Nice natural experiment on the short-term effect of TV availability on piracy.

http://www.forbes.com/sites/insertcoin/2013/06/28/google-and-apple-may-bring-us-a-console-war-we-didnt-see-coming/

The Ouya is a piracy goldmine, allowing even users with a fractional amount of tech knowledge to get access to emulator roms of nearly every old video game in existence. You can bet that’s a service Google and Apple won’t offer.

http://observationalepidemiology.blogspot.com/2013/06/hell-probably-get-in-trouble-for-saying.html

But [David] Petrarca shrugged and said the illegal downloads did not matter because such shows thrived on "cultural buzz" ..."That's how they survive."

Since it's conference season

Evidence on promotion

Cool paper. Press release below. Background is of course that the Constitution allows for copyright and patent law to, "Promote the useful arts and sciences," one of two directive clauses in the constitution. This stipulation didn't get much play in the early 2000's court cases, but it should IMHO. Do intellectual property rights on existing technologies hinder subsequent innovation? A recent study published in the Journal of Political Economy suggests that some types of intellectual property rights discourage subsequent scientific research. "The goal of intellectual property rights – such as the patent system – is to provide incentives for the development of new technologies. However, in recent years many have expressed concerns that patents may be impeding innovation if patents on existing technologies hinder subsequent innovation," said Heidi Williams, author of the study. "We currently have very little empirical evidence on whether this is a problem in practice." Williams investigated the sequencing of the human genome by the public Human Genome Project and the private firm Celera. Genes sequenced first by Celera were covered by a contract law-based form of intellectual property, whereas genes sequenced first by the Human Genome Project were placed in the public domain. Although Celera's intellectual property lasted a maximum of two years, it enabled Celera to sell its data for substantial fees and required firms to negotiate licensing agreements with Celera for any resulting commercial discoveries. By linking a number of different datasets that had not previously been used by researchers, Williams was able to measure when genes were sequenced, which genes were held by Celera's intellectual property, and what subsequent investments were made in scientific research and product development on each gene. Williams' conclusion points to a persistent 20-30 percent reduction in subsequent scientific research and product development for those genes held by Celera's intellectual property. "My take-away from this evidence is that – at least in some contexts – intellectual property can have substantial costs in terms of hindering subsequent innovation," said Williams. "The fact that these costs were – in this context – 'large enough to care about' motivates wanting to better understand whether alternative policy tools could be used to achieve a better outcome. It isn't clear that they can, although economists such as Michael Kremer have proposed some ideas on how they might. I think this is an exciting area for future work." Heidi L. Williams, "Intellectual Property Rights and Innovation: Evidence from the Human Genome." Journal of Political Economy 121:1 (publishing in February 2013 issue--due to release in April).

Sales increased after Megaupload shutdown. Haven't read the paper, but here's the relevant paragraph from the abstract:

Simply examining changes in sales after the shutdown would produce an inaccurate measure of its actual effect as sales are changing over time for a variety of reasons. Instead we exploit cross- country variation in pre-shutdown usage of Megaupload as a measure of treatment intensity. Controlling for country-specific trends and the Christmas holiday, we find no statistical relationship between Megaupload penetration and changes in digital sales prior to the shutdown. However, we find a statistically significant positive relationship between a country’s Megaupload penetration and its sales change after the shutdown, such that for each additional 1% pre-shutdown Megaupload penetration, the post-shutdown sales unit change was 2.5% to 3.8% higher, suggesting that these increases are a causal effect of the shutdown.

Of course, there's still the effect of "competition" with pirated downloads which spurred movie studios to offer online services in the first place, but it's interesting to see a seemingly high-quality study that shows the effect go in this direction. Most of the others show piracy increasing sales.

VH1's apparently doing a documentary on Napster.

Pandora alternatives

Now that Pandora is terrible and ad-ridden, I found this today: http://www.earbits.com/ Enjoying quite a bit so far. I wonder what the dynamics of this are. It sounds like a classic case of new entrants offering more for lower prices in order to build market share. In the movie/TV industry, that would be a little more dubious, since contracting is voluntary--and thus the content controllers can basically extract near-oligopoly profits from middlemen like Netflix and Hulu. But I think for music streaming there is compulsory licensing (c.f. recent articles on how little artists get paid from even hits on Pandora et al.) and thus middlemen are fairly free to price how they want.

Survey of file sharers.

Remix culture has come full circle

The pros are now remixing the amateurs' covers of their own songs.

Gotye’s stunt reminded me of an argument I first heard from the academic Karl Hagstrom Miller: In the 21st century, we have circumnavigated back to the late 19th, when pop was a participatory sport, and the amateur was the star. As in 1890, the real musical action these days is taking place at home. And the laptop camera is the new parlor room piano.

From Slate.

Natural experiments and movies

This looks very cool. They use the Megaupload shutdown as a natural experiment to examine the effect of piracy on movie sales. Unfortunately the paper doesn't contain many details at this stage. Looks like they're basically comparing movies released in countries where Megaupload was shut down to movies released in countries where it wasn't.

