2024-06-18 19:48:25
How does downloading affect the markets? economics/movies

This is the question everyone wants the answer to. Well we have data on the Pirates of the Caribbean II. And they are anything but easy to interpret.

Variety reports on 26/07 that “The smooth sailing continues for Disney’s “Pirates of the Caribbean: Dead Man’s Chest. Pic dominated four new entries and easily won the weekend box office with $35 million at 4,133 playdates.”

This film is all about breaking new records:

Disney’s swashbuckling sequel grossed $18.1 million Monday, shattering the previous nonholiday Monday benchmark of $14.4 million set by “Star Wars: Episode III — Revenge of the Sith” last year.” etc, etc.

Well, PotC is not only #1 in the box office but also on p2p networks:It was downloded (as of 22/26) 1,485,734 times worldwide and 887,392 times in the US.
Now the question arises: what has happened to that nearly 900.000 downloads? Did they go and see it on the big screen? Or they have tuned out because they thought the movie sucked?

Well, one effect of watching the movie illegally before going to the cinema might be that people who would have been discontent with the movie eventually end up not paying for it. Is that so bad? I dont think so.

There is always a huge uncertainty associated with the consumption of cultural goods. Will I like it? Are all the movie reviews telling the truth? This uncertainty means extra cost on the buyer side and lost income on the seller side. So the seller (and the buyers) would do anything to lower that lack of information. How? The tools are apperent:

– large marketing campaign (including publishing good reviews and word of mouth)

– saturation of the market (try to avoid the wide release)

– using as many stars as you can pay for

– and use references to stuff the buyers already know (do a sequel, recycle a comics character).

With free downloads cultural goods stop being “experience goods” – or something that reveals its true value after the consuption. They become “search goods” – something that has a known value from the first moment.

So my bet would be that with this shift content producers will loose those customers, who were trying to lower their uncertainty using the proxies mentioned above, but they were cheated, misinformed or simply let down. They loose only those revenues that they do not deserve.And the fact that PotC II does well in theatres and on p2p might mean that it is actually a movie people are willing to see, because they already know it is good…

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