Does piracy help or hurt word-of-mouth movie buzz?

In light of recent news items suggesting piracy is on the rise again, researchers from the University of Houston and Western University in London, Ontario, have published new data in the INFORMS journal, Management Science, which has found that the power of word-of-mouth (WOM) is effective at boosting demand for counterfeited copies of motion pictures. It does, however, depend on when the copies are made available.

The study to be published in an upcoming edition of the journal is titled “Does Piracy Create Online Word of Mouth? An Empirical Analysis in the Movie Industry”. According to the study’s authors, counterfeiting or online piracy can help create online WOM and boost demand, but if the counterfeits are made available during the pre-release time period in advance of the motion picture’s official screening, that can lead to lower box office revenues. But, when counterfeited copies of movies are made available to the public after the official release of a motion picture, the pirated copies show a positive correlation to the WOM effect and higher revenues.

The researchers were able to use real-world developments, in part, to analyze the impact of limited online access to counterfeits when a major web site that traffics in online motion picture piracy was taken down.

“One of the key online piracy sites, The Pirate Bay, was blocked in Russia since 2015,” the authors said “Because of that, we were able to estimate the impact of piracy on WOM and revenue by applying research methods to all movies widely released in the United States from 2015 to 2017. We were then able to effectively use Russian piracy data to construct instrument variables for piracy in the United States.”

In addition, the study’s authors noticed that there was a period when the site was temporarily taken down after a raid from the Swedish Police in December 2014. During the period when the site was down there was a decline in word-of-mouth volume and revenues that were consistent with the effect of lower post-release piracy predicted by the researchers’ models.

“The net effect of post-release piracy varies across genres of motion picture. Action movies benefit the most, and thrillers benefit the least,” the authors said. “In the process, we conclude that studio managers seeking to counter the negative effects of piracy on their revenues may be best served to target their resources on combating pre-release piracy, because post-release piracy can actually be a net positive.”

Published by

Martin Dew

editor

31 Comments

  1. My takeaway from this information is that those who did the research would have zero problem with my reaching into their pockets or purses, removing their wallets, and returning them empty.

    “It’s theft, and theft makes thieves.”

  2. there's always a victim. no matter what kind of piracy you're talking about. if you get it for free then you've stolen it. word of mouth? is that like "hey, see that movie…here's where to get it! it's so gooooood!!" lol

    Now, I'm iffy on people who pirate then like it and pay to see it or own it later. More than one game maker had told people to go ahead and try their game and if you like it buy it. Minecraft was done that way originally. Let's just say, I like it a lot! and bought the Windows 10 version after upgrading my computer. Also, I remember one company actually providing the info to get the game through those kinds of channels! if movie makers can make that work for them in the same way… people will still pirate and not pay really. lol They don't even care if they are told it cuts down on new stuff coming out for all kinds of reason.

    /mr. obvious

  3. I suppose if I nicked a packet of sweets from a shop and told people at work they tasted nice it might encourage a couple of them to buy a bag.

    But I've still nicked a packet of sweets from the shop. 🙂

  4. It hurts everything. Terrible.

    Amazon has an open door policy though, warmly welcoming pirates. I bought DVD, and Blu-Ray that were illegal fakes. The last Blu-Ray I bought from them which was hot garbage "The Year of Living Dangerously" was returned and I talked with a member that assured me it would be dealt with, and taken down. I believe that was three years ago. It is still available for the low price of $34.99. I just wonder how many others got (and will continue to get) suckered with their hard earned money going to the hands of thieves.

  5. Bryan^H

    It hurts everything. Terrible.

    Amazon has an open door policy though, warmly welcoming pirates. I bought DVD, and Blu-Ray that were illegal fakes. The last Blu-Ray I bought from them which was hot garbage "The Year of Living Dangerously" was returned and I talked with a member that assured me it would be dealt with, and taken down. I believe that was three years ago. It is still available for the low price of $34.99. I just wonder how many others got (and will continue to get) suckered with their hard earned money going to the hands of thieves.