Peukert and Claussen. Piracy and Movie Revenues: Evidence from Megaupload. In this paper we make use of a quasi-experiment in the market for illegal downloading to study movie box office revenues. Exogenous variation comes from the unexpected shutdown of the popular file hosting platform Megaupload.com on January 19, 2012. The estimation strategy is based on a quasi difference-in-differences approach. We compare box office revenues before and after the shutdown to a matched control group of movies unaffected by the shutdown. We find that the shutdown had a negative, yet insignificant effect on box office revenues.This counterintuitive result may suggest support for the theoretical perspective of (social) network effects where file-sharing acts as a mechanism to spread information about a good from consumers with zero or low willingness to pay to users with high willingness to pay.

Posner on term length

Beautiful post on copyright/patent term lengths from Posner. One concept I think he leaves out is how much of a product's value results from any single patent. The recent Apple/Motorola decision seems wrongheaded in part because the shrink/swipe interface is only one aspect of the increased value of iOS. The proof is in the pudding: a single Apple device outsells an ecosystem of Android devices.

Wow, just...wow.

The other Olympic games: the DRM games.

Paper clips and patents

Interesting tale of the dominance of the Gem clip over all the others. I'll put forth a less story-driven potential explanation, though: the Gem clip flourished because it was one of the few which was unpatented (they patented the machine but not the clip shape itself). As always, there are benefits and costs to stronger content protection, and neither stronger nor weaker protection can be said to be pro-innovation. It all depends where on the curve you are.

Blogger reviewing studies of piracy's effect on the RIAA constituents.

This will be a fascinating case--right of resale with digital music.

Nice quantitative breakdown of movie industry patterns.

Graveyard of DRM: compilation of all the abandoned formats.

Legal shenanigans around the public domain. My understanding of the law here is that companies are under no obligation to provide public domain works that they have copies of, but that anyone who obtains such a copy can redistribute it. I don't know how the law works with "intent to distribute" as in the original case, but in this case I suspect he'd be ok since he was careful to take only public domain works. Unless he violated a hacking law somehow (unlikely, given the fairly trivial things that were required in the first attack), or ran afoul of the contract (very likely, given the all-encompassing nature of most click-through agreements these days).

It would be interesting to try to quantify quite how many public domain works are locked up inside paywalls. Easier to come up with a number of works than with a valuation on their economic value.

Conspiracy-theoryesque report of movie industry not releasing a report stating that "pirates" purchase more than non-pirates.

The interesting point here for me is not the smoking gun or the conspiracy theory or somesuch. Rather, I've assumed for a while that such evidence has made it into the hands of executives, either via the public domain or via commissioned reports. What's clear is that the decision-making process has simply ignored the evidence over and over again. It's not a phenomenon unique to one industry (or government, or even sometimes academia), sadly. For all the rise in "data scientist" positions at corporations, for all Netflix and Google's success, evidence is still a second class citizen.

New Pandora/Last.fm competitor: Spotify.

Electronics giant Ericsson takes a boldly moderate stand on piracy and anti-piracy.

Nice to see someone studying IPhttp://www.blogger.com/img/blank.gif issues quantitatively.

A Generation of Software Patents

James E. Bessen

This report examines changes in the patenting behavior of the software industry since the 1990s. It finds that most software firms still do not patent, most software patents are obtained by a few large firms in the software industry or in other industries, and the risk of litigation from software patents continues to increase dramatically. Given these findings, it is hard to conclude that software patents have provided a net social benefit in the software industry.

The cloud

You know that the "media cloud" has made it when copyhttp://www.blogger.com/img/blank.gif-cat clouds like Best Buy's new one start popping up.

On the other hand, being in Paris for the summer, I have discovered a huge downside: because you don't actually own your media, artificial restrictions get put in place. Not only do subscription services like Netflix stop working, but even movies that you ostensibly paid for with Amazon's video-on-demand service stop working. If you're going to charge the same price that the physical media costs, at least make it just as useful.

An interesting illustration of how copyright law is not just about profits but speech.

P2P on the decline?

"According to research group NPD Group, the shuttering of Limewire's music file sharing service has led to a similar decline in the usage of such services throughout the U.S. The number has gone from a high of 16 percent in the fourth quarter of 2007 to just nine percent in the fourth quarter of 2010, right after Limewire shut down its file-sharing services due to a court order, when a federal judge sided with the Recording Industry Association of America (RIAA)."

Taxonomy of Conference Questions

Some of the more "interesting" questions at a recent conference inspired me to conduct the following detailed analysis of secondary data.

Japanese econometrics study: Filesharing boosts DVD sales

http://www.rieti.go.jp/en/publications/summary/11010021.html

"Whether or not illegal copies circulating on the internet reduce the sales of legal products has been a hot issue in the entertainment industries. Though much empirical research has been conducted on the music industry, research on the movie industry has been very limited. This paper examines the effects of the movie sharing site Youtube and file sharing program Winny on DVD sales and rentals of Japanese TV animation programs. Estimated equations of 105 anime episodes show that (1) Youtube viewing does not negatively affect DVD rentals, and it appears to help raise DVD sales; and (2) although Winny file sharing negatively affects DVD rentals, it does not affect DVD sales. Youtube’s effect of boosting DVD sales can be seen after the TV’s broadcasting of the series has concluded, which suggests that not just a few people learned about the program via a Youtube viewing. In other words YouTube can be interpreted as a promotion tool for DVD sales."

I wish there were an English translation, now that I've spent all this time learning econometrics....

Free can be lucrative.