PolitiFact Trashes Lamar Smith: Says His Claims About Economic Impact Of Piracy Are Flat Out False

from the fact-checking dept

Tue, Feb 7th 2012 12:46pm — Mike Masnick

We've pointed out before that Lamar Smith based his entire argument for why SOPA was needed on misleading or simply incorrect claims -- but who are we to say that? Thankfully, it appears that the professional fact checkers are in agreement that Smith's argument for SOPA isn't based in reality. The famed PolitiFact fact checking operation has completely dismantled Smith's claim that "illegal counterfeiting and piracy costs the US economy $100 billion every year."

It turns out (as we've pointed out) there's nothing true about that statement. PolitiFact tracks down the key points on which Smith bases this claim, noting that it's a Chamber of Commerce report that says, "the U.S. consumption-based share of counterfeit and pirated goods is between $66 billion and $100 billion." Smith, obviously, just takes that higher number (already a questionable move), and insists that's the "harm." But, as PolitiFact points out, that's not what the report actually says.

In fact, the report flat out states that it "has not attempted to estimate business losses associated with counterfeiting and piracy." So to pretend that's what the report says is, well, lying.

PolitiFact checks in with a number of experts -- including someone from the Chamber of Commerce who produced the report -- who admits that it's simply not true to say that $100 billion is the cost to the economy. Add everything up, and PolitiFact says that Smith is being anything but truthful in his claims:

Smith’s statement draws on a high-end estimate also based on flawed assumptions for the U.S. "consumption-based share of counterfeit and pirated goods" in 2008. The cited $100 billion figure doesn’t reflect the costs to the economy, contrary to Smith’s claim; the 2011 study did not assess such costs, which are understandably slippery.

Maybe there is no solid estimate of the cost to the economy. Smith’s CNN.com statement rates False.

Unfortunately, there still doesn't appear to be any punishment for trying to pass a really bad bill by using misleading stats, other than public ridicule.

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Filed Under: fact checking, facts, lamar smith, piracy, sopa

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KeithV (profile), 7 Feb 2012 @ 12:53pm

There is no cost to the economy
The reason that they can not estimate the "cost to the economy" is because the net is $0.

Even if consumers spent the reported $100B on counterfeit goods, that is still what the consumers spent. That went into the economy.

Now, if consumers spent less than $100B, including down to $0, they still would have spent that on something else.

No net difference TO THE ECONOMY.
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:Lobo Santo (profile), 7 Feb 2012 @ 12:57pm

Re: There is no cost to the economy
I thought 'The Economy' was what we call the 2-ton Ogre which constantly threatens the President...
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mudlock (profile), 7 Feb 2012 @ 1:06pm

To bad Politifact burned most of it's credibility with the half of the political spectrum that used to still trusted it; because otherwise I could have used this claim as something meaningful.
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Hephaestus (profile), 7 Feb 2012 @ 1:12pm

Re: Re: There is no cost to the economy
Where do you get your facts? Lamar Smith and the LA Times say the Ogre weight in at 42 billion tons.
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MrWilson, 7 Feb 2012 @ 1:13pm

Re: There is no cost to the economy
I don't know about you but every time I pirate anything, I burn the money I would have paid for the actual product. After I'm done, I burn the ashes of the money again since the entertainment industry's estimates keep counting the same money multiple times.
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Anonymous Coward, 7 Feb 2012 @ 1:14pm

Perjurer
Lying in court is called perjury. Maybe we should apply that here.
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pixelpusher220 (profile), 7 Feb 2012 @ 1:15pm

Re:
wait...which half still trusts them?
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pixelpusher220 (profile), 7 Feb 2012 @ 1:16pm

Re: Perjurer
I personally feel that if you pass a bill that later gets ruled to be unconstitutional, you are no longer allowed to write laws or vote on them.

