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.


Reader Comments (rss)

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  1.  
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    vivaelamor (profile), Apr 13th, 2010 @ 5:31pm

    Statistics bureaux?

    This sort of thing would be avoided if governments used their own resources as intended. The UK government seems more interested in expanding the data collected by their Office of National Statistics than they are in ensuring the data already collected is used properly, or that outside statistics are checked. I still hear the '7 million file sharers' number all the time in UK politics, despite the referenced number being 6.7 million and that number being made up.

    It is nice that the GAO are taking some initiative, but this should be a matter of procedure.

     

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  2.  
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    Anonymous Coward, Apr 13th, 2010 @ 6:03pm

    And the GAO's funding will mysteriously disappear in 3...2...1...

     

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  3.  
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    Sneeje (profile), Apr 13th, 2010 @ 6:20pm

    Re:

    As someone who reads GAO reports on a regular basis, I have to say that I believe GAO is one of the brighter spots in a government that seems to separate itself further and further from both logic and the people.

    And I've even been working with agencies that have been on the wrong side of those reports--even in the face of outrage, GAO will rarely back down. Sometimes they'll soften a finding, but rarely remove them. They'll let them respond with a letter that will be included in the report though, which shows integrity.

    I just wish GAO had a greater ability to pursue a greater number of issues of importance.

     

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  4.  
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    Anonymous Coward, Apr 13th, 2010 @ 7:01pm

    so wait the piracy stats are junk, but unsubstantiated comments with no hard numbers from pro-piracy people is good? gao is smoking crack.

     

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  5.  
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    Hephaestus (profile), Apr 13th, 2010 @ 7:23pm

    Re:

    Hey what happened to the GAO web site? It seems to be redirected to a page on RIAAs web site ...

     

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  6.  
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    Anonymous Coward, Apr 13th, 2010 @ 7:56pm

    I agree, none of the studies you usually read about are based in fact. Of course, since there are no studies based on fact, you can't claim here that piracy actually increases the market for the targets of piracy.

     

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  7.  
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    Paul (profile), Apr 13th, 2010 @ 9:03pm

    I read through the report...

    ... and it doesn't seem to me to be as even handed as Mike claims here.

    Yes, the report points out existing studies are junk.

    BUT balancing that, it quotes "expert" after "expert" that claim that strong IP laws promote innovation.

    Not a peep about the costs to legitimate businesses due to patent lawsuits by patent trolls. Not a peep about the loss of competition due to patent thickets by established businesses.

    Likewise, copyright as currently in law goes way beyond promoting the production of goods to establishing nearly perpetual content monopolies. This effect can quite clearly be demonstrated as a harm to the economy; why do so many stars just go away to live on their royalties? This increases the costs to the consumers, takes money from the artists who are trying to work, and gives it to groups (like the labels themselves) whose "product" is nothing other than to collect money from the system!

    This isn't that hard to figure out. And the GAO report mostly ignores these observations.

     

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  8.  
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    Pedro (profile), Apr 13th, 2010 @ 9:14pm

    Re: Re:

    Couldn't agree more. This is one piece of the federal government that consistently does good work, regardless of administration. If only it had the power to act on its reports...

     

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  9.  
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    Anonymous Coward, Apr 13th, 2010 @ 9:44pm

    Re: I read through the report...

    "BUT balancing that, it quotes "expert" after "expert" that claim that strong IP laws promote innovation."

    Hey, someday I want to be an "expert."

    Oh, what the heck, why not simply declare myself an expert now.

    I hereby declare myself an expert.

     

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  10.  
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    Anonymous Coward, Apr 13th, 2010 @ 9:50pm

    Re: Re: I read through the report...

    (to continue)

    but in all seriousness, it doesn't take a self proclaimed expert to figure out that IP laws are not intended to promote the progress and they do nothing to promote the progress. They're only intended to enrich the elite. and one thing that gives it away is simply copywrong length and copywrong laws in general.

