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Downloaders / Streamers Estimating displacement rates of copyrighted content in the EU Final Report [May – 2015] EUROPEAN COMMISSION Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs Unit 0.1 — Chief Economist Team European Commission B-1049 Brussels EUROPEAN COMMISSION Estimating displacement rates of copyrighted content in the EU Final Report Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs Chief Economist Team 2014 EUR [number] EN Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): 00 800 6 7 8 9 10 11 (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE This document has been prepared for the European Commission however it reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein. More information on the European Union is available on the Internet (http://www.europa.eu). Luxembourg: Publications Office of the European Union, 2014 ISBN [number] doi:[number] © European Union, 2014 Reproduction is authorised provided the source is acknowledged. Printed in [Country] PRINTED ON ELEMENTAL CHLORINE-FREE BLEACHED PAPER (ECF) PRINTED ON TOTALLY CHLORINE-FREE BLEACHED PAPER (TCF) PRINTED ON RECYCLED PAPER PRINTED ON PROCESS CHLORINE-FREE RECYCLED PAPER (PCF) Image(s) © [artist's name + image #], Year. Source: [Fotolia.com] (unless otherwise specified) TABLE OF CONTENTS EXECUTIVE SUMMARY .................................................................................................... 7 1 RESEARCH QUESTIONS ........................................................................................ 19 1.1 Background ................................................................................................ 19 1.2 Research questions ..................................................................................... 20 1.3 Content ..................................................................................................... 20 1.4 Internet using population ............................................................................. 21 1.5 Representation of results for the EU28 ........................................................... 23 2 STUDY OUTLINE .................................................................................................. 27 2.1 General overview of the study ...................................................................... 27 2.2 How to define the counterfactual................................................................... 28 2.3 Truth and recall .......................................................................................... 30 2.4 Econometric challenges ............................................................................... 33 2.5 Further steps within the approach ................................................................. 35 2.6 First literature review .................................................................................. 36 2.7 Interviews .................................................................................................. 36 2.8 Questionnaires ........................................................................................... 37 2.9 Econometric analysis ................................................................................... 40 2.10 Methodological challenges and solutions ........................................................ 42 3 COPYRIGHT REGULATIONS .................................................................................... 47 3.1 Legal Framework in France ........................................................................... 48 3.2 Legal Framework in Spain ............................................................................ 52 3.3 Legal Framework in Germany ....................................................................... 57 3.4 Legal Framework in Poland ........................................................................... 61 3.5 Legal Framework in the United Kingdom ........................................................ 64 3.6 Legal Framework in Sweden ......................................................................... 67 3.7 Conclusions ................................................................................................ 71 4 SALES DEVELOPMENTS ......................................................................................... 73 4.1 Approach ................................................................................................... 73 4.2 Music......................................................................................................... 73 4.3 Audio-visual ............................................................................................... 76 4.4 Books ........................................................................................................ 77 4.5 Games ....................................................................................................... 79 4.6 Conclusions ................................................................................................ 80 5 INITIAL LITERATURE SCAN ................................................................................... 81 5.1 Literature covered ....................................................................................... 81 5.2 Methodology scan – displacement rates ......................................................... 81 5.3 Methodology scan - willingness to pay ........................................................... 86 6 SURVEY STATISTICS ............................................................................................ 89 6.1 Sample selection ......................................................................................... 89 6.2 Sample description ...................................................................................... 90 6.3 Use of creative content ................................................................................ 92 6.4 Proportion of illegal downloaders / streamers ................................................. 93 6.5 Numbers of transactions .............................................................................. 99 Estimating displacement rates of copyrighted content in the EU 5 6.6 100 films ................................................................................................. 105 6.7 Willingness to pay ..................................................................................... 108 6.8 Truthfulness of self-reported legal and illegal consumption ............................. 109 6.9 Conclusions .............................................................................................. 113 7 DISPLACEMENT RATES ....................................................................................... 117 7.1 Introduction ............................................................................................. 117 7.2 Econometric specification of the model ........................................................ 118 7.3 OLS regressions ........................................................................................ 119 7.4 Instrumental variables approach ................................................................. 125 7.5 IV regressions .......................................................................................... 133 7.6 Comparison with previous literature ............................................................ 140 7.7 Conclusions .............................................................................................. 148 8 DISPLACEMENT RATES 100 FILMS ........................................................................ 151 8.1 The approach ........................................................................................... 151 8.2 The displacement of first legal views by first illegal views ............................... 152 8.3 The displacement of second legal views by first and second illegal views ...................................................................................................... 155 8.4 Total displacement effect and conclusions .................................................... 158 9 WILLINGNESS TO PAY ........................................................................................ 161 9.1 Willingness to pay questions ....................................................................... 161 9.2 Analysis ................................................................................................... 162 9.3 Interpretation of the ordered logit model: .................................................... 166 9.4 Conclusions .............................................................................................. 170 10 METHODOLOGICAL CONCLUSIONS ....................................................................... 171 A: LITERATURE LIST .................................................................................................. 173 B: INTERVIEWED ORGANISATIONS ............................................................................. 177 C: INTERVIEW TOPIC LISTS ........................................................................................ 179 Questions National Authorities and copyright collecting organisations ....................... 179 Questions for content providers ........................................................................... 181 D: QUESTIONNAIRES
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