A Step By Step Debunking Of US Chamber Of Commerce's Dishonest Stats About 'Rogue Sites'

from the let's-go-through-this dept

The issues of SOPA/PROTECT IP and censoring the internet are slowly creeping into more mainstream news sources. PBS Newshour hosted a brief debate, mostly focused on the recent domain seizures. The debate was between Steven Tepp, the former Copyright Office official, who jumped ship to the world's largest lobbying organization, the US Chamber of Commerce (who, along with the MPAA has been leading the charge in getting SOPA and PROTECT IP approved) and Larry Downes, author and consultant, whose excellent work on both the domain seizures and SOPA/PIPA we've mentioned repeatedly. Unfortunately, as you might expect in 10 minutes, it's hard for anyone to get into much depth. I think Downes made a key point early on in noting that these domain seizures are almost entirely "symbolic," since the sites themselves aren't seized.

But what I really wanted to focus on was how Tepp misleads with statistics. This is a specialty of the US Chamber of Commerce, and Tepp plays exactly to expectations here. First, you can watch the full 9 minute video, if you'd like:
And let's call out the specific examples of how Tepp misleads with stats:
"The scope of the problem is unbelievably huge. Rogue websites -- those dedicated to the theft of American intellectual property, our creative and innovative products -- get over 53 billion visits every year. That's 9 visits for every human being on the face of the earth. And they've been estimated to do at least $135 billion in harm to legitimate businesses. The products they sell are made in completely unregulated facilities, and can often be, not only shoddy, but harmful to consumers' health."
So much misleading in one little paragraph. Lets start with the 53 billion claim. Guess what? It's from a US Chamber of Commerce-funded study by an anti-piracy monitoring company called MarkMonitor. And the details suggest serious problems with the study. First, the study itself was based on Alexa, widely considered the least accurate web traffic measuring tool out there. Second, the number of "visits" to any site is an especially meaningless number -- especially when trying to discuss the actual economic impact of such visits. Who cares how many visits there are if we don't know anything about what people do on those sites?

Third, a large percentage of those visits all come from three sites: RapidShare, Megavideo and Megaupload. These are three cyberlockers that the industry has declared as "rogue," but which have significant legitimate purposes. Rapidshare, in particular, has been repeatedly ruled to be perfectly legal, both in Europe and in the US. The company follows DMCA takedown rules and has plenty of legitimate uses. Including Rapidshare in these calculations makes the whole thing a joke. And none of those sites are involved in "selling" counterfeit goods that put US citizens in harm's way.

Fourth, that "estimated to do at least $135 billion in harm," is a totally made up number. The US Chamber of Commerce cites a different MarkMonitor report to support that. But it's not actually a report or a study or anything like that at all. Instead, it's promotional "white paper" (read: sales pitch) from MarkMonitor entitled "Seven Best Practices for Fighting Counterfeit Sales Online." That report does say that "criminals" setting up ecommerce storefronts "will likely cost legitimate businesses $135 billion in lost revenue this year." But it doesn't source that number. Notably, other statistics in the report are sourced. Which makes you realize that the $135 billion is basically made up. But Tepp doesn't mention that.

Fifth, he focuses on "the products they sell." This is the really slimy part, for which Tepp should be ashamed (if the man had any shame at all). The obvious implication of all of this is that when you tie together these disparate numbers -- you've got 53 billion visits to sites selling counterfeit goods that may be harmful to consumers. We've already pointed out that the 53 billion is bogus -- but it's even more bogus when combined with this final sentence. That's because that same MarkMonitor report that gave us the 53 billion, also notes that the traffic to sites selling counterfeit goods is a minuscule percentage of the 53 billion. Specifically, the same report says that the sites selling counterfeit goods receive merely 87 million per year... or 0.1642%. That's not 16.42%. Or even 1.642%. It's 0.1642% of the total. In other words, the sites actually selling counterfeits... seem pretty small.

Sixth: even that exaggerates the problem -- because even then you'd have to assume that every one of those sites involves selling counterfeits that are shoddy or harmful. But that's crazy. Most counterfeits are merely replica versions, that are passable. They're not harmful in any way. So now we're talking about significantly less than 0.1642% of the big scary 53 billion he's talking about. Basically, the 53 billion, besides being meaningless in general, has no connection to the rest of the claims about losses and harm to consumers. It's complete and utter bunk.

