With the first person in South Africa facing charges of copyright violation for uploading films to the internet due to appear in court next month, it’s maybe time to step back and ask an important question about filesharing. How much damage does it actually do?

For the most part, the idea that file sharing harms the movie and music industries is accepted as an international truth. A new paper titled “Empirical Copyright: A Case Study of File Sharing and Music Output” by Tulane University School of Law professor, Glynn Lunney suggests that not only may file sharing better support the purpose of copyright law in the first place, but file sharing may also serve to help boost artists and lead to even more hits. The reasoning for this is pretty unintuitive, to say the least.

As a starting point, it is helpful to understand what the purpose of copyright law is. As Techdirt points out in its article about Prof Lunney’s paper

… copyright is not fundamentally about making money: it’s about encouraging creativity.

This is essentially correct, although it is not a complete perspective on copyright law’s general approach to protecting the works it safeguards. The way copyright law encourages creativity is by granting a copyright owner a limited monopoly over her creations and an opportunity to exploit her creations in whatever way she deems fit. The law achieves this by granting a copyright owner a series of exclusive rights which include rights to sell content, make copies and adaptations and even transmit her content using different media.

The challenge with file sharing, of course, is that people who share content without a copyright owner’s permission or exercising the copyright owner’s rights in contravention of that legally guaranteed monopoly. The entertainment industry has maintained, for quite some time, that unauthorised file sharing both equates to theft (not quite correct although it is a useful metaphor for the industry) and every time somebody shares content without permission from the copyright owner, the copyright owner is deprived of revenue and the industry suffers.

Prof Lunney’s research revealed an interesting trend which is another nail in the entertainment industry’s argument’s coffin. He noticed that, despite a “sharp decline in revenue that paralleled the rise of file sharing” which seem to be associated with a decrease in the number of new artists in the top 50 artists each year covered by his study, the new artists who did make it produced more hits on average. He concluded that although file sharing may have led to fewer works by fewer new artists entering the market, “file sharing has not reduced the creation of new original music”. He argued that the underlying dynamic, well established in economic theory, is that artists working in a more constrained environment (in this case, where there may be lower revenues due to file sharing) essentially work harder and produce more content. One of his basic assumptions is that file sharing does, in fact, cause a drop in revenue but even this assumption has been challenged repeatedly over the years.

An academic paper published by researchers from the University of Minnesota and Wellesley College, published in early 2012, examined the link between BitTorrent downloads and box office revenues and concluded that there was no evidence that file sharing harmed box office revenues in the United States. Instead, what they found was that longer delays between a movie’s release on the big screen and its release for sale or rental tended to exacerbate unauthorised downloads of that movie. This likely lead to reduced sales in retail channels after the movie had gone off circuit.

More recently, there has been a fair amount of anecdotal evidence that unauthorised filesharing has actually benefited legitimate content distribution channels for TV shows. One example that stands out is the extremely popular TV series, “Game of Thrones”. The show’s director has suggested that the extent to which it was “pirated” probably contributed to its success. This isn’t accepted wisdom, though. “Walking Dead” producer, Gale Anne Hurd took issue with this suggestion that piracy is beneficial:

There’s a mistaken belief by many of my peers that piracy is somehow good, that viewers will develop a habit to pay for it. I’m not sure they really understand other than anecdotal evidence that their ratings go up that the people who hire it are not then going to choose legal downloads or legal viewing in the future.

She may be correct. People who are accustomed to downloading their content through unauthorised channels may not opt to buy their content should it become more readily available through legitimate channels. That said, there is a growing number of case studies which also point to consumers’ willingness to pay for content and supports content creators when those content creators either make their content available through more accessible channels or even change their underlying business model to appeal more to their fans in different ways.

Unauthorised file sharing may, superficially, support what copyright law is trying to achieve even as it remains illegal but there is a growing body of evidence that it could be beneficial for the entertainment and content industries in many respects. One of the interesting trends that has emerged from Techdirt’s annual 2012 and 2013Sky Is Rising” reports is that artists themselves seem to be doing fairly well, overall, and if anyone is losing money due to file sharing, is more likely the industry’s labels and production companies themselves. Content creators are increasingly finding ways to adapt to this growing file sharing culture by embracing business models that align better with consumers’ preferences. The end result may well be a stronger and, more importantly, creative grassroots industry.

(Image: Portrait of Mezz Mezzrow in his office, New York, N.Y., ca. Nov. 1946 by William Gottlieb, from the US Library of Congress’ Public Domain archives)