If It's May It's Time For The Press To Parrot Bogus Stats Announcement From The BSA

from the bsa-from-the-bsa dept

Like the swallows returning to Capistrano, every May is marked by the release of intentionally misleading and bogus stats from the Business Software Alliance (or, more accurately, the Bogus Stats Alliance) concerning software "piracy." As with every other year, the stats are compiled by IDC, despite the fact that even IDC has admitted in the past that the BSA is purposely misrepresenting their findings. You would think, at some point, that IDC would stop providing numbers that are blatantly misrepresented... but I guess if the money's green, IDC will give you the numbers you want.

We've been covering these bogus stat reports for many years, providing a detailed look at how misleading the stats are, and pointing out how many in the press simply parrot the numbers without question. Two years ago, a VP at the BSA (who's now working at the Justice Department, of course) was kind enough to call me to try to explain the BSA's numbers (along with a PR person and a representative from IDC). When I challenged them on the whole "one copy equals one sale thing" they insisted that their numbers showed such a claim was accurate.

Thankfully, in the past few years, more and more in the press have started to sound skeptical of the BSA's numbers -- but it's still a minority. Last year, the BSA did a neat trick in getting some publications to run stories about the numbers, while then saying don't pay attention to the numbers as a way of fending off anyone who criticizes how incredibly misleading the numbers are.

This year, you would think the press would be extra skeptical, given that just a few weeks ago, the GAO report pointed out that these stats are totally baseless (and yes, the BSA was one of the reports they criticized). But, looking through the press coverage, most seem to be just reporting the ridiculous claims such as "$50 billion" in "losses" due to file sharing. Lots of the reports focus on "local" findings -- with local publications just covering the claims in that local country (for example, coverage in Malaysia, China, the Persian Gulf, the UK, Korea, India, Canada, etc.). Of course, in the past, even those numbers have been called into question. Last year, after people took a more detailed look at how "piracy" stats were counted in Canada, it came out that the findings were based on pure guesses. No one in Canada was surveyed. They just made up the data.

So, really, you would think that the mainstream press would at least put up some semblance of skepticism in seeing these same bogus numbers released yet again, with no serious changes to the methodology. But, for the most part the reports just repeat the BSA's talking points. Looking through the press reports, it's tough to find coverage that expresses any skepticism at all. They just repeat the numbers -- the same numbers the US government just said were bunk -- as if they were pure fact. Just a sampling: the AFP, the BBC, ComputerWeekly, Computerworld, the UK Press Association, Network World, eWeek and many, many others.

Business Week gets credit for being one of the very, very few sources that at least mentions the GAO's findings, though it does so in one sentence at the very bottom of the article. The National Journal also mentions the GAO report -- though neither seemed to ask (or get any responses from the BSA) to this rather crucial point. ITWire, at the very least, points out that the study is basically made up, noting that:

"estimates of piracy rates are based mostly on inferences and the 'gut feeling' of the BSA's research organisation IDC;

But that's about all I could find. For the most part, the press -- the one's we're told are supposed to be asking all the "tough" questions, simply reposted the BSA's press release as fact. You would think that, given that this report has come out every year for the past seven years -- and the methodology has been debunked widely time and time again -- this year by the US government -- and that the report itself admits that many of the numbers are based on hunches and guesses, that the press would stop reporting them as fact. Wishful thinking, I guess.

Filed Under: bsa, piracy, software, stats
Companies: bsa

EU Digital Agenda Commissioner Admits That 'Piracy' Has Created The Market That Legislators Did Not

from the knocking-down-barriers dept

I've been reading the excellent book, Property Outlaws, which I'll write more about when I'm done, but it's main thesis is that oftentimes, people violating certain restrictions -- such as on copyright or civil rights -- actually are helping to refine the law in those areas by highlighting problems with the existing laws. Basically, it builds on the idea that people taking a stand are more able to change and to fix highly dynamic areas of law more efficiently than slow moving bureaucrats. Along those lines, it appears that the EU's Digital Agenda Commissioner, Neelie Kroes, is recognizing that unauthorized file sharing actually has been useful in building a single market, where politicians and bureaucrats have been unable to do so:

"We have effectively allowed illegal file-sharing to set up a single market where our usual policy channels have failed.... While the internet is borderless, Europe's online markets are not. It is often easier to buy something from a US website than online from the country next-door in Europe. Often you cannot buy it at all within Europe... Consumers can buy CDs in every shop but are often unable to buy music online across the EU because rights are licensed on a national basis. No wonder the US market for online music is five times bigger than Europe's."

