Why People Pirate
The libertarian Mercatus Center has a new website, PiracyData.org, that we featured in our White Papers & Research section today. The site compiles a list of the most highly pirated movies each week, and also publishes data on whether these movies are available to rent or buy legally online.
The message is clear enough, some initial data errors aside: Sometimes, people pirate movies because they don't have legal options, or at least legal options that they deem acceptable. For example, right now the top pirated movie is Pacific Rim, which you can buy digitally on Amazon for $15, but which according PiracyData is not available for online rental or streaming. Other movies aren't available in digital form at all (e.g. No. 2, White House Down, isn't out on DVD yet). There's no control group -- movies that were released to theaters at the same time and sold as many tickets but are easily available online today -- but it's plausible enough that in some cases people pirate things they'd be willing to pay some amount for if that were possible.
[Update: A correction by the Washington Post says that Pacific Rim is now available for digital rental. It's still listed as not available on PiracyData.]
I'm sure this is important information for movie studios. (I'm also sure it's old news for them.) I'm less sure what the policy ramifications are.
Obviously, everyone is well advised to take whatever steps they can to avoid becoming a crime victim. But frankly, lowering the price of a movie (or releasing it at a sub-optimal time) to appease pirates is basically victimizing oneself. As I can attest from being a huge video-game fan, one way that entertainment companies maximize their revenue is to release a product at a high price for the diehard fans who need to have it right away, and then gradually reduce the price until patient cheapskates like me buy it.
For example, because the marginal price of a download is close to zero, it was profitable for Square Enix to sell me Sleeping Dogs for $7 back in June -- presuming they'd already made up their initial investment (millions upon millions of dollars) by selling the game at much higher prices to people with less self-restraint. That's what movie studios are doing when they charge $15 for a new movie and don't make it available to stream or rent online, or when they wait until a movie is out of theaters before releasing it for home consumption. Without this technique it's much harder to turn a profit, and many intellectual properties don't turn a profit already.
The Pacific Rim downloaders highlighted by PiracyData are claiming a right to have movies right away and not pay a premium for it. In other words, they're brats.
And regardless, even if we assume that we know the optimal price for a movie better than huge movie studios do, I don't see how we get to the (clearly implied) idea that aggressive copyright enforcement is illegitimate or unnecessary. If there's a spate of muggings in dark alleys, "people should stay out of dark alleys," while great advice, is not an argument against police action.
The site has already provoked significant backlash from copyright defenders. See: IPI Roundtable, TechPolicyDaily, and Vox Indie. Those following copyright issues will also want to check out Derek Khanna's argument against requiring performance royalties for radio, an issue I touched on here.
Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen