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April 16, 2010 • News

So … Even The Government Accounting Office Can’t Estimate the Impact of Piracy?!?

Image courtesy of BoyGeniusReport

If you even peripherally follow any news about media piracy – music, movies, video games, TV shows, ebooks, and so on – you would have likely been confused. The media industry would have you believe that the amount of piracy is so massive and devastating that if they could recoup, the taxes would be enough to pay off the deficit, solve world hunger, wipe out disease, and give every child a cute little hypoallergenic kitten. If you believe the pirates, they are actually increasing sales for media and are misunderstood innovators breaking ground with a new way to make informed media choices.

Of course, most people know that both of them are full of crap.

Reasonable people can see that piracy has a dramatic effect on every corner of the entertainment industry. Whether they see direct impact from piracy – such as an artist whose sales languish while their music is discussed vigorously in web forums; or the indirect impact such as the massive traffic on P2P sites, clamping down of DRM, and so on. For me one of the

But at the same time most folks see that at the same time Napster and other sites were going wild with illegal MP3 downloads, the music industry was resisting the move to digital and was actually trying to RAISE prices! And more recently, in spite of how well the $0.99 model for songs was working, the backlash against the size and power of Apple has allowed the industry to act in a sleazy way and offer lower prices and DRM-free music to Amazon and others to force Apple to allow them to RAISE prices in order to also get DRM-free music. (Yes, yet another example of consumers being rewarded for their short attention span and misplaced outrage!)

Anyway, last year Congress asked the GAO (Government Accounting Office) to look at the financial impact of piracy as part of an effort to better protect intellectual property. What they found was that there is certainly an impact, but that developing any sort of metric was very problematic as the data are unreliable.

I know, another ‘no duh’ moment, right? Anyone who spent five minutes thinking about this would be able to tell you that! I spent a while looking at some of the actual report, but in the end found there was little substance to use, so here is a quote:

“Three widely cited U.S. government estimates of economic losses resulting from counterfeiting cannot be substantiated due to the absence of underlying studies,” the GAO said. “Each method (of measuring) has limitations, and most experts observed that it is difficult, if not impossible, to quantify the economy-wide impacts.”

So what does all of this tell us? That piracy DOES have a large and negative impact, but also that the industry is horribly unreliable as a source for what that impact might be.

A big problem is that of assumptions: the industry likes to model a subsample of P2P traffic as a static reality, and use a conversion of 1:1 on piracy to sales. So if they are looking at a new CD across 10 sites and see 1 million downloads in progress, they will estimate the loss at 1 million times the $20 they would like to charge, or $20 million lost.

Although I am not all that knowledgeable about P2P sites, I do know that they spread fragments around, use multiple sources, and other stuff that can really screw up those numbers. Then there is the fact that there is no way going to be a 1:1 conversion rate.

Interestingly, as I was writing this up I got a Buzz from Carly Z to a Boy Genius Report story about how the RIAA and MPAA want to force spyware on to your PC to fight piracy. From that article:

* The installation of spyware on computers which would seek out and automatically delete illegally obtained media
* Censorship of the internet which would block the transfer of illegal files
* Giving border guards the authority to search one’s tech gear for illegal files
* The lobbying of foreign governments to follow suit
* Having the Department of Justice and Department of Homeland Security actively and swiftly enforcing copyright laws

Is it me, or is it total irony that we see this stuff in the same day as we get a government report stating:

  • Piracy is bad and is harmful commercially and artistically, and often to the consumer
  • There are real areas where piracy has promoted commerce that wouldn’t otherwise have existed
  • Estimating piracy is problematic due to the myriad assumptions needed.
  • Regardless of those issues, there is NO WAY it is even remotely as much of a problem as the industry would have you think.I have gone on record here at GearDiary and other places as being strongly anti-piracy, and I base that on having some of my own industrial research work stolen and reused without attribution or permission. I see piracy as wrong, harmful, and generally indefensible, but I am not such a zealot that I swallow the bull$h!t that the industry is trying to feed us.

    What are your thoughts on all of this?
    Source: CNet News

  • 3 Responses to " So … Even The Government Accounting Office Can’t Estimate the Impact of Piracy?!? "

    1. So ? Even The Government Accounting Office Can?t Estimate the Impact of Piracy?!? #gadgets

    2. Bob Bering says:

      So … Even The Government Accounting Office Can't Estimate the …

    3. NPC42 says:

      “For me one of the” – looks like an unfinished thought to me. Pirated, perhaps? 🙂

      Good overview, though. Thanks!

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