But then Congress would be a lonely quiet place...
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MrWilson, 7 Feb 2012 @ 1:21pm

Re: Re: Perjurer
Hey, if that applied in California, all those Prop 8 supporters would lose their ability to try to screw over their neighbors or legislate bigoted morality! Not a bad idea.
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Anonymous Coward, 7 Feb 2012 @ 1:24pm

Re: Re: There is no cost to the economy
That's nice. I don't have any money, so when I pirate anything, I write out an I.O.U. and then burn that.
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juanita, 7 Feb 2012 @ 1:29pm

Re:
Yeah, they burned most of their karma capital with the constant stretching to place anything Obama in a positive light and anything at all about Sarah Palin negative, just to make her look stupid.
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Anonymous Coward, 7 Feb 2012 @ 1:32pm

but the others in congress believe it, especially those that are being 'encouraged', and let's face it, would a congressman/woman lie?
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BeachBumCowboy, 7 Feb 2012 @ 1:42pm

Facts
Hey Lamar,

Facts remain facts even if you choose to ignore them.
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Anonymous Coward, 7 Feb 2012 @ 1:46pm

Yet, if all of the counterfeit goods had been purchased legally, there would be an economic BOOST of 66 to 100 billion.

Not losses, just good business that never happened.
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Josef Anvil (profile), 7 Feb 2012 @ 1:48pm

huh?
Maybe my math is just THAT bad. I thought the music and movie industries took in roughly $14 billion each in 2011. So thats $28 billion, but lets just say $100 billion for fun. I know there are counterfeits out there and let's not forget software and books, but I'm guessing that ICE and the MPAA and RIAA are more focused one movies and music.

So Lamar Smith wants us to believe that revenues for these companies would double if we eradicate piracy ? If you do adjusted dollars for all the industries impacted by piracy for 1992, will we find that the revenue is double what it is now?

$100 billion loss to the economy??? So all of the money would have to leave the US and not be processed by US financial institutions. Kim Dotcom must be rolling in cash.
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TtfnJohn (profile), 7 Feb 2012 @ 1:51pm

Re: Re: Re: There is no cost to the economy
Just be sure to mix all that high quality carbon back into your gardens in time for spring, particularly if you're heading out for veggies and stuff.

They'll love it!
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TtfnJohn (profile), 7 Feb 2012 @ 1:52pm

Re: Re:
With all due respect to Ms Palin, she didn't need PoliFacts for that. She simply had to open her mouth.
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Mike42 (profile), 7 Feb 2012 @ 1:57pm

Re: Re: Re:
Ditto, sans that "Respect" part.
I want to be governed by people who respect intelligence, not "Joe Sixpack".
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Anonymous Coward, 7 Feb 2012 @ 1:58pm

Oh, I do have to add, BTW: Mike, BTJunkie is gone. Other Torrent sites (according to your wonderful source torrent freak) are considering shutting down.

Why stories about Lamar and not about issues that directly touch copyright? Could it be that perhaps you don't want to discuss the negative issues, the widespread realization by those in the piracy community that perhaps they can't hide out from the law, etc?

It would seem to me that two items bullshitting about Lamar is overkill, compared to what is happening in the real world.
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Bengie, 7 Feb 2012 @ 2:02pm

Not harm, but savings
I don't look at it as $100bil of harm, but $100bil of savings. Fewer jobs created in that industry, but the money still gets spent in other industries.
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Donnicton, 7 Feb 2012 @ 2:06pm

Re: Re: Re: Re: There is no cost to the economy
This just in, MPAA sues man for 150,000 ears of Corn in retaliation for pirating the Hurt Locker.
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aguywhoneedstenbucks (profile), 7 Feb 2012 @ 2:10pm

Re: Re: Re: There is no cost to the economy
I'm in the same boat as you, except I actually go steal money from people in the music industry (local bands, A&R folks, execs, the blind dude on the corner playing guitar...whoever I can find connected with music) and burn that when I pirate.
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TtfnJohn (profile), 7 Feb 2012 @ 2:11pm

Re:
For all of that the article reads as well researched and well backed in saying that Smith is either exaggerating or lying about the impacts of what he calls "piracy" on the Web.