    I had a chat about piracy with multiple reps at Amazon several years ago. They do support it.

  6. In theory, exposing a potential audience to a project for free can be a persuasive sales pitch. We know this works for how often it’s used: individual songs played on the radio for free to promote a new album, trailers to promote a movie, etc.

    Here’s the problem with movie piracy in comparison to those legal free sample giveaway examples. Most people just watch a movie once. If they’ve pirated it, even if they enjoyed it, most viewers aren’t going back and then buying a disc after watching the pirated version. So that sale just evaporates.

    Additionally, on an anecdotal level at least, I’ve found that people who tend to pirate content tend to hang out with other people who do the same. So it’s likely not a case where one person pirates a movie, but then recommends it to ten friends who go out and pay for it. It’s more likely that one pirate recommending a title while just encourage another pirate to steal it.

    I’ve said it before but it bears repeating: the biggest hurdle that content creators face in 2019 and beyond isn’t getting an audience to choose between physical or digital versions of a title, it’s getting people to pay for the content at all. Most people simply do not perceive pirating digital content to be theft. The behavior runs the gamut from people who share passwords they’re not entitled to share, to looking for stuff on YouTube that shouldn’t be there, to buying hacked streaming boxes, to actively downloading material from torrent sites. Most people don’t equate that with walking into a store, taking something from a shelf and leaving without paying, but that’s exactly what it is.

    That’s the big battle, right there.

  7. Josh Steinberg

    Additionally, on an anecdotal level at least, I’ve found that people who tend to pirate content tend to hang out with other people who do the same. So it’s likely not a case where one person pirates a movie, but then recommends it to ten friends who go out and pay for it. It’s more likely that one pirate recommending a title while just encourage another pirate to steal it.

    Conversely, when people who do pirate films encounter those of us who do not, it can lead to some delicate discussions. A couple of years before I retired, I inherited a new group of employees from an organization we merged with. I was chatting with one of the technical staff, sort of a getting to know each other session. I mentioned my love of film and my home theater, and he told me he had copies of just about every film out there that he could get me a copy of — probably thinking that would gain favor with his new boss. Since I didn't really want to piss off someone from my new group with a lecture, I just politely declined and told him if I was interested in seeing a film I preferred to purchase or rent it.

    I really don't think the person, who was a pretty nice guy, even thought twice that what he was doing was stealing.

  8. Ross Gowland

    I suppose if I nicked a packet of sweets from a shop and told people at work they tasted nice it might encourage a couple of them to buy a bag.

    But I've still nicked a packet of sweets from the shop. 🙂

    But if the sweets cost more than you think they should due to company greed wanting to make more money, were discontinued and only available as old stock is available at specialty stores, or aren't sold at the stores you'd rather buy from or don't use the same quality sugar they used in 1977 — you'd be completely justified in stealing them, correct?

  9. As a member of SAG, I get DVDs of movies during awards season and in 2016, I was a member of the SAG nominating committee and got something like 60 DVDs. Friends often hint (and sometimes downright ask) to borrow them and I have to say no (though they are perfectly welcome to watch them with me). But once out of my hands, it is out of my control and though a friend may promise not to lend it to anybody else, the ultimate responsibility is mine and the reality is those DVDs sent to me as a courtesy could easily be pirated so I say no.

  10. Not to condone piracy, but I think there are a few instances where it can be both morally and financially neutral. Take the original Star Wars movies where fans have either undone the special edition changes or scanned old prints of the films. I suspect anyone who has downloaded these has already bought the legitimate versions in several different formats, and would buy them again if they were offered by the rights holders. There are other similar cases – for instance, someone scanned a print of the 1979 Dracula with the colour intact. And others have married original audio mixes of blu-rays that only offer a remix. I've downloaded some of these and don't feel the least bit morally conflicted about it, nor do I believe that any studio or distributor has lost a penny as a result.