     

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  11.  
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    Anonymous Coward, Apr 13th, 2010 @ 10:03pm

    Re: I read through the report...

    and another problem with patent laws with respect to pharma is that it encourages corporations to do R&D just for the sake of justifying a patent. I don't want companies to do research just for the sake of justifying patents, I want them to do research for the sake of finding cures.

    One company that got a patent on a certain (synthetic variant of a) B vitamin, where the non synthetic was shortly thereafter banned by the FDA, used their alleged R&D to justify their patent despite the fact that dietary supplement companies have been selling this B vitamin before this company applied for the patent, the vitamin occurs naturally in nature, your body can't synthesize it but it needs it and so it acquires it from the food you eat, and it's been known to exist for a LONG time. It's all one very sad joke.

    http://www.naturalnews.com/025606_vitamin_B6_pyridoxamine.html

     

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  12.  
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    Anonymous Coward, Apr 14th, 2010 @ 12:23am

    Piracy is good for education

    Well I love art, so I learned software 3D and 2D. This is what I wanted to do film, webdesign, games, well art in general.

    I am poor, if I did not pirate some of this software originally I would of never learned how too use it. I would of never made this my career, and I would of never finally, when I got the money through using the pirated software for freelance work, bought Adobe CS and the likes.

    Because of the initial piracy they have gained me as a loyal customer and fan.

     

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  13.  
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    Anonymous Coward, Apr 14th, 2010 @ 12:31am

    Re: I read through the report...

    why do so many stars just go away to live on their royalties?


    They don't. What are you talking about?

     

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  14.  
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    Trav, Apr 14th, 2010 @ 12:33am

    Re: Re: I read through the report...

    Wait a second is not tomato's high in vitamin B?? I must eat one tomato a day. O_O they could sue me for millions!!!

    I got a plant to that manufactures vitamin B, I'm a dead man -_-

     

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  15.  
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    vivaelamor (profile), Apr 14th, 2010 @ 12:40am

    Re:

    "I agree, none of the studies you usually read about are based in fact. Of course, since there are no studies based on fact, you can't claim here that piracy actually increases the market for the targets of piracy."

    Do you not understand words like 'may' and 'potentially'?

     

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  16.  
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    Anonymous Coward, Apr 14th, 2010 @ 5:31am

    The Republicrats and Teabaggers are going to come out demonizing the GAO as communist.

     

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  17.  
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    Anonymous Coward, Apr 14th, 2010 @ 6:02am

    Re: Re: I read through the report...

    Michael jackson comes immediately to mind though i'm not really sure it's a bad thing for him to go away. Yeah i know he's dead but he quit performing a long time before that.

     

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  18.  
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    Anonymous Coward, Apr 14th, 2010 @ 6:13am

    Vivaelamor, my point is the GAO stated that studies are not based on fact, but yet here many times you see claims that it actually increases the market for performers, which is just the other side of the coin.

    Of course, one could say that piracy will happen on way or another so why not try to use it for your benefit, kind of like Bobby Knight saying "if rape is inevitable, you may as well enjoy it" but if the industry limits it as much as possible, then you keep it out of mainstream so it doesn't do as much damage.

    As for the pharmaceutical patent on synthetic variant of B vitamin, whats wrong with that? You want to get your b1, feel free to just eat tomatoes.

    As for Michael Jackson going away, he was actually getting ready for a new tour, so he wasn't going away. His going away period had nothing to do with copywrite, think maybe the child abuse charges had more to do with his absense.

     

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  19.  
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    vivaelamor (profile), Apr 14th, 2010 @ 8:46am

    Re:

    "Vivaelamor, my point is the GAO stated that studies are not based on fact, but yet here many times you see claims that it actually increases the market for performers, which is just the other side of the coin."

    It does increase the market for performers. That isn't the result of some factless study, it is evident in every anecdote told where someone has bought something they would not have had access to were it not for file sharing.