What you have here is that Tepp and others are taking a real, but tiny problem: mainly an exceptionally small number of counterfeit drugs, and then pretending that the "harm" is broad and applying it to sites already judged to be perfectly legal, because some people use them for copyright infringement. The reports he relies on actually show what a tiny problem this is, but tries to mask that by lumping a bunch of totally disparate things together, from the tiny percentage of fake drugs out there... to the already judged to be legal cyberlockers like Rapidshare.

Tepp's misleading bogosity doesn't stop there. He then goes on to claim that these sites "steal jobs." Um, how? But beyond the rhetoric, lets get back to the misleading numbers. Later on he states:
"Another study, earlier this year, showed that 19 million Americans have jobs that rely on 'IP-intensive industries.' This is a huge part of the American economy. 60% of US exports are from 'IP-intensive industries' and $7.7 trillion dollars are output from 'IP-intensive industries.'"
This one we've attacked head on before. The intellectually dishonest bit here is easy to spot. It's the reliance on "IP-intensive industries." Not IP. The "study," if you can call it that, involves the biggest maximalists teaming up to fund a report that defines "IP-intensive industries" extremely broadly and then pretends that everything that comes from such industries... is because of strong IP laws. That's ridiculous, because you know who's included in the "IP intensive industries"? Basically every tech company -- including all of those which are fighting against these crazy new laws.

Tepp is being intellectually dishonest in the extreme here, suggesting that the only reason that the broadly defined "IP-intensive industries" are so successful is because of IP law. But that's showed to be bogus quite simply. As CCIA has done for years, it uses the very same methodology to show that exceptions to IP contribute more to the economy than IP laws themselves. You can't except one report without accepting the other since the methodologies are identical. There are only two logical conclusions from this: (1) the suggestion that those jobs, exports and output numbers are due to IP are complete bunk or (2) Tepp and the US Chamber of Commerce really believe we should do away with IP completely, since his own favored methodology shows that the less IP laws we have, the greater the output. So which is it, Steve?

Either way, Tepp is being painfully intellectually dishonest throughout the entire interview, citing facts and figures that are misleading in the extreme, if not completely bogus. What's unfortunate is that none of the press that lets Tepp speak his mind ever calls him on these ridiculous claims.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Anonymous Coward, Nov 30th, 2011 @ 10:54am

    Wow. You actually took time out of your day to write a defense of forign pirate sites?

     

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    •  
      identicon
      Anonymous Coward, Nov 30th, 2011 @ 10:56am

      Re:

      foreign.

      And still, wow.

       

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

      •  
        icon
        Fzzr (profile), Nov 30th, 2011 @ 10:59am

        Re: Re:

        If they're as bad as it's said, that should be something backed up with ironclad facts. Not made up bullshit. "Facts" that can be debunked should be, no matter who the victim of the misrepresentations is.

         

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    •  
      icon
      Richard (profile), Nov 30th, 2011 @ 11:08am

      Re:

      Wow - You actually took tie out of your day to support the most intellectually dishonest rant I have ever seen - and to display a bit of your xenophobia for good measure.

       

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

    •  
      identicon
      Jeremy7600, Nov 30th, 2011 @ 11:09am

      Re:

      Wow, you took time out of your day to defend totally baseless statistics and lies?

      Good on you, bro.

       

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    •  
      icon
      Mike Masnick (profile), Nov 30th, 2011 @ 11:32am

      Re:

      Wow. You actually took time out of your day to write a defense of forign pirate sites?


      Nothing in what I wrote up defends "forign" (sic) pirate sites.

      Are you really that intellectually dishonest that you now resort to complete lying? Sad.

       

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  •  
    icon
    Killer_Tofu (profile), Nov 30th, 2011 @ 11:06am

    And this ladies and gents is why

    And this is why artists for songs and crews for films get paid so very little. All of the money is excused away into thin air so that it can be funneled to:
    A) Executive salaries and bonuses
    B) Lobbying efforts that are aimed at controlling the world to make sure that artists cannot stand up for themselves or possibly promote themselves outside of the old gatekeeper's realms
    C) Studies that are meant to make wild claims so that point B's lobbying efforts have something to cite, no matter how weak the methodology or actual science behind the study is (or how much it outright lies).