It doesn't matter which, in the end. The problem isn't anywhere near as bad as how he and SOPA supporters presented it to be.
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Anonymous Coward, 7 Feb 2012 @ 2:14pm

Re:
Piracy is still happening in the real world.
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TtfnJohn (profile), 7 Feb 2012 @ 2:14pm

Re:
Now then if a significant portion of those goods were made in the United States, and they are, and the money spend in the United States that would drive the loss back down to zero. Wouldn't it?
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Dave, 7 Feb 2012 @ 2:25pm

Smith objected to Sanchez as an expert, saying in an email that because Sanchez is opposed to the anti-online-piracy act, he "cannot provide an objective or unbiased analysis." /boggle

Well, I object to Smith's analysis because he is *in favor* of the 'anti-online-piracy act'. If he is in favor of it then he "cannot provide an objective or unbiased analysis."

Total and utter logic fail.
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Anonymous Coward, 7 Feb 2012 @ 2:26pm

Re:
Logic Fail.
The reason why the person bought the $20 counterfeit handbag in the first place is because they weren't prepared to spend $200 on the authentic one.
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Anonymous Coward, 7 Feb 2012 @ 2:31pm

Re: Re:
Logic Fail.
The reason why the person bought the $20 counterfeit handbag in the first place is because they weren't prepared to spend $200 on the authentic one.

How about the guy who bought the counterfeit medication?
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Anonymous Coward, 7 Feb 2012 @ 2:55pm

Re:
Yup. That's such a run of the mill ad hominem. I'd expect a political mastermind like Lamar Smith to at least have graduated to the trickier fallacies. I guess it must be pretty hard to argue objectively against a competing analysis of data when your favored analysis commits so many mistakes and distortions.
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Anonymous Coward, 7 Feb 2012 @ 3:00pm

Re: Re:
And Hollywood still refuses to take me money by offering services I actually want.
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Anonymous Coward, 7 Feb 2012 @ 3:20pm

Re: Re: Re:
He couldn't afford the $2000 medication. My question is: did he get it from the pirate bay?
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f0nZi3 (profile), 7 Feb 2012 @ 3:25pm

Re: Re: Re: There is no cost to the economy
No, no, no. Haven't you heard? That figure has been recently updated to 6.0 sextillion metric tons. ;-)
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Franklin G Ryzzo (profile), 7 Feb 2012 @ 3:31pm

Re: Re: Re:
With the outrageous costs of some medication, some people have no choice than to try and obtain a more cost effective source. It's sad and detestable that people try to take advantage of that demographic by selling them counterfeits, but that is a symptom of a larger problem. If we provided cost effective medicine to the disadvantaged they would not be forced to try and get their medications from shady online businesses.
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Franklin G Ryzzo (profile), 7 Feb 2012 @ 3:35pm

Re:
Torrent sites shutting down is not really that newsworthy. It happens all the time. The nature of the hydra is that when one head dies, at least two more spawn in it's place. BtJunkie closes down and the void is filled shortly. This is just business as usual. Some very large sites have already indicated that they aren't going to be pressured into closing and some others indicated that they might. There's your coverage.
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f0nZi3 (profile), 7 Feb 2012 @ 3:36pm

Re: Not harm, but savings
Yep. Honestly, the only form of counterfeiting I can possibly think of that would actually harm the economy is the counterfeiting of money.
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OC, 7 Feb 2012 @ 4:08pm

So here's my thinking...

A country is made up of people. No people, no country. The government is supposed to be by the people, for the people. If you intentionally mislead the public and government in attempts to pass laws that would negatively impact the public and therefor the country... doesn't that make it a kind of treason?
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Idwal, 7 Feb 2012 @ 4:11pm

Re: Re: Re: Re: There is no cost to the economy
Don't tell me you're growing your own vegetables! In a garden!? The farmers, shippers and grocery stores should sue you into the ground!

Do you have any idea how much money vegetable pirating costs the US economy every year?