    'Of course, one could say that piracy will happen on way or another so why not try to use it for your benefit, kind of like Bobby Knight saying "if rape is inevitable, you may as well enjoy it" but if the industry limits it as much as possible, then you keep it out of mainstream so it doesn't do as much damage.'

    You're making a straight comparison between piracy and rape, seriously? Should I point out that piracy doesn't violate your person, make you pregnant, cause lasting emotional damage, cause people to commit suicide or have anything whatsoever in common with rape apart from both being against the law?

    "As for the pharmaceutical patent on synthetic variant of B vitamin, whats wrong with that? You want to get your b1, feel free to just eat tomatoes."

    You know, after the rape reference that drivel doesn't look nearly as bad as it might.

    "As for Michael Jackson going away, he was actually getting ready for a new tour, so he wasn't going away. His going away period had nothing to do with copywrite, think maybe the child abuse charges had more to do with his absense."

    Must resist urge to correct spelling of copyright.. Oh crap.

     

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  20.  
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    Anonymous Coward, Apr 14th, 2010 @ 11:06am

    Vivaelamor, so if you agree that the studies done by industry are not based through scientific studies, then you would agree that anecdote stories are not based on scientific studies either, right? That was my point.

    A: I didn't equate rape with piracy, although I have heard that pirates usually rape women too. If you can't get the point, well, that is just your problem. If you can't understand why a patent on something that is synthetic, too bad.

    I bet you really wish you could post in red, don't you?

     

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  21.  
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    Anonymous Coward, Apr 14th, 2010 @ 1:54pm

    Re: Re: Re: I read through the report...

    ichael jackson comes immediately to mind though i'm not really sure it's a bad thing for him to go away. Yeah i know he's dead but he quit performing a long time before that.


    Michael Jackson started his career at five. His career spans 45 years, 28 albums (not including compilations) and numerous world tours. He worked longer and harder than you ever will even if you live another fifty years.

     

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  22.  
    identicon
    Anonymous Coward, Apr 14th, 2010 @ 2:02pm

    Re: Re:

    You're making a straight comparison between piracy and rape, seriously?


    The funny thing is you've never seen vivaelamor react so angrily to any of the numerous times someone has compared copyright enforcement to slavery or Nazism.

    Hypocrite much?

     

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  23.  
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    Harrison Ainsworth, Apr 14th, 2010 @ 2:05pm

    The whole issue is industry misinformation

    They are not even asking the right question. When you pause to look at what exactly is lost, the whole 'huge loss to the economy' myth unravels.

    Free, unpaid, copying causes no loss in itself -- it duplicates and spreads. The only possible 'loss' would be indirect, in the system of copyright. One might say a particular industry loses money, but why should anyone else care? It is not the government's job to help particular industries, but to let the market work. The one thing we do care about generally is the one good thing that copyright claims to do: encourage production. So the only possible important loss is in less encouragement, and so less production. Is this proven? -- no, and certainly not by quoting figures of 'lost' sales.

    Everything else free copying does is a gain. Really, adding up amounts of money of 'lost' sales doesn't give losses at all, it more closely gives *gains*: gains to the public in real, tangible availability of goods.

    The question we need to ask is: 'Does the average person have more new music/films/books/etc. to enjoy?' -- that combines production and distribution into current overall good for the public. It seems reasonably measurable . . .

    And of course, even if good were decreasing it wouldn't be an argument for copyright, but for support of production in a way sympathetic to internet distribution.

     

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  24.  
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    Lawrence D'Oliveiro, Apr 14th, 2010 @ 4:57pm

    Re: Anonymous Blowhard

    so wait the GAO’s debunking of piracy stats is junk, but unsubstantiated comments criticizing their report about things it doesn’t even say is good? one of us is smoking crack, and it sure ain’t me...

     

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  25.  
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    Anonymous Coward, Apr 15th, 2010 @ 7:48am

    This is where selective quoting gets people in trouble.

