Piracy of digital media content (music, movies) does not always damage the copyright holder. In certain conditions it is even beneficial and beneficial for him. These are the results of a new study conducted by scientists from the University of Indiana. The scientific article “The“ invisible hand ”of piracy: an economic analysis of the supply chain of information goods” was published in the journal MIS Quarterly (doi: 10.25300 / MISQ / 2018/14798).

For decades, the entertainment industry has demonized piracy. Often, pirates expose villains, and the phenomenon itself is called absolutely unacceptable. Such demonization sometimes takes on radical forms, even to display frightening anti-piracy videos in front of films, threats on behalf of the FBI, etc. Industry groups such as the American Filmmakers Association offer increasingly aggressive and costly "solutions" to problems (lawsuits, website blocking , fines, even criminal prosecution of users), although history shows that such aggression is not very effective .

Researchers at Indiana University looked at this phenomenon from a completely different angle. They concluded that online piracy can have a positive effect on markets, and excessive aggressiveness in repressing and punishing pirates is sometimes counterproductive.

As an example, the authors of the study cite the popular series “Game of Thrones” of HBO television, which regularly occupies the first lines of pirate charts due to the large number of downloads in torrents.

Price regulator

Researchers have found that piracy often acts as a form of invisible competition, keeping both the manufacturer (HBO) and the cable operator (for example, Comcast) away from the highest possible price increases that they could otherwise do. The fact is that the video market is vulnerable to the effect of double margin (double overhead).

This problem arises in the conditions when there are two monopolists in the product supply chain: a monopolist-producer and a monopolist-distributor of goods. In this case, each of them tries to maximize their profits, but the decisions of the distributor and the manufacturer depend on each other, as a result of which the price increases prohibitively.

Piracy is an effective antidote to such abuse. If the manufacturer pushes the price for the product too much, users can simply switch to pirated products. That is, the manufacturer loses its monopoly position.

The benefit of consumer goods in this case is obvious: they have both free pirated content and licensed content at a reduced price. But another conclusion of scientific work is interesting. It turns out that content producers also benefit from moderate piracy of their products: “When information products are sold to consumers through retailers, in certain situations a moderate level of piracy seems to have a surprisingly positive effect on producer and retailer profits, while at the same time increasing wealth consumers, say the authors of the scientific work. “Such a win-win situation is beneficial not only for the supply chain, but also for the economy as a whole.”

The authors say that they themselves were surprised to find that piracy significantly reduces and sometimes completely eliminates the negative impact of double marginalization. This is the “invisible hand” of piracy, which introduces “shadow” competition in the market and influences the price policy of both the manufacturer and the distributor for their mutual benefit: “From the manufacturer’s point of view, reducing the retailer’s markup is good,” Antino Kim, lead author of scientific work. - It cannot raise the price of a product too much, as before, and the problem of double marginalization is reduced. Conversely, if the manufacturer reduces the markup, the retailer benefits from this. ”

Thus, a simultaneous decrease in the trade margin from both the manufacturer and the distributor, the study showed, can bring the product closer to the optimal retail price for a vertically integrated organization as a whole. This means maximum profit for the manufacturer (in the case of the Game of Thrones, this is HBO), and for distributors (cable and satellite television operators).



Researchers are proposing that businesses, the government, and consumers rethink how to combat piracy and consider the possibility of a moderate approach. For example, in Australia, due to the exorbitant costs of aggressive anti-piracy measures, she abandoned the “three strikes” scheme to track illegal downloads on the Internet and send warnings to users.

Although the study again confirmed that the complete absence of anti-piracy measures is harmful for the economy, but the authors caution against excessive diligence in this direction, as well as from further tightening of legislation.

“In the real world, the manufacturer and retailers must recognize that a certain level of piracy can be really useful and, therefore, some moderation must be exercised in their efforts to combat piracy,” they write.

Actually, the same HBO is not particularly zealous and does not seek to sue the pirates, and the result is obvious.