Devices & Services
There is a powerful material component to attitudes and practices around digital culture. What people do and think is shaped, in part, by what they have—by their access to the larger ecology of devices and services that shape the media environment. Germany and the US have much in common in this regard because they are both high-income countries. Both have high levels of home Internet use (77% and 79% of adults, respectively) and saturated markets for computers and recorded-media players, such as DVD players.
Yet there are also significant differences that shape practices of copying and sharing. Pay TV services, for example, are significantly less common in Germany than in the US (49% vs. 82%), reflecting a tradition of public television funded by broadcast fees (like the United Kingdom’s BBC). German commercial TV services started only in 1984. This has implications that we will explore in the next sections, including lower availability of on-demand programming and other video services and an accordingly larger role for informal and Internet-based sharing of TV and movies.
Newer device markets have also developed differently in the two countries. The US has higher levels of MP3 player3 and smartphone ownership and has seen a much more rapid adoption of e-book readers and tablets. Controlling for population size, the digital music market in Germany is small compared to the US, and the e-book market is tiny (about 1% of the total book market [Naumann 2012] compared to over 6% in the US [Wischenbart 2011).
The ownership of different types of recorded media (CDs, DVDs, music files, etc.) broadly mirrors trends in device ownership. In Germany rates of CD and DVD ownership are high for all age groups under 70. For newer digital formats the 18–29 cohort outpaces older age groups by wide margins. As we shall see repeatedly, digital culture in Germany is youth culture, heavily concentrated among those under 30. In the US the age gradient for most digital media practices is more gradual, encompassing many more 30- to 49-year-olds.
Older groups show more uptake of digital music in the US, and digital movie/TV files in Germany.
The US leads Germany by a wide margin in e-book ownership, mirroring the large gap in device ownership. Here, too, the explanation is overdetermined by market and cultural differences, including German tax policies that favor print over digital publication and “fixed price” policies that level the terrain between small and large chains (Wiener 2012; Naumann 2012).
The CD is dying among the young but is still the primary medium for music collecting among older age groups, especially in Germany, where in 2011 physical formats still represented 82% of music sales revenue (Spahr 2011)—compared to 48% in the US (RIAA 2012). Germans and Americans have very similar patterns of CD ownership. Average collection size and median collection size are roughly the same across the four age groups.
The sources of these collections are also similar. The vast majority of CDs are purchased. Only a small portion is copied, at most 12%–15% among the 18–29 group. That figure falls sharply among the older groups.
As the revenue figures suggest, the US is moving toward a post-CD music culture more quickly than Germany. Although digital music file adoption is virtually identical in the 18–29 groups (79% US and 81% Germany), US digital music collections are larger and have more fully displaced the CD among those under 30 (see below). In the US 15% of 18- to 29-year-olds have no CDs. In Germany 7% have no CDs.
Here, as in the case of other media, average collection size is skewed by the small number of people with very large collections. In both the US and Germany, roughly 9% of adults have over 250 CDs; 2%–3% have over 500 CDs.
In contrast to CDs, there are sharp differences in US and German DVD ownership. The DVD market has been much stronger in the US over the past decade, with retail sales peaking at around $18 billion in 2006 (before sliding to under $7 billion in 2011). The German DVD market, shaped by higher prices and slower rollout of digital streaming alternatives, peaked in 2010 at $1.2 billion (International Video Federation 2011). On average, across all age groups, Americans own roughly twice as many DVDs as Germans.
These differences are also reflected in the frequency of large collections:
- Seventeen percent of Americans have more than 100 DVDs; 4% have more than 300
- Five percent of Germans have more than 100 DVDs; only 1% have more than 300
As with CDs, the vast majority of these DVDs are legally purchased. Copying plays a very minor role in DVD acquisition, peaking at roughly 8% of collections among those under 30. Nor has the pirated DVD trade played a significant role: only 7% of Americans and 3% of Germans have ever purchased a pirated DVD. In the US this trade faded to insignificance by the mid-2000s as broadband connections proliferated. In Germany it was never a significant factor.