Of course, she's saying this in an effort to pass the EU "digital agenda," which tries to make it easier to do licenses across the EU, rather than having to do individual licenses in each country. And, with that, she does go on to complain about various aspects of unauthorized file sharing, but it's nice to at least see a recognition that such forms of infringement are often useful in breaking down the barriers that bureaucrats are too slow to manage.

Filed Under: eu, markets, piracy

Chair Of The Featured Artist Coalition Explains File Sharing Isn't Going Away; Artists Need To Innovate

from the indeed dept

A few months ago, at Midem, I had the pleasure of meeting Jeremy Silver, the chair of the Featured Artist Coalition. We had quite a nice chat and have exchanged a few emails here and there since then. Last week, when there was that debate on the music industry that involved ten or eleven panelists -- including a bunch of record label folks, and Brokep from The Pirate Bay, I noted that Silver's comments about the industry's own failure were quite compelling. Glyn Moody alerts me to the news that Silver has written up much more detailed thoughts on what he would have liked to have said if there had been time. It's well worth the read. But, the short version is, again, that file sharing isn't going away. Focusing on fighting it is missing the point. The focus should be on innovating, creating new solutions that are what consumers want. You should read the whole thing, but here's a short snippet with some of the text highlighted (by me):

File-sharing is also a technological capability that, having been unleashed on society, is highly unlikely to go away. I don't think it's like a smallpox virus that can be eradicated. Close down the Pirate Bay this week and another Bit Torrent site will pop up next week. Find a way to reduce the popularity or effectiveness of this particular form of unauthorized file-sharing and another technology will replace it. The chances are also that the newer forms of file-sharing will be less easy to detect, less easily identified with the individuals at various ends of the process -- until our detection methods improve and seek to clamp them down, and so the cycle will continue.

There is a shift in attitude of mind required. We have to look at a world in which the reproduction right and the control of it are progressively eroded. Given the woefully low level of economic development of alternative methods of funding content, we are fortunate that the rate of erosion is slower than it might have been. Whether the impending new legislation in the UK will slow that erosion any more, I somehow doubt. And unfortunately I believe the cost of that legislation to civil liberties and freedom of speech will be much greater than the likely cultural and economic benefit it strives to achieve.

For those of us toiling in the cultural digital fields however, this kind of legislation also has another negative effect. It continues to provide incumbent businesses with a remedial focus on prevention of piracy rather than on investment in new solutions to the economic problem it causes. Worldwide expenditure on anti-piracy measures is out of all proportion to the worldwide investment in new digital content business models. More importantly the investment in new ways to invest in content is not coming from the music industry. It's coming from new entrants who are faced with the prospect of rights holders who make it difficult and expensive to try new things out. Rights holding companies typically demand advances and even equity in companies that dare to enter their sector with a new idea for creating economic growth.

This is, of course, what many of us have been saying for over a decade now, but we were always told that we were crazy folks who didn't know anything about the music industry and just wanted stuff for free. Silver, on the other hand, has been quite involved in the music industry for many years and knows his stuff. Will the copyright system defenders claim that he's just a "freeloader"? As for how to get out of this vicious cycle, Silver is hoping that artists take charge, rather than let the record labels continue to frame the debate and pretend they're acting in the best interests of everyone. It's a good read.

Filed Under: drm, innovation, jeremy silver, piracy
Companies: featured artist coalition

The Economist Warns That Newspapers Putting Up Paywalls May Create Newspaper 'Pirates'

from the well,-duh dept

The Economist has become really sharp on the sorts of issues we talk about here these days lately. Just this year alone, it's published articles on how the patent system is broken and hindering innovation, and how copyright law is broken, and has little to do with its intended purpose. Recently, it also highlighted a study showing the problems with gene patents. Not bad. And, now, as a few of you have sent over, it's warning the newspaper industry that it would likely be a mistake to put up paywalls, because it will create a new breed of "newspaper pirates." Most of the article is about "TV piracy," which the magazine appears somewhat indifferent about -- noting that it's not really a big problem, since TV is designed to get people hooked on watching future episodes, so free and easily available shows probably isn't a huge deal.

However, the final paragraph notes a warning to newspaper paywalls (and to television folks who think that charging for shows online makes sense):

In this sense the pertinent parallel is not with music or films but with newspapers and magazines. These days print piracy is a trivial issue, since most general news articles are given away free. If newspapers and magazines begin charging people to read their output, the pirates are likely to turn up, and quickly.

Of course, it's not clear whoever wrote that piece talked about it with the management at The Economist, since last year they decided to bring back something of a paywall for its own content.