    Oh sure, they claim piracy is killing their business. It is more like somebody somewhere might be making a dollar that the studios and labels aren't so they try to steal it from the people and artists. There is a reason it is called hollywood accounting. A light search through TechDirt will show up plenty of cases of artists being ripped off by those who claim to represent them.

    Yet somehow we still get idiots like some of the ACs who will rush in to bash Mike (or anyone else who posts in which case they still name Mike anyways) but always fail to provide any proof. Much like the MPAA / RIAA, and all of their various lobbying arms, they just spout hot air and never cite good evidence. Kind of makes one wonder ...

     

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    •  
      icon
      :Lobo Santo (profile), Nov 30th, 2011 @ 11:09am

      Re: And this ladies and gents is why

      (psst! pretty sure there're paid shills in them there AC ranks.)

       

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      •  
        icon
        Pitabred (profile), Nov 30th, 2011 @ 12:03pm

        Re: Re: And this ladies and gents is why

        If you're pissing off enough people that they're shilling to try to shut you up, you're doing something right

         

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        •  
          icon
          Killer_Tofu (profile), Nov 30th, 2011 @ 1:21pm

          Re: Re: Re: And this ladies and gents is why

          So very true, and part of the reason I am glad to have been reading this blog for a quite a few years (even if I don't always agree with Mike's views).

           

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

    •  
      identicon
      Anonymous Coward, Nov 30th, 2011 @ 11:16am

      Re: And this ladies and gents is why

      Speaking of making things up...

      Everyone that works on a film set belongs to at least one union that represents them well.

      But nice try.

       

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      •  
        identicon
        Anonymous Coward, Nov 30th, 2011 @ 12:21pm

        Re: Re: And this ladies and gents is why

        not everyone on the film set - just the ones that are paid well.

         

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      •  
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        TtfnJohn (profile), Nov 30th, 2011 @ 1:23pm

        Re: Re: And this ladies and gents is why

        The reason that film crews are represented by a union is that they don't want to be caught up in the creative accounting practices that screw artists.

        At one time they were caught up in it but now they want to be paid for their work while they actually do the work so in came the unions.

        Nice try on your part, though.

         

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      •  
        icon
        Killer_Tofu (profile), Nov 30th, 2011 @ 1:24pm

        Re: Re: And this ladies and gents is why

        What does that have to do with the studios constantly wanting to pay them less and trying to fire as many of them as possible to funnel money to the higher ups?

         

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      •  
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        PaulT (profile), Dec 1st, 2011 @ 1:36am

        Re: Re: And this ladies and gents is why

        "Everyone that works on a film set belongs to at least one union that represents them well."

        Even on independent, non-union, non-corporate productions?

        As ever, you seem unable to understand that non-corporate media exists. One of your many failings.

         

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    •  
      identicon
      rubberpants, Nov 30th, 2011 @ 11:33am

      Re: And this ladies and gents is why

      Home filtering is killing the bottled water industry!

       

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      •  
        icon
        Killer_Tofu (profile), Nov 30th, 2011 @ 1:23pm

        Re: Re: And this ladies and gents is why

        Next thing you know they are going to want to charge me since I use bottles that were from bottled water, and I refill them with filtered water.
        I am sure there is an infringement joke in there somewhere ...

         

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  •  
    identicon
    out_of_the_blue, Nov 30th, 2011 @ 11:22am

    "Storage capacity of several Petabyte" -- All legal content, eh?

    From Rapidshare "About" page:
    "Servers: 1,000 servers.
    Storage space: Storage capacity of several Petabyte (one Petabyte is equivalent to 1 million Gigabytes)."

    You're matching any misleading dishonesty here Mike, by overlooking plain facts.

     

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    •  
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      Mike Masnick (profile), Nov 30th, 2011 @ 11:33am

      Re: "Storage capacity of several Petabyte" -- All legal content, eh?

