Ups and Downs: Economic and Cultural Effects of File Sharing on Music, Film and Games

Abstract

The main aim of this study is to identify the short- and long-term economic and cultural effects of file sharing on music, films and games. File sharing is the catch-all term for uploading and downloading. The short-term implications examined include the direct costs and benefits to society at large. In order to determine the long-term impact, we analyse changes in the industry’s business models as well as in cultural diversity and the accessibility of content.

The study draws on existing sources of information to describe the structure and operation of the film, games and music industries and discusses the most important changes in their business models. Digitisation has played a central role in this process.

The trends and developments are subsequently analysed from a legal perspective, with a primary focus on copyright aspects. The empirical reality of file sharing is described using data collected during interviews with heavy file sharers as well as data from a representative survey of 1,500 internet users in the Netherlands. Other sources include interviews with people working in one of the three entertainment industries and, where none were available, with industry representatives.

Note that this part of the study is by no means a consultation of all parties concerned. The research findings are subsequently placed in a broader perspective using comparable scientific studies carried out in other parts of the world. This has enabled us to fill in the missing pieces and to take a closer look at the impact of file sharing on the paid consumption of music, films and games.

The research shows that the economic implications of file sharing for welfare in the Netherlands are strongly positive in the short and long terms. File sharing provides consumers with access to a broad range of cultural products, which typically raises welfare. Conversely, the practice is believed to result in a decline in sales of CDs, DVDs and games.