Correlation Between Income and Piracy

The answering of the question of what effects does unauthorized online content consumption have on legal sales has proven to be difficult. Because most scientific literature, that was analyzed in the making of this paper, suggests that illegal digital consumption hurts legal sales. On the other side, however, a significant number of studies show that the information provided as proof is inadequate to make absolute statements that illegal file-sharing harms revenues legitimate producers.

Therefore only the research studies that are objective as possible, and that have a considerable amount of countries and people analyzed in them have been taken into consideration when evaluating this segment of the paper. Therefore the results of a study conducted by the University of Amsterdam will primarily be presented in this segment of the paper. The study analyzed 13 nations in regards to the topic of illegal downloading, streaming and stream ripping.

These nations were picked specifically to represent as accurately as possible the worldwide situation when it comes to this mater. Countries that were analyzed from Europe were: France, Germany, the Netherlands, Poland, Spain, Sweden, from the Americas: Brazil, Canada and from Asia Hong Kong, Indonesia, Japan, Thailand. All of them have diverse income and law standards regarding this mater. Therefore we can be sure that an unbiased assessment has been conducted.

Study which combined different research methods and sources, made on a sample of 35000 consumers,7000 of them minors, in period of 2014-2017 gave an explanation on how minors changed theyre behavior over the years. Results are shown in table below.

This table splits the research sample into two groups minors and adults. And studies their behavior separately. From the separation it can be apparent that the displacement of legal sales occurs mostly for adults and not so much for minors, in minors piracy actualy seams to have a net positive effect. Displacement fenomenan in this context, depicts how illegal sales displaced many legal sales. In the table numbers bigger than 0 indicate that piracy has a positive effect on the number of legal viewings. Where the displacement rate for music in minors or 0.52 means that 100 illegal users of music produced 52 new music listeners that consume it legally. This is primarily because of the three ways the positive effect can occur described previously. However the negative ratio of for example games of -2.49 means that 100 illegal adult users coused the loss of 249 legitimate users.

All of these findings on a per industry basis might seem to lead to a negative conclusion on the topic of the relationship of sales and piracy. However, the following graph depicts a rather interesting finding. It was found that more than 95 percent of pirates are consumers of both legal and illegal sources.

The graph above is actually two graphs from the study have been merged and edited in terms of placement to make the effects of piracy clearer and easier to understand. The red bars depict the total percentage of the Internet population in those 13 countries that have obtained or viewed any content be it games, songs, films, books, etc. through the use of legal outlets. And the blue bars depict any types of contents obtained and viewed through illegal outlets. We can, therefore, by observing the graph, see a significant overlap of those two populations. This overlap implies, for instance, that in Indonesia 84% of the people on the Internet utilizes illegal techniques to obtain and consume previously mentioned products, this would be the previous conclusion mean that a large loss of sales would occur. However, the study showed that 93% of the population on the internet also utilizes legal means as well.

This essentially means that pirates do not differ much from legal consumers at all. Although they are younger and more often male than legal users, 95 percent of them also legally consume content. This means that they, on average, consume double the amount of content that strictly legal consumers do.

This finding is true for all content types and nations studied, and therefore piraters are not the reason companies are losing money because they actualy represent the majority of their customer base. Also, in the long run, the common user of illegal sources appears to gradually increase his/her spending on legal products and simultaneously lowers consumption of illegal ones. This trend was not, however, noticed in the gaming industry, but it has been noticed in music, movies, series, and books industries.

Also, another interesting finding is that the purchasing power of citizens of one country, more specifically the lack of it, has a lot to do with the number of piratersper legal user (from the previous graph) in it. The arrows indicate developments in the country between 2014 and 2017. From the graph, we can conclude that there exists a surprisingly strong correlation from which a trendline can be extracted. The trendline shows that the higher purchasing power of citizens is correlated with a lower number of pirates per legal user. But we can also notice the previously mentioned law differences that make this study unbiased.

Where in a country like Spain which, is significantly above the trendline. Has income at a level higher than for example Poland the piracy is actually on a higher in it. This can be explained by the specific characteristics Spain has, these characteristics were explained previously in section Why are products counterfeited and pirated? There are fewer pirates per legal user in the countries below the trendline, especially Germany and Japan, than predict based on their citizens purchasing power. To sum up this segment of the paper we can conclude that: There exists a correlation in which the greater the purchasing power of