Filed Under: newspapers, paywalls, piracy

As If On Cue, Sony Sued For Making PS3 Less Useful

from the soon-your-new-purchase-will-be-worth-nothing dept

We recently noted how Sony decided to make their Playstation 3 game console less useful by removing the ability to run alternative operating systems. Sony wanted to retain stricter control of the hardware to battle piracy, but it's something that annoyed some hobbyists -- who'd found a number of creative uses for the feature. The decision made it clear that in the broadband age, the product you thought you purchased isn't always the product you now own -- and it raised the question whether products made less useful post purchase demand a refund. One UK customer thought so, using a UK consumer protection law to force Amazon to give him a 20% rebate. At the time, we noted how a class action lawsuit seemed likely in the U.S., and right on cue -- Sony's now facing a lawsuit:

"The suit claims that the "Install Other OS" function was "extremely valuable." According to the suit, the plaintiff he has not yet installed the latest firmware update so that he can continue to use the Other OS feature. The suit also notes that PS3 owners who choose not to update their firmware cannot access the PlayStation Network, play PS3 games online, nor can they play new games or Blu-ray videos that require firmware 3.21."

So with the recent Avatar DRM flap in mind, users not only lose useful functionality, but if they refuse to update their system with the latest firmware -- they also lose the ability to go online, or watch/play the latest Blu-Ray titles or games. In other words, if you refuse a hardware downgrade designed to battle piracy (which punishes paying customers), your PS3 console becomes progressively less useful. So what exactly is a Playstation 3 worth if it can't be used to do anything?

Filed Under: hardware, piracy, ps3
Companies: sony

No Surprise: MPAA Wouldn't Reveal Data On How It Came Up With Bogus 'Piracy' Numbers

from the of-course-not dept

Starting last year, I started receiving reports from folks at the GAO that they were getting massive resistance from the entertainment industry when it came to their attempt to look more deeply into the actual economic impact of unauthorized file sharing. Some even told me that industry pressure had resulted in the GAO never releasing a particular report. However, last week, as everyone knows, the GAO came out with its extremely damning report, showing that industry figures on the impact of unauthorized file trading were totally bunk. The numbers -- which were regularly used by politicians in pushing for entertainment industry-supported legislation -- had little basis in fact, greatly overstated the issue and totally ignored the benefits of file sharing.

As people dig deeper into the report, more and more details are coming out -- including the fact that the MPAA wouldn't provide the data on how it came up with some of its more questionable "piracy" claims. Of particular concern was a report from 2005, which the MPAA used to push for regulations requiring universities to set up filters. The MPAA used its own research to claim that 44% of unauthorized file sharing came from universities -- and the MPAA's main lawyer made the statement that the primary purpose of internet access on campus was for students to share unauthorized materials. Congress never bothered to question these stats -- though, after all the debate, the MPAA finally admitted that it had made a math error that showed the "real" number (according to itself) was 15%, rather than 44%.

The GAO was apparently interested in digging into this report to understand where these numbers came from, but the MPAA decided it would rather not share:

The GAO never got all of the information it requested from the Motion Picture Association of America, according to GAO administrators, including Loren Yager, the author of the summary report that ensued and director of the GAO's International Affairs and Trade efforts. The agency said as much in the report: "It is difficult based on the information provided in the study to determine how the authors handled key assumptions." Without the materials, government analysts couldn't properly evaluate the MPAA's 2005 survey...

At this point, I think it's fair to ask why the gov't should ever be allowed to rely on the stats put forth by the entertainment industry in passing legislation again.

Filed Under: bogus, mpaa, piracy

Oh Look, UK Piracy Statistics Are Based On Nonsense Too

from the fake-science-makes-the-world-go-round dept

A recent GAO study found claims of piracy's supposedly-devastating impact on the economy (shockingly) usually aren't based on real science -- despite the fact that such claims (which usually originate from the entertainment or software industries) are repeatedly parroted by government officials. The study also found that there were a few instances where file trading could actually be a good thing -- and could actually result in increased product sales. The GAO's overall conclusion? No government agency actually bothers to track piracy statistics, and instead just regurgitates scary industry claims without question. The study also found that there's so many moving parts involved -- that making broad claims about piracy's impact on the economy (for better or worse) may not even be possible.