Copying from libraries (which we explored only in the Germany survey) is also minimal—less than 3% acknowledged copying library DVDs. Only two respondents in the German survey (out of 1000) indicated that they had copied “most or all” of their collection this way.
Youth dominance of copy culture is most visible in digital music. Among 18- to 29-year-olds in the US, the transition away from the CD is well underway: 79% own music files, with the average collection containing nearly 1900 songs and the median collection around 1000. Among older respondents, the percentage drops sharply: only 14% of Americans over 64 own music files. Average collection size in that group falls to around 450, with the median around 100. A caveat: these numbers are based on self-reporting, and should be viewed as rough estimates.
In Germany overall rates of ownership are very similar among the young: 81% of 18- to 29-year-olds own music files. Average collection sizes are smaller but comparable: just under 1500 songs among 18- to 29-year-olds. Ownership rates then drop sharply: 48% of 30-49 year olds own music files; 32% of 50-69 year olds; and 13% of those over 70.
Age also affects how people collect. In both countries the 18- to 29-year-old and 30- to 49-year-old groups show remarkably similar patterns of purchasing digital music and ripping their own CDs. Age makes virtually no difference in the scale of either practice. But the average collection sizes of the two groups differ signficantly—with the younger group outcollecting the older group by a third in the US and nearly 60% in Germany. The gap is almost entirely due to higher levels of copying from family and friends and file sharing.
- France, 2011: According to the French enforcement agency HADOPI (2011a) there is a strong correlation, among Internet users, between spending on “digital cultural goods and services” and “illicit use” or file sharing. Of those who spend 100 euros per month on such goods and services, 64% admit to “illicit use” or file sharing. Of those who spend nothing, 36% admit to “illicit use.”
The rough comparability of music file ownership rates and average collection size in the two countries hides deeper differences in the organization of digital music culture, most sharply visible in median collection size. For adults under 30 the median collection in the US contains roughly 1000 songs; in Germany it has 300 songs. Although Germany and the US have similar numbers of large collections per capita—in both countries 3% of Internet users own over 5000 songs—the US has three times per capita as many medium-sized collections of 1000–5000 songs: 9% in the US; 3% in Germany. Put differently, digital music file collecting on a large scale is still rare in Germany. The CD remains the main collectors’ format.
In both countries, the possession of medium and large digital collections tracks closely with P2P use—a practice that includes roughly 4% of German and 13% of American Internet users. We can filter the same set of questions about music file acquisition through P2P use.4
Predictably, P2P users download much larger numbers of music files. Less predictably, they are also the heaviest buyers of digital music—by a roughly 30% margin in the US and by a much larger (though statistically unreliable) margin in Germany. Our study confirms numerous others on this point, including work by RIAA survey firm NPD (2012), the British government Ofcom (2012), and French enforcement agency HADOPI (2011).
Overall, American Internet users buy significantly more songs than they download for free, by a ratio of roughly 7:4. As copying and downloading for free diminish in the 30- to 49-year-old group, purchasing remains the same, suggesting that these practices are mostly complementary to legal acquisition, not strong substitutes for it.
[bonus web content: we got into a dispute with record-industry survey firm NPD on this these findings, summarized here.]
How much of these collections is “pirated”? The question is more complicated than it sounds. Under US law unauthorized downloading or copying is almost always presumed to be infringement. The most commonly accepted ‘fair use’ exceptions are relatively narrow. At the same time, our questions introduce two likely countervailing sources of error: legal free downloading on the one hand and underreporting of perceived infringement on the other. We can measure neither.
We can say that around 44% of the average collection of American 18- to 29-year-olds is copied or downloaded for free, and that this is likely a rough approximation of the infringing content in those collections. Among 30- to 49-year-olds, roughly 21% is copied or downloaded for free.
