Media Uncritically Cites Flawed Piracy Studies, Again
from the balance-needed dept
The Washington Post has a story about the never-ending lobbying campaign for more draconian penalties for copyright infringement. It's extremely one-sided, quoting several industry executives but not a single person on the other side of the copyright debate, who could have pointed out that Congress has passed "tougher penalties" repeatedly in recent years and the results haven't exactly been good. The report also cites the widely discredited series of piracy reports that, as I explained here and here, dramatically overstate the effects of piracy on the copyright holders by double- and triple-counting uncaptured revenues by adding in "ripple effects."Those previous studies covered the movie and music industries, and both made the same basic error: after they counted some amount of CDs or movie tickets unsold as "lost revenue," they then counted the same lost revenue again by calculating how much less the movie and music industry is paying their suppliers due to those lower revenues. In some cases, they count the same dollar a third or fourth time when those suppliers pay their suppliers less than they would have without piracy. But that's obviously silly. What matters is the total number of dollars earned, not how many times each dollar changes hands. When you strip out these spurious double- and triple-counted revenues, and correct some of the other questionable assumptions I detail in the posts linked to above, you find out that uncaptured revenues from music piracy to the recording industry are around $3.2 billion, not $12.5 billion as the report claims. Similarly, IPI claims the uncaptured revenue for the movie industry is $20.5 billion, but if you strip out the double-counting, you find it's more like $6.1 billion. I pointed these problems out to them after they released the movie study, yet they still made the same flawed assumptions for the music study, and presumably their latest study has the same problems. The Post says the latest study finds that the combined cost of movie, music, and software piracy is $58 billion. I think it's a safe bet that this number, too, is wildly overstated, and that the actual figure is closer to $15 billion. Unfortunately, this reporter apparently didn't have the time to dig into the report in detail, or to pick up the phone and call someone who could offer a critical perspective. Once again, readers will see these inflated numbers reported as fact and assume there must be some rigorous methodology behind it.
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Filed Under: copyright, piracy, ripple effects
Companies: ipi
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Again?
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Ummm, do you have any perspective? $24.3 billion is still a heck of a lot of money.
$15 billion. Thats about the total revenue of Lipitor, the biggest selling drug in the world. Guess what happens to Pfizer if it goes away.
$24 billion is 2.5 times the GDP of Bolivia. It is enough to house a million prisoners in a federal pen for a year. Its about the cost of 70 million iPhones.
Course, with those free iPhones, piracy would probably get worse.
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Tim and I had this discussion off-line, but it's worth pointing out here as well. My big problem with this study is that it counts all competitive impacts as "lost revenue" and doesn't bother to count any of the positive impacts or the "gained revenue" to other parts of the business. So I'd argue that the "loss" numbers are a joke.
After all, the buggy whip industry "lost" a lot of revenue to the automobile industry -- but we didn't see people whining about how the gov't was needed to save the "billions" lost to the buggy whip makers and all their suppliers...
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If that is the case then why inflate them? When you pushing for changes and decide to back up your argument with rigged studies and false data then that weakens your posistion.
The number of child abuse cases on an anual basis already too high so why have a child care organization put out rigged studies and false data to push their agenda?
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You make it sound as if $24.3 billion is missing from the economy. It's not. That figure represents uncaptured revenue - it's not a real number. That $24.3 billion is being spent on other things, like Lipitor or an iPhone.
What if the money spent on these other things is better for the economy? What if their multiplier is higher than the multiplier for music and movies? Are you suggesting that the economy be less efficient?
Guess what happens to Pfizer if it goes away
Nothing. It markets a new product. It's called supply and demand.
McNeil Consumer Healthcare still sells Tylenol and Bayer still sells Aspirin, despite the wide availability of cheaper generic versions. Both companies have managed to expand these two products. Competition is a wonderful thing.
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@RandomThoughts
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I also agree that the buggy whip industry lost revenue to the auto industry, but be careful how you talk about that. The whip industry (kinky sex groups excluded) ended due to the auto. Content creators are not being replaced by another product, just copies of their own product. They are being whipped by their own whip.
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Realistically the better comparison would be something like what happened between American automakers who were using people and assembly lines to assemble their vehicles and the mechanization/robotics that happened in Japanese automakers. The Japanese accepted the new technology and incorporated it, the American auto industry didn't want to. Toyota is number one and Ford is thinking about how to avoid bankruptcy.
Just something to think about.
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Do you honestly believe that if piracy ceased today, that the music, movie and software industries would show an immediate increase in revenue of $15 billion? Wouldn't other industries complain about $15 billion in uncaptured revenue?
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What I find particularly offensive about the "piracy" issue is that it is a red-herring designed to hide the fact that these media companies seek to eliminate any rights that you may possess to the use of the media. Furthermore, the news media seems to lack any real insight into this issue and simply reprints the industry press releases.
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That's what I've been saying all along...
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piracy kills trees
I don't see hard-drive and other digital-storage manufactures crying about the effects of piracy. Nor do I see PETA or The Environmentalists crying over landfills being filled with all the packaging used in piracy.
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Another Perspective
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Another Perspective
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I do agree though that if you inflate the numbers, people will tend not to believe what you are trying to get across at all. Personally, $24 billion should be enough. A billion here, a billion there, soon you are talking real money.
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RE: Another Perspective
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Bah, the music study don't actually assume every pirated copy is a lost sale, although they do make some other dubious assumptions I detail in the links above.
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I agree that the industry's numbers are bogus, but that being said, whatever the number is pretty big. Is it Bill Gates big or Donald Trump big, that is the question.
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A big picture
Yes, but the economy would get better. The goal of copyright legislation should be to maximize the net welfare, not to redistribute wealth to producer cartels. Copyright should be reduced to 14 years and in return technology companies should do more to identify large-scale violators.
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If piracy ceased today, they wouldn't see an increase of $15 billion, but they would see an increase. How much? I don't know, and you don't either, but it would increase.
Seems to me the industries are talking about uncaptured revenue, so not sure what you are getting at here.
J&J still sells Tylenol, but those sales are not what generates profits and funds research for J&J.
If Pfizer lost Lipitor today, I bet you that dollar I stole from you that they would be bought out within a year.
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For the entertainment industry to see more revenues, people need to be willing to spend more each month on their wares. This will happen if there's an increase in real wages, a drop in the cost of living in more vital categories like food and shelter, or something along those lines.
Let the RIAA harangue Congress to raise the minimum wage or lower taxes in the working-class brackets or raise income tax at the expense of abolishing sales taxes or something. That sort of thing might actually lead to them seeing revenue increases down the road.
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