No? Funny... neither do I.
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Anonymous Coward, 7 Feb 2012 @ 4:13pm

Re: Re: Re: Re: There is no cost to the economy
No way Hillary weighs that much...
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Anonymous Coward, 7 Feb 2012 @ 4:14pm

Re: Re: Re: Re: Re: There is no cost to the economy
I bet its somewhere around 5-10 times the size of the actual vegetable market though...
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Idwal, 7 Feb 2012 @ 4:16pm

Re: Re: Re: Re:
No. You can't print specific chemicals quite yet. Wait a few years.

WalMart's entire housewares section, however...
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Anonymous Coward, 7 Feb 2012 @ 4:17pm

Re: Re:
I know... DAMN those Somalians!
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Idwal, 7 Feb 2012 @ 4:20pm

Re: Re: Not harm, but savings
You'd have to talk to the FED about that. Just be careful how you phrase the question.
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Isaac the k (profile), 7 Feb 2012 @ 5:44pm

Ooo! I know!
If Lamar Smith is able to pass laws by making false assertions, maybe WE should be able to abrogate HIS rights by making false assertions!

How about:
"Rep Lamar Smith is an avid consumer of Hitler-themed seal clubbing videos which he watches stoned while sitting on a burning American flag."
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Anonymous Coward, 7 Feb 2012 @ 6:03pm

Re:
Shills like you will find anything and everything to whine at Mike over.

When he posts about torrents, you claim he's a piracy apologist. When he posts about law, you claim he's a poor journalist. When he posts about politicians, you claim he's a lobbyist.

He's never going to satisfy your twisted inconsistencies, and you know it.
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mudlock (profile), 7 Feb 2012 @ 6:26pm

Re: Re:
Now? Neither.

The right never did (something about facts having a liberal bias?) but since the "Lie of the Year" and their State of the Union thought-lie, neither does the left.
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The Moondoggie, 7 Feb 2012 @ 6:47pm

Fine, fine....
There should be a fine for false high-end estimates. Lamar Smith seems to be a very incompetent public servant if he usually pull this kind of stunts.

Who let this guy graduate college again?
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Runaway1956, 7 Feb 2012 @ 6:50pm

rated funny
I clicked "funny" above your post. I'm not even a grammar nazi, but you use all those big 50-cent words - then fail to use proper syntax! Credibility? Sorry, you don't have much to work with.
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JMT (profile), 7 Feb 2012 @ 6:53pm

Re:
"Yet, if all of the counterfeit goods had been purchased legally, there would be an economic BOOST of 66 to 100 billion."

I like the way you just pulled $100B out of your butt. Wouldn't it be neat if the real-world economy worked that way.

"Not losses, just good business that never happened."

Most of which would never have happened anyway, and some of which will encourage more business in the future.
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TDR, 7 Feb 2012 @ 6:59pm

Re: Re: There is no cost to the economy
I thought 'The Economy' was what we call the 2-ton Ogre which constantly threatens the President...

What did Shrek ever do to you? Ogres have layers, you know!

Anyway, I think it's time to invoke the Black Sacrament on Lamar Smith and friends. The Dark Brotherhood needs to pay them a visit.
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Anonymous Coward, 7 Feb 2012 @ 8:38pm

Re:
Use Retroshare if you want to hide, use Bittorrent if you want to flip the copyright industry.
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Anonymous Coward, 7 Feb 2012 @ 8:40pm

Re: Re: Re:
Darwinism in action?
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Anonymous Coward, 7 Feb 2012 @ 8:43pm

Re: Re: Re: There is no cost to the economy
Leech the Potassium hydroxide from it first so you have potash(KOH)
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Anonymous Coward, 7 Feb 2012 @ 9:20pm

Re:
"Well, I object to Smith's analysis because he is *in favor* of the 'anti-online-piracy act'. If he is in favor of it then he "cannot provide an objective or unbiased analysis.""