In Germany the unauthorized downloading of copyrighted material is infringement, but the legal status of “copied from friends/family” depends on the legality of the source material—a very difficult subject that the survey does not illuminate. The large percentage of files acquired this way makes it impossible to say how much of the average German collection is infringing.
In both countries sharing copies with friends and family plays a large role in acquisition: roughly 42% of file owners in each country share music files within close personal circles. In the US such copying represents a large share of the total music files owned by those under 30—some 22%. In Germany the number is slightly lower: 18%.
A somewhat different picture emerges when we eliminate the influence of large collections. When each respondent is weighted equally, the importance of personal sharing in German copy culture becomes clearer. American 18- to 29-year-olds attribute, on average, 16% of their collections to personal sharing. Germans in the same age group attribute 25% to personal sharing.
Generally speaking, per capita, Germans have smaller collections and share more of them with friends than Americans. In both countries copying and downloading for free drop sharply with age.
The German P2P response pool is too small for statistically reliable breakdowns, but it is consistent with our broader account of German digital music culture.
Only 14% of Americans and 15% of Germans own movie/TV files, and the vast majority of them are young. Because possession of movie/TV files in the two oldest age groups was negligible in both countries, we dropped them from our analysis.
Movie/TV file ownership provides a relatively weak window on home video practices because both legal and illegal services have gravitated toward other models. The legal distribution chain is largely locked down through cable and Internet streaming subscriptions, digital rights management, and specialized hardware. Premium cable channels are the elephant in this room, with over $6 billion in US revenues in 2011 (of which nearly $4 billion went to HBO) (Wallerstein 2011). Internet-based streaming services (mostly Netflix) earned $473 million in 2010. Video-on-demand services like iTunes and Amazon.com earned only $273 million in 2010 in the US. As a result, video file ownership tilts sharply toward informal acquisition.
Because of the small sample sizes, detailed breakdowns of collections and acquisition methods are volatile—especially in the German case.
Among the younger groups, the results are consistent with our overall picture of US and German audiovisual culture. US viewers experience less windowing and have more legal options than their German counterparts, including well-developed streaming services and on-demand pay TV services. Among young Germans, unauthorized downloading plays a larger role in meeting that demand. Seventy-one percent of movie/TV files owned by German 18- to 29-year-olds are downloaded for free, versus 57% in the US. In both countries, some of this demand has also shifted toward unauthorized streaming services.
To date, research on unauthorized copying—“piracy”—has strongly favored two-sided models in which piracy in a given medium (e.g., recorded music) substitutes for some percentage of legal sales. Such models commonly underpin arguments for stronger enforcement: raise the cost of piracy and legal sales will grow.
The growth of streaming music and video sites, however, complicates efforts to map the media landscape and the role of copy culture within it. Simply put, it has become very difficult to say what substitutes for what. Does an infringing MP3 displace some portion of a legal CD, an iTunes single, a YouTube viewing, a Spotify listen, radio play, or nothing at all—as part of a massive archive that will never be played? Is there a “natural” level of demand for recorded music that infringement cannibalizes? Or—as we think is more likely—is music purchasing part of a dynamic allocation of income and attention to competing leisure goods, in which more music means less of something else? Access to music, especially, now involves a rapidly changing ecology of media and services that act as near—but not complete—substitutes. The situation is equally dynamic with regard to copying and file-sharing technologies, where direct download and video streaming sites have partially supplanted P2P file sharing.
Music streaming is not new: Internet radio broadcasts began in the mid-1990s, and archive-based services like Pandora date back to 2000. But the use of such services has grown rapidly in recent years as cheap devices and higher bandwidth connections have proliferated. As with other new digital media services, use tilts sharply toward the young.
According to our data 13% of American adults rely on streaming services for “most or all” of their music listening—including 29% of those under 30. Over half of these heavy streamers—7% of adults—listen through paid subscription services.
