C3 Patent and Intellectual Property Law

While I don't have any stats at my fingertips, either, here's a thought for you, Steve. Downloaders only have so much money for buying movies, say 10 DVDs a year worth of cash. They just aren't going to buy more than 10. Before the internet, they'd buy 7, 8, 9 movies a year. But never 20 or 30. How many movies are they downloading? I'd venture to guess they download far more than they would ever buy, were they to actually buy them. So perhaps not every movie downloaded is a lost sale.

For example, my wife and I have a Netflix account, and we stream content from Netflix to our TiVo. We've got a queue of probably 30 movies ready to be watched. I put a lot of those movies on there thinking I'd be interested in them, but on the list they remain for months, waiting for me to click on them.

The transactional costs for me to queue a movie on Instant Netflix are pretty low - I browse movies on my computer and click to add them to my queue. If I never watch them, I'm not out a whole lot - 15 to 30 seconds of time. Pirating a movie from a torrent site doesn't impose a heavy transactional cost, either. With fast downloads, a DVD pirate can grab lots of movies that he/she may be interested or may watch some day in a short amount of time(I think). Were stealing more difficult, I would venture to guess that the pirate would go after only the movies he really wants to watch, i.e., those that he would probably be willing to spend money on. But, downloading ain't hard, so he goes willy-nilly picking every independent flick and documentary out there. Those aren't true lost sales, because the pirate never would have bought them in the first place.

Well, that's all just a rambling conjecture posing one possible explanation. That said, I have heard very small filmmakers (sub $1 million budgets) talk about the very real effect that downloading has on them and their crew.

I agree, most movie downloads would not have been purchased at all. How many things in your life would you take for free if someone gave them to you, but would never pay for? Probably a lot. There is also a portion of these downloaders that have already purchased a DVD and downloaded an encoding for a back up. You can store a 700mb DivX rather than a 4.5gb DVD on your computer. Why bother encoding yourself when it can be downloaded easier? I have about 100 Kids movies, legit DVD's stored in a box in the attic. Every one has been encoded as DivX and on a hard drive hooked to my media player. When the kids want to watch a movie, they are all right there with a few clicks of the remote.

There is a gap in the industry, there is a demand for smaller files to store on hard drives that the movie makers are not filling. They are blaming poor sales on downloading, but fail to see that poor sales come from poor films. Good films still make money at the box office and in DVD sales.