EC accused of suppressing ‘inconvenient’ piracy findings

European Commission has been accused of burying a report suggesting piracy has little impact on copyrighted content.

The allegation, made by Pirate Party MEP Julia Reda, relates to a study that was commissioned by the EC in 2014 to look at “displacement rates” of copyrighted content of movies, books, games and music in the EU – in other words, the relation between online copyright infringement and the sales of copyrighted content.

The EC spent €360,000 on the study, which was completed in 2015, but the results were never made public.

In July of this year, Reda became aware of the public tender for the study and submitted a freedom of information request to access the report, which the Commission failed to respond to twice.

Finally, Reda received the 307-page report, which revealed that: “In general, the results do not show robust statistical evidence of displacement of sales by online copyright infringements. That does not necessarily mean that piracy has no effect but only that the statistical analysis does not prove with sufficient reliability that there is an effect.”

The one exception was blockbuster movies where the report showed a displacement rate of 40 per cent, which means that for every 10 recent top films watched illegally, four fewer films are consumed legally, resulting in an estimated loss of 5 per cent of current sales volumes.

However, the report also revealed a counter-intuitive finding where there was a positive estimated effect of illegal online transactions on sales for games, “implying that illegal consumption leads to increased legal consumption”, the report said. “This positive effect of illegal downloads and streams on the sales of games may be explained by the industry being successful in converting illegal users to paying users,” it added.

In a blog post after accessing the report, Reda queried why the Commission, after having spent a significant amount of money, chose not to publish the study for almost two years, and suggests it would have remained buried had she not put in a freedom on information request.

The German MEP speculated that the report’s nondisclosure was because “copyright policy is usually based on the underlying assumption that copyright infringement has a direct negative effect on rightsholders’ revenues”. One such policy is the “Commission’s highly controversial proposal” of requiring hosting providers to install content filters to surveil all user-uploaded content in order to address the displacement of value form licensed music streaming services to hosting services such as YouTube, Reda noted.

“We clearly need to have access to all available evidence on whether such displacement actually takes place in practice”, hence the commissioning of the study, Reda said. Only the study didn’t return the results that were wanted to justify policy decisions.

However, Reda told The Next Web website that the EC had cherry-picked figures from the report to support its agenda on strengthened copyright rules.

She said: “At first I was willing to give the Commission the benefit of the doubt that the study had simply fallen through the cracks, since the responsible department underwent significant restructuring in 2014, after the study was commissioned. However, now all available evidence suggests that the Commission actively chose to ignore the study except for the part that suited their agenda – in an academic article published in 2016, two European Commission officials reported a link between lost sales for blockbusters and illegal downloads of those films. They failed to disclose, however, that the study this was based on also looked at music, ebooks and games, where it found no such connection. That demonstrates that the study wasn’t forgotten by the Commission altogether.”

She added: “One cannot avoid the suspicion that the Commission intentionally suppressed the publication of publicly funded research because the facts discovered were inconvenient to their political agenda.”

On her blog, Reda said: “I would like to invite the Commission to become a provider of more solid and timely evidence to the copyright debate.”

“Such data that is valuable both financially and in terms of its applicability should be available to everyone when it is financed by the European Union – it should not be gathering dust on a shelf until someone actively requests it.”

There has been no comment from the EC in regards to the claims.

The report does note the challenges involved with identifying accurate displacement rates, saying they can only be estimated based on observed behaviour but that technology, such as online delivery channels for content, makes this increasingly difficult.

The European Union currently has proposals out for copyright reform for “modern copyright rules fit for the digital age” with the aim of creating a digital single market. While the hope is to “help European copyright industries to flourish” there have been criticisms about the proposals.

The full report can be read here: https://cdn.netzpolitik.org/wp-upload/2017/09/displacement_study.pdf