  11. Worth

    Not to condone piracy, but I think there are a few instances where it can be both morally and financially neutral. Take the original Star Wars movies where fans have either undone the special edition changes or scanned old prints of the films. I suspect anyone who has downloaded these has already bought the legitimate versions in several different formats, and would buy them again if they were offered by the rights holders. There are other similar cases – for instance, someone scanned a print of the 1979 Dracula with the colour intact. And others have married original audio mixes of blu-rays that only offer a remix. I've downloaded some of these and don't feel the least bit morally conflicted about it, nor do I believe that any studio or distributor has lost a penny as a result.

    Not passing judgment (well, maybe a teenie weenie bit :)) but you are still taking someone else's copyrighted work and not compensating them for it. It's wrong, no matter what reasons you have for justifying it. I'd love to have a blu ray or DVD of Disney's Song Of The South but we all know that's never going to happen if Disney has anything to say about it. Could I justify obtaining a pirated copy or bootleg disc with the justification that "Well, it's Disney's fault for not making this classic available to us and denying its fans the pleasure of this wonderful classic"? Well, I could try I suppose but I would still be in the wrong.

  12. Scott Merryfield

    Conversely, when people who do pirate films encounter those of us who do not, it can lead to some delicate discussions. A couple of years before I retired, I inherited a new group of employees from an organization we merged with. I was chatting with one of the technical staff, sort of a getting to know each other session. I mentioned my love of film and my home theater, and he told me he had copies of just about every film out there that he could get me a copy of — probably thinking that would gain favor with his new boss. Since I didn't really want to piss off someone from my new group with a lecture, I just politely declined and told him if I was interested in seeing a film I preferred to purchase or rent it.

    I really don't think the person, who was a pretty nice guy, even thought twice that what he was doing was stealing.

    I have a younger co-worker – he's probably around 30 – who thinks I'm a total chump because I pay for movies.

    He doesn't view piracy as stealing because he thinks the studios make enough money.

    I guess if he thinks the Walton family is rich enough, he thinks it'd be okay to grab whatever he wants from Wal-mart and not pay…

  13. Thomas T

    Not passing judgment (well, maybe a teenie weenie bit :)) but you are still taking someone else's copyrighted work and not compensating them for it. It's wrong, no matter what reasons you have for justifying it. I'd love to have a blu ray or DVD of Disney's Song Of The South but we all know that's never going to happen if Disney has anything to say about it. Could I justify obtaining a pirated copy or bootleg disc with the justification that "Well, it's Disney's fault for not making this classic available to us and denying its fans the pleasure of this wonderful classic"? Well, I could try I suppose but I would still be in the wrong.

    But it's much more ambiguous,

    Take people who collect audio bootlegs. I own some "unofficial" recordings but I've not stolen anything because this is material the artists never released – they can't lose money on product they don't provide.

    If the artists officially released the music, I'd buy it – just like everyone who "pirated" the 1977 "Star Wars" would happily fork over money for an official version.

    You can't compensate someone for something they refuse to sell…

  14. Colin Jacobson

    But it's much more ambiguous,

    Take people who collect audio bootlegs. I own some "unofficial" recordings but I've not stolen anything because this is material the artists never released – they can't lose money on product they don't provide.

    If the artists officially released the music, I'd buy it – just like everyone who "pirated" the 1977 "Star Wars" would happily fork over money for an official version.

    You can't compensate someone for something they refuse to sell…

    Sorry to sound like a broken record (too late I know :)) but if Disney refuses to see Song Of The South, they still own it. No, you can't compensate them for something they refuse to sell but you still have something that doesn't belong to you, legally or ethically.

