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Media Lecturers at London School of Economics Misquote Professor Danaher

October 10, 2013

The results-oriented “study” from the media lecturers at the London School of Economics sets out to “prove” that the graduated response law in the UK should be “reviewed” (which really means “stopped” as the authors later revealed in a blog post):

The experiences of other countries that have implemented punitive measures against individual online copyright infringers indicate that the approach does not have the impacts claimed by some in the creative industries.

One of the studies that these LSE media lecturers cite to support their claim is the frequently misquoted but detailed econometric review of the HADOPI graduated response law in France: The Effect of Graduated Response Anti-Piracy Laws on Music Sales: Evidence from an Event Study in France, by Professors Danaher, Smith, Telang and Chen.

The LSE “study” cites Danaher et al for this proposition (text accompanying note 22):

The evidence was that the increased sales observed were more strongly related to the education component of HADOPI than to the enforcement component of the implementation measures.

Here is the actual conclusion from the econometric study:

[O]ur results suggest that the HADOPI law (and the education and media attention surrounding it) increased iTunes single sales by 90,000 units per week on average. If we assume an average song price of €1 per song, this equates to anincrease of €4.7 million ($6.3 million) in annual iTunes track revenues [text following note 22]. (emphasis mine)

Pretty much the opposite.

Danaher et al go on to say:

The most interesting, and potentially surprising, part of this conclusion is that the study occurs before anyone received a third notice (i.e. before any cases have been referred to the criminal court), and that the increase in sales is observed even before the law’s final passage. While this may seem irrational, it is consistent with the idea that increasing the salience of the law, the illegality of piracy, and the potential penalties is sufficient to change user behavior. In this regard, we note the significant discussion in the media about the illegality of piracy while the law was being debated, and that after the passing of the law, the HADOPI agency has also conducted extensive awareness and education campaigns about the illegality of media piracy and the legal alternatives that are available.

Thus, we cannot determine to what degree the continued effectiveness of HADOPI is driven by the threat of sanctions, the media buzz, or the educational/awareness campaigns. Disentangling the effects of the positive reinforcement actions like education from the negative reinforcement actions like sanctions is a fruitful area for future research.

Yes, pretty much the opposite conclusion.

Not only did the LSE lecturers fail to provide the proper context for the Danaher et al conclusions, they also missed what I believe to be the most important issue of all when it comes to ad supported pirate sites (which is all the big ones).

There are no lost sales.  All sales are monetized.  If they are going to analyze the economics of file barter, they should take a hint from Google’s UK policy manager:  Ad supported piracy is big business.

And none of the money flows to the artists.  Including the knighted ones who as a group probably added a zero to the UK GDP–and that is something that the London School of Economics should be able to actually measure accurately.

So by supporting piracy under the guise of fighting “repression”, these media lecturers at the London School of Economics are actually supporting big multinational media companies like Google selling advertising to support piracy and pocketing the money.  Or as the LSE might say, those greedy, repressive capitalist pigs.  No wait…these lecturers are supposed to be on the side of the proletariate, not the multinationals, right?

In case you were interested in what Professor Danaher actually said in his team’s study, you can watch this video from Music Canada’s Global Forum at Canadian Music Week:

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