That and the fact that he's received 100s of thousands of dollars from Hollywood to pass these laws. Like his views are in any way "objective or unbiased".
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Anonymous Coward, 7 Feb 2012 @ 9:57pm

Re: Re:
if the counterfeit wasn't available, they might buy another alternative (creating the potential for a low cost brand) or, horrors of horrors, actually save up enough to buy the real thing.

The only reason people buy the $20 one is because they can.
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Anonymous Coward, 7 Feb 2012 @ 11:01pm

Re: Ooo! I know!
I like that mental image, simply because it involves him sitting on, and hopefully about to catch, fire.
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Prisoner 201, 8 Feb 2012 @ 12:48am

Re: Re: Re:
"if the counterfeit wasn't available, they might buy another alternative (creating the potential for a low cost brand) or, horrors of horrors, actually save up enough to buy the real thing.

The only reason people buy the $20 one is because they can."

Yeah, saving up so you can buy those $2000 medicines is the right thing to do. I'm sure that painful, debilitating and/or lethal illness you have will wait for you to get the money.

Of course, being in pain, debilitated and/or dead your salary might not be too peachy. But never you fear, you are doing the Right Thing(tm).
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PaulT (profile), 8 Feb 2012 @ 1:07am

Re: Re:
"just to make her look stupid"

I think you'll find she did that all by herself.
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Kat, 8 Feb 2012 @ 1:37am

Re:
If he lived in a country that cared enough to give everyone free healthcare, instead of gouging sick people for profit, he probably wouldn't have had to buy counterfeit medication in the first place.
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techflaws.org (profile), 8 Feb 2012 @ 3:20am

Re:
compared to what is happening in the real world.

You mean like piracy continuing unabated?
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PaulT (profile), 8 Feb 2012 @ 3:47am

Re: Re: Re:
"The only reason people buy the $20 one is because they can."

Yes, and by extension they cannot buy the real thing. If you think that every $20 handbag represents a $200 sale that absolutely would have been made if the counterfeit didn't exist, you're a drooling idiot.
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The eejit (profile), 8 Feb 2012 @ 4:52am

Re: Re: Re: Re: Re: There is no cost to the economy
Oh, don't mind him, that's just the new Hollywood drug doing the rounds. It makes you feel like a 6.0 sextillion metric ton Hillary Clinton sat on your face.
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The eejit (profile), 8 Feb 2012 @ 4:55am

Re: Re: Re:
Because it's far cheaper to buy generics form Canada than the FDA-Approved versions with an approximate 6000% markup.
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The eejit (profile), 8 Feb 2012 @ 4:57am

Re:
I would happily pay �30/month for viewing new movies at home (even only two a month). Because ity costs nearly �50 to go to the cinema before transport and food costs. KISS and RtB are useful to have, y'know.
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The eejit (profile), 8 Feb 2012 @ 4:58am

Re: Fine, fine....
Nah, he's just anti-progress. Makes him perfect to sit in Congress, don'cha think?
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Badger (profile), 8 Feb 2012 @ 5:04am

Re: There is no cost to the economy
No net difference TO THE ECONOMY

Not necessarily true. I buy something from a reputable shop and part of that money goes into the economy through taxes, rent, wages, buying the product, etc.

If I buy something from the man-on-the-corner, he takes all that money and none of it needs to be seen within the wider economy - he might buy a Rolls Royce and so allow someone else to pay taxes, etc. or he might just ship the money abroad. Either way, I suspect that he doesn't see a social responsibility in sharing his wealth.

If the counterfeit goods are sold in reputable shops then, again, some of that money does make it into the economy through the taxes, etc. but the majority for the product will just disappear.
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Anonymous Coward, 8 Feb 2012 @ 5:06am

surely the punishment is not re electing?
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Badger (profile), 8 Feb 2012 @ 5:22am

Re: Re:
The problem isn't anywhere near as bad as how he and SOPA supporters presented it to be

But that sort-of begs the question "how much money does the problem have to represent before we're bothered?".

Even if the problem were only a tenth of that quoted, $10billion, that still sounds like a lot of money to me.

