Great post by Falkvinge:

The image for this article is a still image from Return of the King published in 2003, the third installment of The Lord of the Rings, which I’ll use as a concrete example. But first, let’s examine the counterargument above in more detail.

I frequently hear that this-and-that would not happen if there wasn’t a guaranteed return on investment. While most people seem in agreement that music would be played, books would be written, and art would be made without the copyright monopoly, because that creativity happens for other reasons than pure money, the objections usually gravitate towards the subject of blockbuster movies, and how a guaranteed return on investment is necessary for those to be produced in the first place.

Let’s look at that statement.

First, it’s a contradiction in terms. By definition, an investment is the acceptance of a risk for a possible return which is larger than the initial investment; there is no such thing as a right to profit off of any endeavor.

Second, so what? Culture has always been fluent in its forms of expression. A hundred years ago, folk songs and concerts with classical music were the two predominant expressions of culture. A hundred years before still, it was ballets and operettes in French and Italian. Nobody even gives a shrug that ballets isn’t the predominant expression of culture today, and so, we should expect feature films to peak and fade, too: to give way for something else and better. Gaming and immersive culture, perhaps.

But let’s look at the underlying assumption again, that nothing would be produced if the copyright monopoly was reduced to allow file sharing. Let’s assume that everything could spread freely as soon as it was digitized, and that this would result in no more revenue for a certain blockbuster movie once it was shared in the wild (which is a completely false assumption, but one that the copyright monopoly maximalists argue, and so, let’s stick with it for the sake of argument).

This means, that after the opening weekend of a blockbuster, it would yield no more revenue under this (false) assumption. So then, let’s look at hard numbers to examine that argument. We have the numbers for Return of the King, which is frequently used as an example in the debate, right here.

The movie Return of the King cost 94 million US dollars to make. On opening weekend, it grossed 199 million. That’s over a 100% return on investment before a digital copy could be fileshared in the wild.

Now, there are a number of assumptions with this number, like how the gross is distributed and much more. But overall, it shows how ridiculous the argument is that there would never be a return on investment if the copyright monopoly was sensiblized to allow noncommercial copying.

The next wave of that argument is that all movies don’t reach the 100-percent level of return on investment during opening weekend. That is true, of course. Some reach more, some less, some go at a loss. So how much return would be needed, and how much risk is acceptable, to still make investments happen?

In order to answer this question, we don’t look at the Hollywood studios, but at other investors: the… well, investors. Wall Street. A ten-percent return over a year is a considered a good investment that easily attracts hundreds of millions of euros (or dollars). And frequently enough, those investments… just tank. Just like movies do. But you practically never, ever, see the hundred-percent return on investment on Wall Street financial derivatives that you can make on just opening weekend for a movie production.

In summary, the argument that nobody would invest in the production of multimillion blockbuster feature movies if filesharing was allowed is incoherent hogwash on multiple levels, proved so by the industry’s own numbers.

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This article has been deemed reference material by the swarm, which has translated it into other languages. Translations available: Spanish.

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About The Author: Rick Falkvinge

Rick is the founder of the first Pirate Party and is a political evangelist, traveling around Europe and the world to talk and write about ideas of a sensible information policy. He has a tech entrepreneur background and loves whisky.

Update: See Mike Masnick, Once Again, If You’re Trying To Save The $200 Million Movie, Perhaps You’re Asking The Wrong Questions.