‘Sweden must act now to stop online piracy’

Internet providers make huge sums of money by not cracking down on piracy sites, argue researchers Karl Lallerstedt and Waldemar Ingdahl.

'Sweden must act now to stop online piracy'
Almost a third of Swedes watch movies illegally. Photo: Janerik Henriksson/TT

According to the Swedish Patent and Registration Office, around 80 percent of the value of Swedish businesses is comprised of intangible assets. To Sweden's knowledge economy, these assets are becoming increasingly important for growth, export and tax revenue.

Meanwhile almost a third of Swedes admit that they commit intellectual property infringements by watching films via illicit online sites. Few are able to muster any sympathy for the billion dollar industry in Hollywood, which loses a few kronor every time someone watches a movie without paying. This is precisely the reason why very little has happened to stop the emergence of a huge illegal market.

It is David versus Goliath, where Goliath is the film industry and David is the little pirate. This is a view many have embraced, but presents a grossly misleading picture of reality.

First, the “pirates” providing copied films are no longer happy amateurs. According to calculations in our new report 'Illicit file sharing and streaming: An ecosystem perspective', leading piracy sites make more than an estimated 30 million kronor ($3.5 million) a year.

But the really important point is that the piracy sites actually earn very little compared to the value they destroy for the copyright holders, and above all, other players indirectly make considerably more on this illegal trade. It is estimated that almost a quarter of total online traffic is driven by piracy. Advertisers on piracy sites, search engines that drive internet users to the sites and payment solutions that charge for the transactions all earn more than the pirates themselves. However, the really big winners of the extensive traffic related to intellectual property infringement online are the internet operators. More traffic means increased demand for faster and more expensive internet access and greater demand for mobile data.

According to our calculations, such revenue for Swedish internet providers potentially exceeds two-and-a-half billion kronor a year, much more than the pirate sites earn. In addition, internet providers are uniquely placed to prevent copyright infringement; they have unique insight into their customers online activity and are able to block websites.

Sweden's “piracy debate” has the wrong focus. It should not be on the pirates. The basic problem is that the biggest players in the digital ecosystem enable extensive piracy and moreover earn huge sums on doing so.

Considering that internet providers earn an estimated two-and-a-half billion kronor and more on traffic generated by piracy, it is relevant that Sweden has a minister for culture who represents a party which rather than reducing this theft wants to legalize file sharing.

Perhaps it is not perceived as a particularly strategic issue if people copy a few movies, music and computer games. But the reality is that this is billions of kronor of revenue lost, and it does not affect “entertainment” alone. Map services, e-books and professional software are also very much affected.

The fact that almost a third of Swedes say they steal copyrighted material indicates that the digital market, which is a prerequisite for the emerging knowledge economy, is dysfunctional. The state has failed in its mission to maintain law and order and protect private property. In the process, the state apparatus has meanwhile lost important tax revenue. A similar theft rate in any other area would have caused an outcry.

As the knowledge economy grows, even bigger sums will be lost due to the ongoing mass theft of intangible assets. Eventually Culture Minister Alice Bah Kuhnke, of the Green Party, or her successor, will have to face the music and admit that “we have been too naive”. Let's hope this happens sooner rather than later.

Although it is politically inconvenient to act, theft of intellectual assets is too important to ignore. Mark Getty, co-founder of photo agency Getty Images, has said: “Intellectual property is the oil of the 21st century. Look at the richest men a hundred years ago: they all made their money extracting natural resources or moving them around. All today's richest men have made their money out of intellectual property.”

Sweden is ranked as the third most innovative country in the 2015 Global Innovation Index. Sweden's interest in defending intellectual property is crystal clear.

There are a number of important areas in which our elected officials have to do more. Some of the most critical are:

1. If market self-regulation does not work, the state has a responsibility to enforce responsible behaviour through legislation. Internet providers cannot be allowed to keep ignoring the theft they are both enabling and making money from.

2. The public should be informed that illegal streaming and file sharing exposes users to heightened risk of their computers being infected by malware and cyber crime. Cyber security is becoming increasingly important and targeted information campaigns could play an important role in minimizing risk behaviour.

