Companies that sell digital products often resort to fallacies when arguing about the economic damages of piracies. So for example, the software companies, in a bid to get China to crack down on pirated software, tried arguing that the practice was robbing the government of tax dollars, which is not the same thing as saying that the practice is actually harmful to the Chinese economy. The entertainment industry, of course, has always wrestled with the economics of piracy, and has had a difficult time proving that the practice was actually costing it much money. Now the industry is out with some new turbo-charged stats that show its previous estimates for how much piracy were costing the industry was way too low. Citing "ripple effects" from piracy, the industry says the economy is losing $20.5 billion in lost economic output, and preventing the creation of 140,000 new jobs. But every economic activity has ripple effects, including the money saved from pirated media, and the money spent on new computers and monitors to watch this pirated media. An EFF lawyer in the above article makes the exact point. That being said, it's understandable why lawmakers wouldn't be completely satisfied by that line of reasoning. Simply saying that the money goes elsewhere and could then create jobs in other industries isn't enough to say a practice isn't harmful. After all, the EFF wouldn't say that stealing a DVD from a store doesn't cause economic damage, even though the same overall cost savings could be cited. But even if Hollywood came up with a compelling argument that piracy was severely damaging the economy, and that it was fundamentally no different from taking a DVD out of a store, "cracking down" isn't the right approach. Instead, the industry still has to find ways of moving past its antiquated business model and finding new ways to bring value to consumers.
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