The short- and long-term effectiveness of anti-piracy laws and enforcement actions

Abstract

Film studios have spent the past two decades lobbying extensively to establish new legislation restricting access to copyrighted materials online. While there is growing evidence of the effect film piracy has on studio profits, the evidence on the impact of anti-piracy legislation is limited. If anti-piracy legislation is having the film industry’s desired impact, we would expect film revenues to be consistently higher following the passage of major laws that restrict access to pirated content, or major enforcement actions, such as the shutdown of Web sites that provide illegal content for download. This paper applies an intervention analysis approach to weekly data on movie box-office revenues in the USA to determine whether the passage of new anti-piracy policy has generated significant changes in box-office revenues during the period from 1997 to the present. These effects are evaluated in both the short and long term, which allows an assessment of the duration of effectiveness of government actions. The results show that four of the six included policies are ineffective in the long term and those policies that do impact revenues in the short term often harm film studios, rather than help them.

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Notes

  1. 1.

    Prior to 1998 only the highest grossing films are recorded, usually 8–15 films per week. From 1998 to 2001 more films, but not all, are counted, resulting in data on 40–70 films per week. After 2001 all films, even those showing in a limited number of theaters, with limited revenues are included. Over this time period revenues are routinely reported for 90–130 films per week. This problem would produce selection bias (it excludes the lowest grossing films from early data) if it is not accounted for with dummy variables.

  2. 2.

    While this policy is largely an expansion of existing state legislation, rather than an entirely new policy, it is treated the same as the other policies in this study. This is done for three reasons: 1. The state policies were not nearly as well enforced as the new national policy. 2. The national press coverage associated with a major law like this likely had a major impact on film revenues that a state policy would not have. 3. Given the ease of copying a filmed movie it is largely irrelevant whether a movie is recorded in one state or in 20. The federal policy established for the first time that it was difficult to record films in theaters across the nation.

  3. 3.

    The results do not change significantly with an AR(1) rather than ARMA(1,2) process. Concerns about overfitting by using the AIC should be dramatically reduced due to the similarity of results. It is also worth noting that since the goal of this paper is explanatory, not predictive, the possibility of overfitting is less of a concern.

  4. 4.

    This version of the equation includes three lags of the z variable, but this choice is arbitrary. Many versions of this equation were tested with many different lag orders of z.

  5. 5.

    Additionally, the statistics package utilized to produce this paper, R, reports unscaled AIC values, which are often significantly more negative than those that are scaled.

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Correspondence to Tylor Orme.

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Orme, T. The short- and long-term effectiveness of anti-piracy laws and enforcement actions. J Cult Econ 38, 351–368 (2014). https://doi.org/10.1007/s10824-014-9225-2

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Keywords

  • Online piracy
  • Motion-pictures industry
  • Intervention analysis
  • Intellectual property rights

JEL Classification

  • C22
  • K11
  • L82
  • Z18