3. The justice system needs more resources and opportunities to proactively combat intellectual property crime. Today's resources are totally inadequate in relation to the extent of the theft. The money used to protect intellectual property should not be seen as a cost, but rather as an investement which will contribute to increased economic growth and tax revenue.

This is a translation of an opinion piece first published by Dagens Nyheter. It is written by Karl Lallerstedt, co-founder of Black Market Watch, and science journalist Waldemar Ingdahl, who have co-authored the report 'Illicit file sharing and streaming: An ecosystem perspective'.


Swedish clichés: Is the alcohol monopoly really a sign of an all-controlling state?

In this new series, The Local's reader Alexander de Nerée seeks to challenge some of the clichés about Sweden.

Swedish clichés: Is the alcohol monopoly really a sign of an all-controlling state?

There are some undeniable truths about Sweden (lots of Volvos, lots of trees) but when asked, most people don’t get far past the usual clichés. And nor did I. 

A well-organized country full of high tax paying, IKEA flatpack-loving, slightly distant Fika fanatics, all happily queuing to buy some much-needed state-controlled booze to get through the never-ending cold and dark winters.

In this series, I give my take on some of the more commonly heard assumptions about life in Sweden and how I experience them.

When you are visiting family back home after your move to Sweden, you will note that nothing seems to get a tipsy uncle quite as riled up as your story about the state-controlled alcohol market. It’s also something that comes up surprisingly often when you tell people you live in Sweden. The mere mention of having to go to a special shop to purchase alcohol seems to set people off in a certain way.

That the shops are called Systembolaget, like some Soviet-era holdover obviously does little to calm your uncle down.

To start with the concept itself. Having grown up in The Netherlands, I was not bowled over with indignation at the idea of having to go to a separate shop to purchase my poison. Although supermarkets in the Netherlands do sell alcohol, it is pretty common to buy your wine, as well as any stronger stuff, at what Australians call a ‘bottle shop’  (which rather misses the point of what’s actually for sale).

READ ALSO: Like having sex in a church: Sweden’s uptight attitude to alcohol

Apart from having a larger assortment than supermarkets, these shops also have specialized staff that can recommend wines with your food. 

But with plenty of well-stocked and reasonably priced Systembolagets around and one right outside my local supermarket, I don’t think the airtime this topic gets when people talk about life in Sweden is actually justified.

For the now properly drunk uncle at your family dinner, the Systembolaget is of course a sign of a bigger problem with Sweden: the all-controlling state. The outrageous combination of high taxes, free healthcare and schooling and state-controlled alcohol must mean that the government has a finger in every aspect of life.

It turns out your uncle is engaging in a long-standing tradition that has been dubbed ‘Sweden bashing’. It started with Eisenhower, but in more recent years lesser statesmen dabbled in it as well. Although there is no clear definition, it seems to involve cherry-picking facts about Sweden – or alternatively just making them up – in order to ridicule the Swedish model. It’s a model that, according to the ideology of the bashers, should fail miserably but somehow stubbornly refuses to do so.

Despite the long-standing tradition of Sweden bashing, I think anyone who lives here will agree that in everyday life there is nothing particularly invasive about enjoying free education and healthcare in exchange for higher taxes. Come to think of it, that is pretty much the model applied in the Netherlands and they never got stuck with a reputation for an overbearing government. On the other hand, Holland does get bashed for easy access to drugs and euthanasia, so I guess you have to be careful what you wish for.

Considering it now really only functions as a lightning rod for politicians, it may not be a bad idea to let go of the state monopoly on alcohol sales.

As for the bashing itself, I think the current Swedish response to it works just fine: a light shrug of the shoulders and let the system speak for itself.

Alexander de Nerée moved to Stockholm with his husband in October 2020. He is Dutch, but moved from Zürich, Switzerland, after having lived in Hong Kong for 10 years. Not having been to Sweden before the move, Alexander had some broad assumptions about what life in Sweden would be like. In this series, he revisits these assumptions and gives his take.  Alexander wrote for series for The Local before about his “firsts” in Sweden.