Does the MPAA spend more fighting piracy than it would earn if pirates went legit?

Speaking of content producer paranoia, TorrentFreak conducts an interesting intellectual exercise comparing the number of BitTorrent movie downloaders to the amount of Netflix traffic. Torrentfreak points out that Netflix now consumes more bandwidth than even BitTorrent, and crunches some numbers to find out how much more Hollywood would earn if every single BitTorrent downloader switched to paying Netflix for their movies.

Torrentfreak estimates that three times as many movies are watched via Netflix as are streamed via BitTorrent, and concludes:

In the whole of 2010, Netflix paid the movie studios $181 million in licensing fees according to the shareholder reports. If we add a third to that, Hollywood would have “made” roughly $60 million extra. Salient detail, the yearly budget of the MPAA is higher than that.

While pointing out that the nature of the calculations is fundamentally “very unrealistic”, Torrentfreak points out that all the same:

It shows that even when you assume that 90% of all US BitTorrent traffic is dedicated to video piracy, the added revenue for Hollywood in 2010 would have been less than the amount they paid to the MPAA. That is, if all BitTorrent users switched to Netflix.

The real added revenue if BitTorrent disappeared would of course be a fraction of this, as not everyone would start paying.

Granted, TorrentFreak is not exactly a neutral party, and this has more to do with movies than e-books. But still, it seems to fit in well with some of the reports I’ve seen in the past suggesting the money spent fighting piracy completely dwarfs the amount of revenue that would be generated if the pirates actually bought instead of downloaded. Why can’t they put that money toward more constructive uses, like working out how to make their goods more attractive for people to buy and more economical to make so they can charge less?

3 Comments on Does the MPAA spend more fighting piracy than it would earn if pirates went legit?

  1. Thanks for analytical and informative approach.

  2. More shoppers buy from physical stores than shoplifters steal, but does that mean that shops should stop catching the people stealing?

    And someone does pay for the theft and the cost of enforcement, the legitimate shoppers.

    Theft is neither a victimless crime nor a esoteric numbers crunch like this article implies.

  3. Law enforcement needs criminality, Social workers need indigence and teachers need ignorance, All of these roles and more have a vested interest in perpetuating the conditions that validate their existence and give them a reason for being. So, too, do those who “battle” against hackers and infringers of copyright. Were they able to deal a death blow to their adversaries, would they? It just doesn’t seem rational (as in “rational economic man”) that they would.

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