Germans make less use of streaming services than Americans in general, and much less use as a primary form of music listening. Only 2% of Germans listen to “most or all” of their music via streaming services. Listening habits also show the now familiar sharp age gradient. Specialized music streaming services have been available in Germany for some time, but adoption has been slow and newer services have not prioritized the German market. Spotify—developed in neighboring Sweden—launched in Germany only in March 2012.5 For comparison, 22% of Swedes listen to Spotify on a daily basis (Findahl 2012).
Streaming Music (US, Among All Adults)
Streaming Music (Germany, Among All Adults)
- Germany, 2012: A BITCOM survey from May 2012 showed that 41% of German Internet users use free streaming services like YouTube and Internet radio, 10% buy music downloads, and 3% pay for streaming services (BITCOM 2012).
- UK, 2010: A Wiggin survey ( 2010) found that 4% of UK residents have paid subscriptions to music streaming services, and 20% use free services.
For TV and movies, the difference is still greater. Nineteen percent of American Internet users watch TV shows and movies via paid subscription streaming services (almost entirely Netflix). In Germany the number of subscribers to comparable sites like Videoload or Maxdome is under 2%. In 2010 the total online video market in Germany was only €21 million (Solon 2011), compared to at least $750 million in the US for the major pay and subscription services (neither number includes cable services). Timid licensing and windowing strategies by studios, poor usability, Windows DRM, limited platform support, and small catalogues have all played a role in the slow take-up of Internet-based video. Nevertheless, the market is expanding. iTunes started offering TV series in Germany in 2008 and movies in 2009. In June 2012 Netflix announced that it will expand to Germany.
Copy culture fills the demand for a cheap, convenient, universal music library—a “celestial jukebox.” As legal streaming services become better direct substitutes for file sharing, there should be evidence of a shift toward those services. This appears to be the case: of the 30% of Americans who have copied or downloaded digital music files for free, 46% indicated that they now do so less because of the emergence of these services. (The US survey was conducted just after the US launch of Spotify in July 2011). The comparable figure for video—the so-called Netflix effect—is 40%.
Among American P2P users, who represent most of the high-volume file sharers, the number is still higher: 66% say they download music less because of the emergence of these services, and 16% have paid subscriptions to music streaming sites, compared to 7% of the general population.
German downloading show a similar dynamic, with 52% of those who both “download for free” and stream music doing less of the former because of the latter. Among P2P users, the figure is 55%. Because very few Germans make use of legal TV/movie streaming services, there are no comparable results for this category.
More Streaming = Less Copying & Downloading For Free (US, Among Those Who Do Both)
More Streaming = Less Copying & Downloading For Free (Germany, Among Those Who Do Both)
What about illegal streaming of TV shows and movies? The major Hollywood studios have raised the alarm about unauthorized streaming over the past several years. Surveying on this issue is difficult because of the lack of clear differentiators between many legal and unauthorized services. Our questions attempted to differentiate such sites from widely recognized services such Hulu (with its in-programming advertising) and Netflix (with its subscription model) in the US, and MyVideo and Videoload in Germany. German public broadcasters also run commercial-free, free-of-charge streaming services. Because of the complexity of this landscape, we have relatively low confidence in the results. We do see the most potential for error on the upside, as people mistake unauthorized services for authorized ones. GfK’s 2011 Digital Content Use survey in Germany suggests that such confusion is common.
With those caveats, our data suggest that around 15% of Americans who watch TV/movies via streaming services also watch at least some of them via unauthorized sites. This represents 8% of the wider adult population.
Among Germans, the number is 18%, or 9% of the overall population. This is roughly double the percentage of Germans who are P2P file sharers (4%), suggesting a shift toward the simpler, less vulnerable streaming model.
The strong German generational pattern is reproduced here, with 18- to 29-year-olds outpolling 50- to 69-year-olds by roughly 4:1. In the US our data suggest no visible generational effect for illegal streaming distinct from the general drop-off of online viewing with age.