(Not that I agree with the SOPA approach)
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Anonymous Coward, 8 Feb 2012 @ 6:30am

Re: Re:
Nobody did more to paint Sarah Palin in a negative light than Sarah Palin.
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Rain Day, 8 Feb 2012 @ 7:07am

Re: Re:
No one ever needs to "make" Sarah look stupid. She manages to do that quite well, all by herself.
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The dillflower, 8 Feb 2012 @ 1:48pm

Piratey things
That figure of lost money is wrong. Many people who pirate would not go out and buy the product if they couldn't pirate it. Let's say a movie got illegally pirated 1 million times. That doesn't mean that if people didn't have access to pirate the movie, that 1 million people would have went out and purchased it. Many people couldn't afford to purchase it and others are interested in it enough to view it for free, but not interested enough to actually go out a buy it if they couldn't get it free.
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scott, 9 Feb 2012 @ 12:02am

the music industry is a mess
The definition of piracy is expanded by these know nothings in Congress to fit whatever purpose they see fit just to have more control, more of a monopoly over creativity when they lack it altogether. The recording industry doesn't even know who the great bands are right now, and I did a list of best songs for the last 40 years, and two other lists for 2010 and 2011. Half of the songs on those lists or more don't even get any radio airplay where I live and it's absolutely inexcusable and ridiculous that these bands and their songs aren't being promoted. The fact that I write about/review and list those songs means that I know something they don't. But then the recording industry only cares about money, not about what music is really among the best.
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scott, 9 Feb 2012 @ 12:04am

the music industry is a mess
The definition of piracy is expanded by these know nothings in Congress to fit whatever purpose they see fit just to have more control, more of a monopoly over creativity when they lack it altogether. The recording industry doesn't even know who the great bands are right now, and I did a list of best songs for the last 40 years, and two other lists for 2010 and 2011. Half of the songs on those lists or more don't even get any radio airplay where I live and it's absolutely inexcusable and ridiculous that these bands and their songs aren't being promoted. The fact that I write about/review and list those songs means that I know something they don't. But then the recording industry only cares about money, not about what music is really among the best.
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scott, 9 Feb 2012 @ 12:09am

i'm opposed to file sharing but i'm strongly in favor of people sharing their opinions and standing up against the attempts at intimidation by Congress and their SOPA, PIPA, or whatever other names they might come up with to stifle thinking and creativity. If Congress is so concerned about MONEY, then why don't they balance the federal budget. What is wrong with them anyway!
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bobby b, 9 Feb 2012 @ 1:25am

Politifact?

Let me start by saying, I'm on your side here - SOPA was just another instance in which the entrenched government mandarins give magnificent gifts to their friends that they'd just stole from us for that purpose. And that was the best, highest aspect of it.

My point is, Politifact has whored itself out too obviously and too dishonestly, too many times. Even when they call it 100% correctly, as I think they did here, their rep drags you down when you cite to them.
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bobby b, 9 Feb 2012 @ 3:36am

Re: the music industry is a mess
"But then the recording industry only cares about money, not about what music is really among the best."

Well, of course they do. And, artists go to the recording companies because the companies care only about money.

Artists who go to recording companies usually have an interest in getting their music out in the world, for the bucks or for other reasons. When a rec company works hard in order to earn bigbucks off of someone's music, that usually means they're striving to sell as many copies as possible.

Thus, both sides are working towards a common goal - building and satisfying huge quantities of demand - even though success might be measured and accented differently between them. For most artists, running their own free music site isn't going to get them nearly the distribution that even a small rec company campaign can build. If an artist is giving away millions of free downloads, you can usually bet the artist is already a big seller - usually because of past rec company efforts.

Don't get me wrong - I'm not arguing your basic points about IP clamps. I'm speaking only to your sort of contemptuous dismissal of the value of a free market in maximizing everyone's satisfaction of their wants, needs, and desires.
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Mekhong Kurt (profile), 19 Feb 2012 @ 11:23pm

Re: Re: Re: There is no cost to the economy
Thanks for a nice chuckle there, @Hephaestus!
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