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Jesse Brown: The Bogus Cost of Piracy

SoftwarePiracy.jpg

$250 billion and 750,000.

Those two daunting numbers will be familiar to anyone who has been following the corporate and governmental push for stricter Intellectual Property legislation. The first - $250 billion - is the figure commonly cited as the amount of money lost to I.P. piracy annually. The second is the total number of jobs lost. These figures have been used by the U.S. Department of Commerce, Customs and Border Patrol, the U.S. Chamber of Commerce, the FBI, the International Anti-Counterfeiting Coalition, The International Trademark Coalition, and countless media reports. The numbers are big, daunting, and useful to anyone trying to prove that piracy must be stopped.

But the numbers are bogus.

A recent investigation by Ars Technica reveals that the citation of these figures has become a 20 year game of broken telephone. The $250 billion figure, often attributed to the FBI, actually seems to have originated in a 1993 issue of Forbes magazine. It was an estimate given with no research behind it, and nevertheless was an attempt to calculate the size of the total counterfeiting market (merchandise, etc.) - not the annual I.P. theft market or the digital side of it.

And the supposed 750,000 jobs lost to piracy?

Well, no-one seems to have any idea where that staggering figure comes from. Nevertheless, it's still used frequently - most recently by the U.S. Chamber of Commerce in their attempts to persuade George W Bush to create a cabinet-level copyright czar.

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Comments

Paul R

There is no piracy. The entertainment and software IP industries sold their souls (if they have any) to the Devil when they lobbied for and got a tax on all blank media, such as CDs and tapes. This "tax" was intended to compensate the industry for unauthorized copies.

End of story. We owe them nothing else.

Posted October 29, 2008 08:24 PM

-PeBo-

Toronto

As I've metioned in other comments, I used to work in the software industry. A few years ago, I was doing some viral marketing on various newsgroups, and I found a file with thousands of illegal keys to unlock our software.

I brought this information to my boss to find out what action he wanted to take, and he just smiled and said that it was great that people were showing an interest. He explained that folks who use illegal keys would not have bought the software anyway, and our real clients would never know where to look for such a file, or how to use it. He went on to say that these keys or key generators actually puts our software within a larger user base and is free advertising for people who BUY software.

Makes sense, if I really like a movie/CD/program, I buy it, if not, I download it, and delete it after using it. Either way, all my friends get to see it, and more than once it resulted in a sale!


Posted October 30, 2008 11:49 AM

Brian

Arrrr I feel betterrrrr now

Posted October 30, 2008 04:00 PM

Alan N

Penticton

Yeah, I agree. The tax was to compensate the industry. I wonder if anyone will be using that as a defence if they are charged with "piracy"?

Posted October 30, 2008 04:22 PM

Jstrang14

And the supposed 750,000 jobs lost to piracy?

I've looked around many sites. Yet I fail to see these claimed jobs that have been snuffed out from this so called 'piracy'. Also it seems the media is confusing 'piracy' with media copying. Big difference. I know if I could, I would copy all my XBOX 360 games, so I wouldn't ever have to scratch them and luckily for XBOX 360 users, the new dashboard is coming out so we can store games, via Hard Drives. I'll stop there because this will start into the Belgium game rental post...

Posted October 31, 2008 05:01 PM

laurent

ottawa

if you're interested, a few institutions in the us (ssrc), brazil, india and south africa are undertaking an extensive study of a better cost model for estimating digital piracy. this article is spot on in noting there is no science behind the numbers at this stage, only marketing. An interesting additional benefit is that it will attempt to measure the benefits of piracy in developing countries (for example through the use of online textbooks)

Posted November 2, 2008 06:34 AM

Mike Boddy

Calgary

The numbers are Bogus for sure.

First you can't have lost jobs AND lost revenue it has to be one or the other.

Most of these products are essentially intangable brcause they consist of very little real world materials. Just a little bit of plastic and cardboard as opposed the the TONS of material and labor need to make a car, for instance.

Do you think a softwater company or movie studio will hire more people just because their profit margins increase. NO, they'd have to have something to do.

Secondly piracy can only INCREASE job avalability. How many people do you think wold LOSE their jobs if everyone suddenly stoped pirating tomorrow.

Posted November 3, 2008 12:53 PM

cam

Halifax

Digital copying for personal use should be legal, period. It isn't theft (the original is still there) and it isn't piracy (that would require theft). It *will* change the distribution paradigm, but every technological change does that. Big Media would like to see every electronic device locked down to perpetuate their monopoly but it is a losing battle. Big Media made sense only during a brief window of opportunity between the advent of recording devices and the advent of easy digital copying.

Posted November 3, 2008 09:10 PM

John

What about printed books? A library buys one copy and perhaps 100 people read that book. That is a loss of 100 potential sales of that book. Should we ban libraries? Everyone will say no to that. So how is this different from people copying DVD's and computer games. Will thay next make it illegal for me to pass on a legal copy to a friend after I have finished wit it? After all there goes 1 more potential salee

Posted November 4, 2008 07:45 AM

Mark

Ottawa

In a perverse way the piracy of videos and SW has CREATED jobs. Have you ever gone to Pac mall in TO. There has got to be 50 companies selling pirate copies of videos and whatnot. The small businesses are in no way as efficient as the big companies and so in effect employ MORE people than the movie and SW companies do. As well given that we in Canada already pay a "tax" on our blank media we in effect are already compensating the big media companies. As someone already mentioned... The people who actually buy the real SW are in no way going to resort to piracy. They need the support that the authentic SW purchase affords them. I'm actually suprised the Microsoft actually does allow known "cracked" copies to download securiy updates. I guess they've done SOME homework on the subject.

Mark

Posted November 4, 2008 12:38 PM

Rick

Ottawa

John,

The "library" argument you used is actually very similar to the ruling in a Cdn court case a few years back. The judge ruled that copying DVDs and CDs (without selling the copied medium) is akin to photocopying material from a book at the library.

This ruling I think may be obsolete now but I'm not sure.

I tend to agree with that opinion as I see no real harm in doing it provided you don't go ahead and sell the copied SW, DVD, CD, etc. for $ like that foolish couple in New Brunswick a few years ago.

Posted November 5, 2008 04:31 PM

Chris Tomalty

Kingston

It's interesting to note that piracy keeps many companies afloat, most notably Microsoft. Only 200 some odd copies of Windows Vista were sold in the first month of Vista's Chinese release. However, almost everyone upgraded. Something wrong?

Piracy lets Microsoft keep it's market share by tying people in to their system. If people HAD to buy Windows to use it you'd see a massive move to Linux and other free OSes or to Apple where upgrades don't cost such a ridiculous amount.

Interesting.

Posted November 8, 2008 01:29 PM

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