Recent report: Private copying causes a loss of EUR 46 million in Finland

The report was written by FCG’s leading expert, DSS Pasi Holm, based on an annual copying survey conducted by the Ministry of Education and Culture.

On behalf of the Ministry, Taloustutkimus carries out an annual survey on how much music and AV content is copied privately and how many would purchase copied material from paid services, if copying wasn’t an option. In 2023, 40% of those who copied music and 17% of those who copied AV content answered that they would.

Respondents were also asked how much they would be willing to pay for this content. Based on the answers, it is possible to calculate the loss of sales and streaming revenue caused by copying.

“With purchase methods and consumer prices specified in the answers of the survey, the probable total loss is EUR 45.9 million,” says Pasi Holm.

“In addition to this, we made a theoretical calculation, in which we used cheaper purchase methods, such as streaming and renting. We also used a lower number of purchases. In this calculation, we estimated that the minimum loss would be EUR 35.7 million.”

Extremely cautious estimate

According to Taloustutkimus, in 2023, a total number of 188-210 million music and film files were copied or downloaded in Finland. Based on average consumer prices, the value of these two hundred million films, music files and albums is over one billion euros. In this respect, the estimate of the losses is extremely cautious.

“Of those respondents who had copied content, only those who would have been willing to purchase the files they had copied were taken into account, and only one tenth of the files they had copied were included into the calculation,” stresses Laura Kuulasmaa, Chairperson of Luovat ry.

“The estimate of losses is cautious, because we included in it a precautionary purchase volumes of 10 per cent of the material copied by the respondent,” confirms Pasi Holm. “We used the price the respondents themselves reported they would be willing to pay, but the volumes were reduced to one tenth.”

The harm consists of the loss of income, compensable under the EU Directive

The financial harm caused by private copying is compensable for the authors of creative content, under the EU’s Information Society Directive (2001/29/EC).

In Finland, this compensation has been paid from the state budget since 2015. The annual amount has been EUR 11 million. As this amount has remained the same since 2015, its real value has sunk significantly. In its proposal for the 2025 budget, the Government puts forward a reduction of the statutory compensation to half, i.e. to EUR 5.5 million.

Digitalisation revolutionised the role of copying

“The right to private copying was incorporated into the Copyright Act in the 1980s,” says Lauri Kaira, Director of Advocacy at Luovat ry. “At that time, the law practically granted the right to record music on a cassette tape recorder.

“When we moved from trade of the physical discs to the world of streaming services, the role of copying right was revolutionised. Now, you can download and clone exactly the same digital files that are sold through different streaming services,” says Kaira. “The right to copy and download sales products free of charge causes a market disruption of a completely different scale than the crackling recordings made with cassette recorders of 80s.”

. . . .

*The Copyright Act gives consumers the right to copy and download content, including music and films, for private use from legal sources free of charge. This is called private copying. According to the Copyright Act, this is compensable to the reasonable amount.

 

BACKGROUND OF THE STUDY:

Conduct of the study

  • The study was conducted by FCG’s leading expert Pasi Holm on behalf of Luovat ry. It is based on an official survey on private copying the Ministry of Education and Culture commissioned Taloustutkimus to conduct (Section 26a of the Copyright Act), in which the responsible researcher is Anne Kosonen.
  • Taloustutkimus investigated on behalf of OKM, among other things, how many of the people who have copied content would obtain this content from paid sources and how much they would be willing to pay for it, if copying wasn’t an option.
  • 9 million music files were copied privately. 40% of the respondents answered that they would purchase the content from paid sources, if copying/downloading wasn’t an option.
  • 1 million video files were copied privately. 17% of the respondents would purchase the content from paid sources, if copying/downloading wasn’t an option.
  • If private copying wasn’t possible, the addition to the purchasers from the paid sources would be 90,400 people for music and 103,000 people for audio-visual recordings, in comparison to the current situation.
  • Luovat ry commissioned a calculation of the harm caused by the loss of sales at the consumer prices the respondents reported they would be willing to pay. The following slides summarise the results of the calculation.
  • Although the respondents who stated their willingness to purchase didn’t make such a restriction, the precautionary preliminary assumption was that they, on average, would purchase only 10% of the content they copied.
  • With the purchase methods specified in the survey, this 10% equals a losses of EUR 45.9 million.
  • In an additional theoretical calculation, the least expensive purchase methods (streaming, renting) were emphasised and the purchase volumes were further reduced. In this calculation, the minimum losses were EUR 35.7 million.
  • Overall, the range of losses is EUR 35.7-45.9 million, where the lower limit is the theoretical minimum and the upper limit is the probable harm based on the purchase methods reported by the respondents.

Comparison with 2017 results

  • Pasi Holm conducted a similar study in 2017. According to it, the realistic losses calculated in a similar method were EUR 16.8-17.0 million for AV content and EUR 14.8-27.4 million for music.
  • The range of losses in 2017 was EUR 31.6-44.4 million, which is EUR 37.6-52.9 million in 2023 value of euro (Statistics Finland’s index calculator).
  • Total amount of private copying was 261 million files in 2017 and 210 million files in 2023. The rate of copying has varied since 2017 and reached a maximum of 295 million files.
  • In 2017, 42% of the respondents who copied music and 16% of those who copied videos reported that they would purchase the content they copied, if copying wasn’t an option. In 2023, 40% of the respondents who copied music and 17% of those who copied videos reported that they would purchase the content they copied, if copying wasn’t an option.