  15. In some ways it can almost be tough. What do you do when a studio adamantly refuses to release something? If the only way to see it is a bootleg, do you get it or not? Song of the South is of course the poster child for this. But then try being a fan of movie serials. While it’s true that most of the Republics got legit releases on VHS, if you wanted to see the Columbia serials, chances were you had to get a bootleg. Only about 10 of the 57 Columbia serials got a legit DVD release and the number might not even be that high to tell the truth. Sony has shown no interest in their serials to date, so serial fans do what they have to do to see them. Is it right? At the least it may be morally ambiguous in certain areas such as classic films available no other way. And in that respect, some pirates are almost making sure the films don’t disappear forever. Then again, there sadly are serial fans who are content with their bootlegs and won’t upgrade even if a legit copy comes out so caveat emptor.

    The biggest problem I have with piracy is that pirates don’t really care who they steal from. You’re just as likely to run across some microbudget film that some poor schmuck broke their back on as you are a major blockbuster. Want to know who’s really being killed by piracy? The porn industry. I have friends who work in it and are really up in arms. No sooner do they put up a clip than it shows up on some Tube or File Sharing site. It doesn’t help matters when people like Howard Stern advertise that they go to such Tube sites. Ironically, pirates may do to the porn industry the one thing no politician ever could: kill it.

    Where I work it seems like half the work force has those jail broken boxes and they brag about it. Sometimes I bite my tongue and other times I just light into people about it.

  16. Brent Reid

    Here's a link to the original article, which is completely uncredited in the OP. In fact, like all the other recent clickbait posted in similar fashion lately, it could just have been linked in a post in an existing thread. What's happening around here, HTF?

    The concept of positive piracy, by the way, is utter b*ll*cks.

    Thanks, Brent. The article was for press consumption verbatim, for re-authoring and as released by Management Science's PR team. I modified it but if there's nothing substantial to add or subtract, I'm happy to let an article ride if I think it's of interest to the forum. It seems like this one has been. I concede that some articles have required a click to see a full report or expanded text but, once again, I only post information if I think it's of interest. Most of the time spent as news editor is wading through hundreds of press releases each week and deciding what's a good fit. I appreciate your feedback, though.

  17. Martin Dew

    The net effect of post-release piracy varies across genres of motion picture. Action movies benefit the most, and thrillers benefit the least.

    Well, that settles it. Hollywood, make more thrillers! 😉

  18. how about when something doesn't work but you bought it? I noticed yesterday that Psychoville season 1 and 2 blu ray doesn't work. I learned it's 50hz and not 60. region free, which is why I bought, but doesn't work. so it just plays the first logo and goes back to the sony menu. darn thing is brand new too. I paid for it and can't play it. Not sure if a region free player will convert that. I sure hope so. But how about if it doesn't?

    oh, similar when you have something die. I've had a bunch of rotting lately. rebought or planning to rebuy all of it. chunk of change there!

  19. Radioman970

    how about when something doesn't work but you bought it? I noticed yesterday that Psychoville season 1 and 2 blu ray doesn't work. I learned it's 50hz and not 60. region free, which is why I bought, but doesn't work. so it just plays the first logo and goes back to the sony menu. darn thing is brand new too. I paid for it and can't play it. Not sure if a region free player will convert that. I sure hope so. But how about if it doesn't?

    oh, similar when you have something die. I've had a bunch of rotting lately. rebought or planning to rebuy all of it. chunk of change there!

    I'm guessing you have a Sony non4K player (or PS3)?
    Non region free LG, Samsung, OPPO, many Panasonics, PS4, Sony 4K, XBO all should play it fine assuming it's really region free.
    All region free players can handle 50Hz OK

  20. David Norman

    I'm guessing you have a Sony non4K player (or PS3)?
    Non region free LG, Samsung, OPPO, many Panasonics, PS4, Sony 4K, XBO all should play it fine assuming it's really region free.
    All region free players can handle 50Hz OK

    I do. And THAT is a relief! thank you!

  21. Radioman970

    I do. And THAT is a relief! thank you!

