Alicante, Spain (May 27, 2016)—A new report by the European Union Intellectual Property Office (EUIPO) estimates the loss through piracy to the potential profits of the recording industry in Europe at €170 million ($190 million) per year.
According to the May 2016 report, “The Economic Cost of IPR [Intellectual Property Rights] Infringement in the Recorded Music Industry,” €57 million ($63.8 million), or 2.9 percent, was lost in physical formats such as CDs and €113 million ($126.5 million), or 8.8 percent, in digital formats in overall music sales. The study looked at direct sales to domestic retailers or intermediaries and did not study sales by music distributors such as online platforms or retailers.
“The question of whether piracy reduces or increases sales of recorded music has been the subject of many studies with contradictory results. Our study’s results are in line with the prevailing consensus and find that piracy reduces the revenue of legitimate industry in both digital and physical formats,” said António Campinos, executive director, EUIPO. The study is based on data from the 19 EU member states in the International Federation of the Phonographic Industry (IFPI).
The report states, “Lost sales in physical and digital formats are estimated using two independent models that aim to quantify the effects of IPR infringements in physical and digital markets. For example, sales of illegally copied CDs can lead to a decrease in legitimate physical music sales and in fewer revenues from digital formats. Conversely, illegal downloading could lead to a decrease in sales of legal CDs and digital formats.”
At the country level, the shares of physical and digital sales vary significantly, the report notes. In Sweden, where physical sales represented 15 percent of total sales, €8.9 million of the €9.1 million ($10 million) total was lost in digital formats. In Germany and Poland, physical sales accounted for 70 percent. Germany, Europe’s largest market, lost €40 million ($44.5 million), while the U.K. lost €49 million ($54.6 million)—together, more than 50 percent of the total losses.
European Union Intellectual Property Office