Pretty much everyone I know has downloaded or streamed a movie over the Internet. It seems, to me, that Internet piracy is somewhat of a norm for my generation, especially for poor college kids on a tight budget. But that's the issue: money. From the research I've done about Internet piracy, the main problem is how it is affecting the economy. For the poor college kids, it's not wanting to pay anywhere from 15 to 30 dollars for a movie, and for Hollywood it's the revenue lost on DVD and box office sales. My question is, how much is it really hurting Hollywood's pocket books and even more so, the economy in general?
The title of my post comes from a quote by Mark Twain that Kal Raustiala and Chris Sprigman of Freakonomics used to describe how numbers get thrown around in the media. After recent legislation battles over bills SOPA and PIPA, that I won't go into here, there has been a lot of attention turned to how much money is actually lost when it comes to pirating. As it turns out, the actual numbers are still a mystery. However, Hollywood has thrown around figures such as a loss of somewhere between 200 and 250 billion dollars. Brad Plumer of the Washington Post states that much of these figures actually come from recounting to boost and fluff their statistics. In fact, Kal and Chris point out that the government has actually released a statement saying that, more or less, those numbers are bogus.
They also point out that Hollywood's argument is piracy creates issues for the economy regardless of what the actual numbers are. Brad argues that the economy as a whole will not actually suffer. Kal and Chris would agree by saying that even though the pirate's money isn't being spent on a DVD, it will be spent somewhere else on some other item that will profit the economy. Basically, Hollywood, the government, the media, etc. tell Mark Twain’s three kinds of lies: lies, damned lies, and statistics. All of which are to make it seem as though the problem is bigger than it actually is.
However, there is indeed an issue that is quite daunting for Hollywood that has proven quite difficult to be challenged. That would be the issue of how piracy is practiced. BBC News reports that in North America, the primary form of piracy is in the form copying as opposed to downloading or bootlegging in other parts of the world. They also report that while number and figures get tossed around and are perhaps fluffed a bit, there are actual revenue losses from lack of box office sales and DVD purchases.
Paul Tassi and Erik Kain of Forbes.com both present a solution to this issue. Paul describes that because of this lack of revenue, Hollywood has jacked up the prices of DVDs and BlueRays as well as tickets at the box office, which he argues quite sarcastically, is such a good way to bring in more customers. Instead, Paul points out, it is much easier to download a copy of a movie in just seven steps.
Therefore, both he and Erik suggest that creating a film version of Steam (an online PC game distributor) would solve much of the piracy issue, because it would give people the opportunity to legally acquire film and TV at a much cheaper rate. What it comes down to for both Paul and Erik is that technology is constantly changing, and it doesn't look like piracy is an issue that will be beaten anytime soon.
So, in all, Hollywood isn’t doing anything to make the consumer’s budget any easier. In fact, they are making it tighter by using deceitful statistics about the piracy of film and television. Based on what I’ve read, the economy is not actually any worse off because of pirating and Hollywood’s trend of raising prices to combat it is actually causing piracy to increase. Perhaps Paul and Erik’s suggestion of a Movie Steam would be a step in the right direction, but Hollywood would have to agree to reduced prices and that remains to be seen.