By Chris Lukeman
Introduction
In
the past 20 years, advances in audio-visual recording and playback have allowed
more artists to enter the entertainment industry and create/distribute music
and movies to the public in greater numbers than ever before. These advances not only lower the cost
for new artists to enter the market, but also allow for digital “pirates” to
easily and cheaply duplicate their work.
Without adequate protection of law, bootlegged copies of an
entertainment content producer’s work can and are widely sold without any
compensation to the original artist.
This is most prevalent in less developed countries, where, for various
reasons, intellectual property rights are not as strongly enforced.
There
has been considerable debate as to how piracy actually affects artists and
creative industries in the developing world. Some have argued that piracy can have a beneficial impact on
creative industries in poorer countries, while others think that any benefits
are negligible compared to those that could be achieved by legitimate
enforcement of IP rights. The
advantages and disadvantages of “institutionalized” piracy is the topic of this
paper.
A Sensible Characterization of
Piracy:
When
referring to “institutionalized” piracy I mean that the practice is both
widespread and accepted. That is
to say most countries have copyright laws, which, if enforced to their full
extent, would prohibit the conduct at issue. The problem is that many
developing countries do not enforce their copyright policy.[1]
By not enforcing it they accept the infringing conduct, and, because of this
acceptance, it is allowed to flourish.
Two countries/industries that generally take part in this conduct are
the music industry in Vietnam, and the motion picture industry of Nigeria.
There
is one distinction about defining piracy that is important to point out. In the literature surrounding piracy in
the developing world, there seems to be no line drawn between pirated works and
works that the artist would allow to be distributed royalty-free even if
copyright policy was upheld. There
is a distinction to be made between piracy and legitimate promotion. A band providing burnt CDs at their
show has been characterized the same as distributors with no connection to the
artists that reproduce the music for sale.[2]
In a marketing culture where free samples have been accepted as a perfectly
viable marketing option, the question of if piracy has happened is a matter of
the original content creator’s choice.[3]
Advantages of Piracy as a
Promotional Resource
One
hears the argument that piracy is a boon, not only to the non-paying pirate
public, but also to the entertainment industry and the specific artists
themselves.[4] The main benefit of piracy is said to
be more publicity for the artist and their work. Increased publicity and exposure of an artist then leads to
increased revenue to the artist from other products, such as, in the case of
Vietnam, concerts ticket sales.[5]
Publicity
for new artists is a problem in Vietnam for several reasons, that could be
extrapolated to other developing countries. There are fewer television and
radio stations, and the government tightly controls those that do exist. Without audio mediums at their
disposal, it is difficult for new artists to gain a foothold in the
entertainment industry. For a
music group to gain significant interest through fliers or newspaper is
unrealistic, and word of mouth advertising alone would be equally not feasible.
In
developed countries, the most prevalent form of music promotion today is over
the internet. However, like the “traditional” media mentioned above, relying on
an internet presence to promote in the developing world is problematic.
Internet access is prohibitively expensive in Vietnam, where the amount of the
population with regular reliable access is less than 10%, making artists look
for alternative ways to market their music. [6]
When
all of these factors are taken into consideration, this leaves the cheap
distribution of the music in stores.
By having their own profit margin cut out of the equation through piracy
the artist is promoted by extremely cheap copies of their work being
distributed -whether they agree to it or not. The artist can then use their promoted status to ensure
ticket sales to live events where they do get paid, endorsements or other
royalty agreements, and increased sales of merchandise they do profit from.[7]
Disadvantages of relying on
piracy as a promotional tool:
Despite
the benefits institutionalized piracy can give to an artist, there are
significant and potentially long-term drawbacks for both the individual artists
and the industry as a whole. The
most straightforward, and obvious, drawback is simply that the artist makes
less money when their work is widely pirated. This could have repercussions for the entire industry, as
entrepreneurs would be less likely to invest in creative product with less
possible return. The risks would
just be too great.[8] Less
entrepreneurial activity would slow the growth of the industry even further,
setting back the kinds of developments needed to make a third world creative
sector competitive on an international level.[9]
Endorsing
piracy for promotional purposes could create a state of mind where piracy is
accepted by society. A larger
acceptance of such practices can aggregate into long-term problems for future
revenue of the industry. If
consumers grow up with piracy as an acceptable practice, they will be less
likely to accept future revenue models.
Further, if pirates are allowed to flourish in an industry’s infancy
they could maintain the status quo through political influence.
Apart
from the industry at large, a specific musical group who turns a blind eye to
fans bootlegging their work may be missing out on future sales once they
establish themselves later in their career. Fans may be resistant to paying for the music of a band they
are used to paying little to nothing for.
The
Nigerian film market, known as Nollywood, on the other hand, seems to exemplify
how piracy negatively affects the market when allowed to go unrestricted. Nollywood directors place piracy at
taking between 40-70 percent of their profits.[10] Where the Vietnamese examples embraced
piracy as cheap and efficient way to promote their work, in Nigeria the artists
are in a constant battle to shave off enough market share from the pirates to
make back production costs.
Admittedly
there are several major differences in comparing Vietnamese pop music industry
to Nigerian film industry. Aside
from the obvious differences in the physical medium, there are associated
problems when considering how video makes money compared to a band.
While
film producers are making some money from group public exhibition, unlike the
Vietnamese musicians, the bulk of their income is by no means “primarily” from
live performances. Without a
proper theater/projection quality, film/video is not nearly as much of an
“event” as a live musical performance.
This means that a video producer in a country that lacks extensive
established movie theaters or other media outlets must recoup production costs
from the distribution alone.[11] If pirates undercut the producer
quickly and cheaply, the film simply will not make its money back.[12] This shortfall happens regardless of
the actual quality or content of the film. An amazing triumph of the cinema can still be a financial
disaster if pirates are fast enough to market. Even more so, as mentioned above, it stands to reason that
this risk contributes to the continued low investment in Nollywood films.[13] The average budget for a film in
Nigeria is $25,000.[14] Without decreasing the risk of return,
the quality of the creative output will likely remain low, which will prevent
the industry from moving forward.
Admittedly budget doesn’t directly correlate to the subjective film
quality, but a mentality of high risk/low return would possibly keep industry
participants from taking chances with the medium.
There
are, of course, a lot of other factors at work that weaken this argument. For example, it stands to reason that
if piracy never existed in Nollywood there might never have been this surge in
the filmmaking sector in the first place. Movies may have been priced too high
for mass consumption, these higher prices would lead to less people seeing the
films, knowing their worth, and less overall demand. Even if piracy ended overnight today fewer movies would be
purchased. It takes more than just
strong IP protection to actually promote creative industry growth.[15]
These reasons aren’t to say that Nollywood directors haven’t had some success in monetizing their work within the piracy system. In some cases, legitimate sources provide higher quality versions of a work, which is preferable to a consumer with more disposable income. There is a subscription Nollywood channel available in the U.K. as well as legitimate online retailers for the international community that provide royalties where they are due.
Further, more unorthodox measures
have also been taken recently. Some
Nollywood directors have been so uncertain that they can make profit after a
film is released that they have resorted to inserting advertisements in their
initial cut of movies -ensuring that future pirated versions retain the ads. All things considered, it appears that
Nollywood flourishes not because of piracy, but perhaps despite it.
Under what conditions would the
benefits of piracy outweigh the dangers?
That
piracy is categorically beneficial to an entire industry would only make sense
under a very specific set of conditions.
A more nuanced argument is that piracy of some kind is beneficial to
some aspects of a market at specific levels of development. In a country’s creative infancy, piracy
can be a useful marketing tool to gain market share over cultural imports. After infancy, the benefits of
institutionalized piracy should be weighed against other channels of promotion.
Conclusion
In
the cases of the Vietnam and Nigeria, where the piracy taking place is from
bootleg CD/DVDs (not file-sharing), the fact remains that someone is making
money from the works.
The bottom line is that the artists
themselves should be able to decide who makes money off of what they
create. Many would likely choose
to freely distribute a portion of their work to attain the very benefits listed
above, regardless of copyright enforcement. Piracy does not appear to be a necessary crutch to a
burgeoning creative industry, but more of a, to put it bluntly, leech. While free distribution has its
benefits, they should be closely weighed against the threat of unnecessarily
constraining an otherwise valuable industry.
[1] Koji Domon & Tran Dinh Lam, Profitable Piracy in Music Industries, 6 Rev. of Econ. Res. on Copyright Issues 1, 10 (2009).
[2] Koji Domon & Kiyoshi Nakamura, Unauthorized Copying and Copyright Enforcement in Developing Countries: A Vietnam Case Study, 4 Rev. of Econ. Res. on Copyright Issues 87, 95 (2007).
[3] More Bands and Musicians Giving Away Free Downloads
(accessed October 27, 2009) <http://mashable.com/2007/10/09/radiohead-free-downloads/>.
[4] Koji Domon & Kiyoshi Nakamura, Unauthorized Copying and Copyright Enforcement in Developing Countries: A Vietnam Case Study, 4 Rev. of Econ. Res. on Copyright Issues 87, 95 (2007).
[5] Id.
[6] Id. at 92.
[7] Koji Domon & Tran Dinh Lam, Profitable Piracy in Music Industries, 6 Rev. of Econ. Res. on Copyright Issues 1, 2 (2009).
[8] Mark Schultz and Alec van Gelder, Creative Development: Helping Poor Countries by Building Creative Industries, 97 Ky. L.J. 79, 129 (2008-2009).
[9] Id.
[10] Will Connors, Nollywood Babylon, Wall Street
Journal (2009),
http://online.wsj.com/article/SB10001424052970203771904574177472683696390.html.
[11] Id.
[12] Mairi Mackay, Nollywood loses half of film profits to piracy, says producers, CNN.com (2009), http://www.cnn.com/2009/SHOWBIZ/Movies/06/24/nollywood.piracy/index.html.
[13] Id.
[14] Id.
[15] Mark Schultz and Alec van Gelder, Creative Development: Helping Poor Countries by Building Creative Industries, 97 Ky. L.J. 79, 90-91 (2008-2009).
Comments