In the UK, the recent Digital Economy Bill was rushed through without any real debate -- but with plenty of typical claims of how piracy was going to lead to economic armageddon if the bill wasn't passed. Just like in the States, the UK government never actually bothered to study whether any of these claims were accurate. If they had, they would have found that -- also just like in the United States -- the claims weren't based on real science but on the usual combination of flawed logic (assuming a copy shared naturally equates to a lost sale) and skewed, industry-supplied data. Looking more closely at the most recent reports that most heavily influenced Digital Economy Bill voting found that very little (if any) data originated with independent, scientific studies:

"So the net result of this 68-page report, with all of its tables and detailed methodology, is that four out of the top five markets used for calculating the overall piracy loss in Europe draw on figures supplied by the recording industry itself. Those apparently terrifying new figures detailing the supposed loss of money and jobs due to piracy in Europe turn out to be little more than a *re-statement* of the industry's previous claims in a slightly different form. As a result, as little credence can be placed in the the report as in those criticized by the US GAO."

Of course none of this surprises anybody who watched the BPI manipulate and massage reality in order to get the bill passed. Meanwhile, the passage of the Digital Economy Bill has file traders heading further underground (where they'll be harder to track), with anonymous BitTorrent protection services seeing a pronounced spike in new users. While the BPI waits for their pet legislation to kick in, they've meanwhile announced that they plan to "reluctantly" return to suing potential customers.

Filed Under: piracy, statistics, united kingdom

Company That Sends Out Almost-Extortion-Like 'Pre-Settlement Letters' Sees No Problem With Almost-Extortion-Like 'Pre-Settlement Letters'

from the business-as-usual dept

Germany-based DigiProtect has a long history of using a machine-gun approach to "fight piracy", in which it sends out tens of thousands of letters to people it says have illegally downloaded its clients' content, and demanding a "pre-settlement" payment to stop them from being sued. The big problem is that the company's net catches lots of innocent people, and it's been condemned by all sorts of people, even including the British equivalent of the RIAA. The BBC has been asking some questions of DigiProtect, and as you might expect, the firm sees absolutely nothing wrong with what it's doing, calling its method "the only proven effective proceeding" for dealing with piracy. How, exactly, is the method effective? Because as far as we can tell -- and as far as the recording industry is concerned -- the amount of illegal downloading going on really isn't slowing down much. What it's effective at is generating revenues for DigiProtect, which tells the BBC that after deducting costs, it pays rightsholders at least 50% of the remainder of the "pre-settlements", leaving it a nice commission. These answers from Digiprotect are completely unsurprising, and it's not clear if the BBC expected the company to have some sort of epiphany and shut down or what. After all, another company using a similar model in the UK called it quits last week, saying it was "surprised and disappointed by the amount of adverse publicity that our firm has attracted in relation to this work." I mean, who in their right mind would think that sending out these bully-like letters, particularly to lots of innocent people, would upset anybody?

Filed Under: digiprotect, extortion, piracy, pre-settlement

GAO Concludes Piracy Stats Are Usually Junk, File Sharing Can Help Sales

from the completely,-painfully-unsurprising dept

For many years we've explored how entertainment and software industry piracy statistics are very reliable -- at least in terms of being consistently and notoriously wrong on an annual basis. Each year companies (especially the BSA) like to throw out marginally-coherent data "proving" the supposedly-huge impact piracy has on the economy, national security or employment. The claims are quickly debunked as nonsense -- yet the same claims return year after year, and often get cited by U.S. politicians as gospel.

Carl was the first amongst many to direct our attention to a new study by the GAO on the effects of piracy (covering all sectors, even toys, clothing, automobile parts, and medicine). The GAO's study unsurprisingly found that U.S. government and industry claims that piracy damages the economy to the tune of billions of dollars "cannot be substantiated due to the absence of underlying studies." The full GAO report is worth a read, and not only argues that claims of economic impact have not been based on substantive science -- but that file sharing can actually have a positive impact on sales:

"Some experts we interviewed and literature we reviewed identified potential positive economic effects of counterfeiting and piracy," The GAO wrote. "Some consumers may knowingly purchase a counterfeit or pirated product because it is less expensive than the genuine good or because the genuine good is unavailable, and they may experience positive effects from such purchases. Consumers may use pirated goods to 'sample' music, movies, software, or electronic games before purchasing legitimate copies," the GAO continued. "(This) may lead to increased sales of legitimate goods."

Study after study have supported the conclusion that file sharers purchase more media -- though the idea never resonates the same way as claims of economic armageddon caused by file sharing. While the GAO's report does obviously highlight some of the negative impacts of counterfeiting, the GAO goes on to argue that any overarching conclusions of piracy's impact on the broader economy may not even be possible. The GAO was instructed to study piracy's impact as part of the Intellectual Property Act of 2008 (PRO-IP Act) -- which delivered plenty of handouts to the entertainment industry. ProIP was ironically pushed through using unreliable studies to justify its creation. Of course we'll soon be swimming in new dubious data "proving" the GAO wrong -- and around and around we go.

Filed Under: economics, gao, piracy, proip, studies