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DVD copying in the US, UK

Futuresource_logo It's been an article of faith for the entertainment industry that unauthorized copying = lost sales. The MPAA seems to be the market leader on this front, citing mind-boggling estimates of the billions of dollars in revenue siphoned off by piracy. This week, Futuresource Consulting Ltd., a UK research firm, released a study that purports to confirm the conventional wisdom, at least in part. According to the study, about a third of those interviewed said they had made copies of pre-recorded DVDs in the previous six months. That's up from about a quarter in 2007. Had they not been able to make those copies, a high percentage of those surveyed -- 77% in the U.S., 63% in the U.K. -- would have bought at least a few of them. Strong stuff, but not surprisingly, there are some notable caveats.

First, the research was financed by Macrovision, a U.S. company that makes anti-copying technology. Second, the DVDs most frequently copied were discs owned by the person doing the copying. Third, the reasons most often cited for copying were time- or place-shifting and making a back-up (evidently, many of those burning discs have small children at home). About half the respondents cited those rationales, which aren't nearly as corrosive to the market as wanting to build one's video collection (the reason given by 12% of the respondents in the U.S. and 6% in the U.K.) or making copies for friends (7% in both the U.S. and the U.K.) And third, the sample sizes were pretty small by the time the blockbuster questions about purchase intent were asked -- a mere 815 people in the U.S., 314 in the U.K. (The sample sizes the previous year were even smaller.)

My bigger complaint with the study is that it didn't look at the other side of the coin -- how purchases might increase (and unauthorized copying deterred) if Hollywood made it easy for consumers to make a handful of copies for personal use. Here's Futuresource's bottom line:

In conclusion, as studios’ revenues from DVD are in decline, protecting revenues is even more vital than 12 months ago. The study showed that the number of people admitting to copying prerecorded DVDs has increased since 2007. The vast majority of these copiers admit they would purchase at least some of the titles on DVD if they had not been able to copy them - clearly indicating the significant levels of lost revenue due to home copying.

However, the survey also shows that copying is confined to a minority of users, and that most of those users are motivated to copy for seemingly legitimate purposes. So an alternate conclusion is that enabling at least some copying would make discs more valuable to the public. And higher perceived value usually translates into higher sales.

Besides, it's not clear how the studios can stop the motivated minority from duplicating disc. Hollywood had counted on the next generation of home video -- high-definition discs -- being more resistent to copying. The two layers of copy protection on Blu-ray discs -- AACS and BD+ -- do have a significant advantage over the scrambling technology used on conventional DVDs: they can be updated to prevent a breach on one movie or device from affecting other titles or products. The problem, though, is that hackers claim to have already busted through the protection, starting a cat-and-mouse game that the studios were hoping to put off for at least a few years.

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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