continue reading “Die, Substitution Studies, Die II: Well, OK, Maybe Some Should Live”

NPD Confidential II: Die, Substitution Studies, Die

Following up our piece on music collections and the apparently surprising result that P2P users buy a lot of digital music, and also our piece discussing some pushback from NPD–the survey firm used by the RIAA–we offer a response to comments by the record industry association IFPI.  Here’s what they said:

While previous studies have shown that some unlicensed P2P network users also pay for music, and a few are serious fans who pay a lot, they are far outnumbered by the bulk of unlicensed P2P network users who pay little or nothing for music. Research by The NPD Group during 2010 in the US found that just 35 per cent of P2P users also paid for music downloads. P2P users spent US$42 per year on music on average, compared with US$76 among those who paid to download and US$126 among those that paid to subscribe to a music service. The overall impact of P2P use on music purchasing is negative, despite a small proportion of P2P users spending a lot on music. That finding was corroborated by a study in Europe by Jupiter Research in 2009. Continue reading “NPD Confidential II: Die, Substitution Studies, Die”

NPD Confidential

Well, the Music Collections post certainly got around. Among other places, NBC News’ tech blog picked up the bit about P2P users being the biggest buyers of music and sought comment from the RIAA. The RIAA sent the reporter to NPD, the firm that handles their survey work. At NPD, Russ Crupnick offered the following response:

“We hear this argument all the time and it makes no sense,” Russ Crupnick, NPD’s senior vice president, industry analysis, said in a phone interview. Continue reading “NPD Confidential”

The Copy Culture Survey: Infringement and Enforcement in the US


The U.S. House of Representatives is now debating the Stop Online Piracy Act (SOPA)—the counterpart to the Senate’s PROTECT IP Act.  If passed, the bill will expand criminal penalties for copyright infringement and give the government (and private parties) new powers to block access to websites accused of facilitating infringement.

The bill is the latest in a series of efforts to strengthen copyright enforcement online. Earlier this year, Internet Service Providers and the film and record industries reached an agreement to expand the private policing of online infringement.  Search engines, social networking platforms, cloud storage providers, universities, and other institutions face growing pressure to monitor and filter Internet activity.

This research note is an effort to bring American public opinion to bear on this vital conversation. The note excerpts a forthcoming survey-based study called Copy Culture in the U.S. and Germany. Drawing on results from the U.S. portion of the survey, it explores what Americans do with digital media, what they want to do, and how they reconcile their attitudes and values with different policies and proposals to enforce copyright online. Continue reading “The Copy Culture Survey: Infringement and Enforcement in the US”

Data Laundering Done Right: the ITC China Study

I guess this doesn’t come as a big surprise, but the recent mini-scandal over McKinsey & Co’s survey of employers’ responses to the US health care reform act shows pretty clearly how pressure for transparency in policy research in the US depends on disagreement between the two parties.  In this case, when the survey showed a surprisingly high number of employers dropping employee health care coverage in response to the Act, Senator Max Baucus led the call for more research disclosure, arguing that “honest public discourse requires a standard level of transparency — one McKinsey simply has not met.”  Baucus released a letter to McKinsey management that included a laundry list of requirements for “standard professional practice.”  Continue reading “Data Laundering Done Right: the ITC China Study”