On A Laffer Curve for Content Piracy

[danieldwilliam]

This thought occurred to me in the shower this morning whilst wondering if my dad was going to buy me Hydrogen Sonata for Christmas.  Does the level of piracy have an impact on content creators output and income?  If so, is the effect variable by the prior success of the content creator? In short, is there a Laffer Curve for content creators and piracy?

There is an argument that piracy of content has the overall effect of increasing revenues for content providers. That piracy acts as a try before you buy low-risk introduction to new work or new artists. Those who enjoyed the pirated copy are exposed to the work and more likely to pay money for future works.  I see this working most effectively with new artists who don’t have an existing supporter base. Sales would be low anyway and piracy acts as a free advertising.  So, even with quite high ratios of not-paid for consumption to paid for consumption the artists over all income is improved.

(Assuming a correlation (1) between artistic income and output high levels of piracy from low-sales volume artists would increase content creation.)

I suspect as an artist become more successful the piracy starts to cannibalise (2) sales that would have been for cash but are now for free. So a given ratio of piracy starts to affect marginal income.

This coupled with the decreasing marginal utility of more money for someone who is already well off and reservation wages suggests that more successful artists might be more likely to withhold their labour in response to a given level of piracy.

So my hypotheses is that early in an artist’s career piracy increases revenue and they would like the piracy rate set as high as possible to get all the free advertising and pick up as many contingent sales as possible.  Latter in their career the extra sales from piracy driven sales might be equal to cash sales lost to piracy, making the artist indifferent to the rate of piracy.  Latter on still, an artist might lose more sales from cannibalisation than they gain from additional exposure and so want a reduced rate of piracy.

When do we reach a point when Iain M Banks says fuck it, I’m rich enough already I can’t be arsed to write another Culture book just so it can be ripped off?

(1) Artists with no income can’t eat and therefore can’t produce art.

(2) there’s a cannibalisation – sales driver coefficient in here somewhere.

Comments

[f4f3.livejournal.com]

Do we describe "free" promotions on Amazon Kindle as legalised piracy? My friend Bill has had some interesting results with these sort of promotions on his books (briefly, they work well for books in a series, not so well for stand-alones).

I wonder how rare I am in now having ebook copies (paid for) of many books I already own in print?

I'd really like a model where you get a download code for a digital copy with each hard copy book you buy, but no one seems to be offering this yet.

[danieldwilliam.livejournal.com]

I think for the purposes of this post I think we do.

I see why series would benefit from a cheap / free introduction. MLW bought her 1st Kindle book for 20p. First of a series.

[andrewducker]

Various authors have said that releasing book 1 for free online a while after book 2 came out in paperback boosted their sales.