    At least give it a shot with a different brand (or higher level Sony). Worst case you got a bad disc, but all US pre PS4 Sony's choked on 50HZ discs and won't even load to the menu page.

  22. David Norman

    At least give it a shot with a different brand (or higher level Sony). Worst case you got a bad disc, but all US pre PS4 Sony's choked on 50HZ discs and won't even load to the menu page.

    mine is a region a/1 player and stops after that first logo thing. doesn't get to the menu at all on any disc in the set so I'm sure it's not the discs.

    I was planning a sony all region with 4k and 3d, atmos and all. those are about $399 now, too much for me. 🙁

  23. I have never been interested in pirated copies of movies and it doesn’t matter if it is on a physical media or a digital download! If I can not afford to purchase the legal studio released version I will wait till I can. And I am not going to avoid the theater by watching a pirated copy!

  24. Radioman970

    mine is a region a/1 player and stops after that first logo thing. doesn't get to the menu at all on any disc in the set so I'm sure it's not the discs.

    I was planning a sony all region with 4k and 3d, atmos and all. those are about $399 now, too much for me. 🙁

    I was suggesting trying one of the other brand players just so you could watch the discs. Actually hoping you might have a 2nd Player (or a PC BDROM or PS4) in the house. I see $20-30 clearance LG BDP at my Walmart pretty regularly.

    As an alternative since you were considering a Region Free player anyway is to get a Region Free BDP now and wait for a 4K player around Black Friday possibly. That would probably allow you to go a little higher quality with the 4K Player without having to worry about modding the new more expensive component. Depending on whether you want 3D or not, plain jane Region Free BDP run can be had for as little as $100

  25. David Norman

    I was suggesting trying one of the other brand players just so you could watch the discs. Actually hoping you might have a 2nd Player (or a PC BDROM or PS4) in the house. I see $20-30 clearance LG BDP at my Walmart pretty regularly.

    As an alternative since you were considering a Region Free player anyway is to get a Region Free BDP now and wait for a 4K player around Black Friday possibly. That would probably allow you to go a little higher quality with the 4K Player without having to worry about modding the new more expensive component. Depending on whether you want 3D or not, plain jane Region Free BDP run can be had for as little as $100

    that is an idea. I'll look into that. I'm definitely forever 3D. I have another sony, cheap crap that started buzzing. I use it in the kitchen with my old panny plasma while doing dishes so there's nothing quiet going. that used to bug me. anyway, the discs do that same thing on it. my old panny bu ray player won't load discs anymore. that's all i have.

    but I like your idea!

  26. Radioman970

    that is an idea. I'll look into that. I'm definitely forever 3D. I have another sony, cheap crap that started buzzing. I use it in the kitchen with my old panny plasma while doing dishes so there's nothing quiet going. that used to bug me. anyway, the discs do that same thing on it. my old panny bu ray player won't load discs anymore. that's all i have.

    but I like your idea!

    Other than the OPPO 203, modding 4K players still seems to be more difficult and none but the LG seems cheap (not a fan of LG Players). I have yet to read of anyone modding the Panasonic which was the model I was most considering so just staying separate in my plan

  27. oh! you're talking about making it all region 4K? that's actually not necessary for me. I just want 3D and regular bd and DVD all region. I think I have 1 3D blu ray, The BFG region b, that I need to work. And quite a few Pal discs and a few non region 1 dvds I need to play.

  28. Radioman970

    oh! you're talking about making it all region 4K? that's actually not necessary for me. I just want 3D and regular bd and DVD all region. I think I have 1 3D blu ray, The BFG region b, that I need to work. And quite a few Pal discs and a few non region 1 dvds I need to play.

    4k doesn't have regions so a Region Free 4K machine is just talking about BD/DVD anyway.
    Basically it justs make 1 machine do the work of two. I think it's cheaper and preferable for me to keep them separate anyway

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