    If you actually read the study, it's no where near that one sided (http://www.gao.gov/new.items/d10423.pdf). It says there are potential negative effects and potential positive effects, but the data is hard to come by and so assumptions have to be made. A summary table from page 9 looks like this:

    Table 2: Potential Direct Effects of IP Infringements in the United States by Stakeholder
    Stakeholders Potential effects
    Consumers
    - Negative effects
    • Damage to health and safety
    • Costs incurred when product fails due to lower quality of counterfeit good
    - Positive Effects
    • Perceived benefits from lower prices of counterfeit and pirated goods
    Industry
    -Negative effects
    • Lost sales
    • Lost brand value or damage to public image
    • Cost of IP protection
    • Decreased incentive to invest in research and development
    - Positive effects
    • Increased sales of legitimate goods

    And the final sentence of the summary, after saying the data sets suck, is: "Nonetheless, research in specific industries suggest that the problem is sizeable, which is of particular concern as many U.S. industries are leaders in the creation of intellectual property."

     

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  26.  
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    vivaelamor (profile), Apr 16th, 2010 @ 3:54am

    Re: Re: Re:

    "The funny thing is you've never seen vivaelamor react so angrily to any of the numerous times someone has compared copyright enforcement to slavery or Nazism."

    If people are making those comparisons then I must have missed or forgotten them, are you quoting from NAMELESS.ONE perchance? If so then I have to admit that I don't actually read their posts anymore.

    Having said that, even if they did they might have an actual reason to. If you can point out one commonality between rape and copyright infringement, bearing in mind that even their legal nature is civil vs criminal, then you might be some way to justifying the comparison.

     

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  27.  
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    vivaelamor (profile), Apr 16th, 2010 @ 4:43am

    Re:

    "so if you agree that the studies done by industry are not based through scientific studies, then you would agree that anecdote stories are not based on scientific studies either, right? That was my point."

    My point was that the fact it increases the market does not need a scientific study to back it up, because the anecdotes are enough. If you were to ask whether that is likely to lead to increased sales, then you would need a study.

    "I didn't equate rape with piracy, although I have heard that pirates usually rape women too. "

    I never said you equated the two, I said you compared the two. The obvious reason you used the quote was its meaning of 'making the best of a bad situation'. Thus you made a comparison between someone having their copyright infringed and someone being raped.

    "If you can't understand why a patent on something that is synthetic, too bad."

    I can understand how the patent system applies to synthetics. I was simply aghast at your suggestion that the solution to companies abusing patents on synthetics to limit the sale of natural vitamins is to eat more tomatoes.

    "I bet you really wish you could post in red, don't you?"

    To correct peoples spelling? Perhaps you should use a browser with a spell checker instead.

     

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  28.  
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    vivaelamor (profile), Apr 18th, 2010 @ 3:32am

    Re:

    "If you actually read the study, it's no where near that one sided (http://www.gao.gov/new.items/d10423.pdf). It says there are potential negative effects and potential positive effects, but the data is hard to come by and so assumptions have to be made. A summary table from page 9 looks like this:"

    Conflating counterfeiting with file sharing isn't too clever either.

     

    reply to this | link to this | view in thread ]

  29.  
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    Runaway1956, Aug 5th, 2010 @ 1:16pm

    Re: reliable piracy research

    Jim Baen has left this world - but not before he established pretty conclusively that the more he gave away, the more money he made. Don't take my word for it - just google the baen free book library. Look for Jim's and other people's discourses on the subject of piracy. Baen books doesn't make EVERYTHING free - each author has to "opt in", and the author gets to choose which books are going to be used. But, they prove that the commonly accepted copyright assumptions are WRONG!

    That said - in the absence of objective, scientific studies, then you must accept the next best thing. An empirical study by Baen books is the next best thing. Lacking an empirical study, then individual subjective studies would have to do. There is no need to take the word of lying corporate SOB's whose motives are obvious.

     

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