Who Streams Pirated TV/Movies (US & Germany, Among Those Who Watch TV/Movies Online)
- Germany, 2011: According to GfK 24% of Germans think that “watching new cinematic releases on portals like kino.to, movie2k etc.”—both well-known unauthorized sites—is legal (GfK 2011).
- Australia, 2012: According to IPAF (2012), 8% of Australian Internet Users “use a website to watch a pirated TV show/series on the Internet” at least once per month. Five percent do so for movies. Among the different methods of viewing unauthorized TV/movies, 50% of “illegal downloaders” indicated they do so most often via downloading (P2P and cyberlockers); 24% do so via streaming; 8% use both methods equally. The shift from downloading to streaming is strongest among the young.
Tablet and e-reader ownership is far more common in the US than in Germany. Ten percent of Americans own tablets and 14% own e-readers. The corresponding numbers in Germany are 4% and 2%. Roughly 21% of American adults have at least one such device, compared to 5% in Germany. The market for e-books is accordingly much larger in the US. US e-book sales approached $1 billion in 2011, representing 20% of book sales. In Germany e-books sales totaled $50 million, or 1% of the book market in 2011 (GfK 2012). Lower rates of device adoption are part of this story, but there are also cultural and policy explanations: the German book market is organized around local bookshops, which anchor the commitment to physical formats. This culture is reinforced through tax policy: printed books are subject to a special value-added tax of 7%; e-books to the general one of 19%.
Our German sample of e-book owners was accordingly very small (N = 49). With caveats, we have included the data for the under-30 age group, which represent over half of these responses.
eBook Collections (US, Among The 15% Who Own eBook Files)
Sources Of eBook Collections (US)
Generally speaking, the US results show three things:
- The US book market is organized to a large degree around monopoly vendors and locked devices. The vast majority of e-books (75%) are bought, not copied or downloaded for free. Sixty-nine percent of e-book owners have purchased all of the books in their collections. Copying from family and friends or from libraries is negligible in terms of the overall market—though the proportion of items “copied from libraries” becomes slightly more visible when controlling for collection size.
- Collections are still small. Median collection size hovers between five and 10 books. Only 4% of US tablet/e-reader owners (<1% of the general population) have over 100 e-books. Only 1% of US tablet/e-reader owners own more than 1000.
- Age shapes the adoption of devices but not subsequent e-book acquisition practices. Purchasing is relatively consistent across the age groups. (The jump in “downloads for free” among the 65+ group reflects the influence of a few outliers with large collections.)
German results are almost too scant to report. Roughly 10% of 18- to 29-year-olds own e-books, though collections are small. Buying is the most prevalent form of acquisition, but downloading plays a significant role. Large collections are virtually nonexistent. Only two respondents in our 1000-person sample had over 100 e-books.
eBook Collections (Germany, Among The 5% Who Own eBook Files)
There is much discussion but little publicly available data about the unauthorized copying of video games. Console-based video games are widely viewed as less vulnerable to such practices than personal computer games, due to the need for hardware or software modification of the consoles. But the landscape has changed quickly, and the Entertainment Software Association—the main representative of the game industry—now disputes this assumption, arguing that copying on these systems is as common as on their PC counterparts. Estimates of the unauthorized copying of PC games routinely run upward of 90% of the installed base.
Much of the attention to console piracy focuses on emerging economies, where game markets are often underdeveloped and high priced, and consoles are routinely sold through informal channels.
In the US, console “modding” (and, consequently, unauthorized copying) is clearly very rare. Forty-eight percent of the surveyed households owned game consoles (Xbox or PlayStation). Of these, roughly 3% (1.5% overall) had consoles that had been modified to play unauthorized copies of games. Of this 3%, a little over half had consoles that were modified at the time of purchase, and a third had consoles that were modified by the owners (in both cases, these are very small samples). We did not inquire about PC or mobile games, and this question was dropped from the German version due to time constraints.