      "Storage capacity of several Petabyte" -- All legal content, eh?


      No one said that all *the content* was authorized. But that the site itself has been found to be legal. Which it has.

       

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    •  
      identicon
      Anonymous Coward, Nov 30th, 2011 @ 11:45am

      Re: "Storage capacity of several Petabyte" -- All legal content, eh?

      A Bugatti Veyron can go over 400 km/h. Does that mean that we should arrest every Veyron driver now, just because they *might* go over the speed limit?

       

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      •  
        identicon
        Anonymous Coward, Nov 30th, 2011 @ 11:48am

        Re: Re: "Storage capacity of several Petabyte" -- All legal content, eh?

        Home Speeding is killing the racing industry.... Of course they should all be fined and the money handed over to NASCAR (or another appropriate lobbying acronym)....

         

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    •  
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      Richard (profile), Nov 30th, 2011 @ 11:50am

      Re: "Storage capacity of several Petabyte" -- All legal content, eh?

      Storage space: Storage capacity of several Petabyte (one Petabyte is equivalent to 1 million Gigabytes)."

      I have over 1 Gigabyte of material on Dropbox - and yes - all legal (almost entirely generated by me) - 1 million of me = 1 petabyte of legal material.

      YOU FAIL

       

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    •  
      identicon
      Anonymous Coward, Nov 30th, 2011 @ 11:58am

      Re: "Storage capacity of several Petabyte" -- All legal content, eh?

      Petabyte isn't that much. I use about 10 TB for the servers at a school district in a large town. Just a few thousands users. All of it is legit data created by staff and students.

       

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      •  
        identicon
        Anonymous Coward, Nov 30th, 2011 @ 12:10pm

        Re: Re: "Storage capacity of several Petabyte" -- All legal content, eh?

        I mean I maintain them and the users use that much.

         

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    •  
      icon
      Kevin H (profile), Nov 30th, 2011 @ 12:02pm

      Re: "Storage capacity of several Petabyte" -- All legal content, eh?

      You have to be kidding that you have /NO/ copyrighted material on your computer. You have /never/ right clicked and pulled a funny picture to your desktop or set it as a background? /Never/ posted it as a profile picture on facebook, or uploaded it to /share/ with a friend?

       

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      •  
        identicon
        Anonymous Coward, Nov 30th, 2011 @ 12:23pm

        Re: Re: "Storage capacity of several Petabyte" -- All legal content, eh?

        All of which should be considered fair use. Nothing illegal going on there at all.

         

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        •  
          icon
          Kevin H (profile), Nov 30th, 2011 @ 1:04pm

          Re: Re: Re: "Storage capacity of several Petabyte" -- All legal content, eh?

          I know that, thats the point. Who gets to decide what is, and what is not fair use. There are those out there who feel that me doing that is NOT fair use, and is somehow infringing upon them.

           

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        •  
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          PaulT (profile), Dec 1st, 2011 @ 1:42am

          Re: Re: Re: "Storage capacity of several Petabyte" -- All legal content, eh?

          *Should* be - apparently fair use is one of those "loopholes" like safe harbours and public domain that these people want to get rid of. They want to make any use that doesn't come accompanied with cash to be illegal.

           

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      •  
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        Richard (profile), Nov 30th, 2011 @ 12:23pm

        Re: Re: "Storage capacity of several Petabyte" -- All legal content, eh?

        You have to be kidding that you have /NO/ copyrighted material on your computer. You have /never/ right clicked and pulled a funny picture to your desktop or set it as a background? /Never/ posted it as a profile picture on facebook, or uploaded it to /share/ with a friend?

        That is a statement about the ridiculous state of copyright law more than anything else.

        What you say applies to every personal computer on the planet - including all big media companies, the copyright maximalists, ootb and the a/c's who troll here.

         

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        •  
          icon
          TtfnJohn (profile), Nov 30th, 2011 @ 1:30pm

          Re: Re: Re: "Storage capacity of several Petabyte" -- All legal content, eh?

          But out of the blue will insist he's NEVER done it.

          Belief in his protest is entirely optional.

           

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    •  
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      Trails (profile), Nov 30th, 2011 @ 12:27pm

      Re: "Storage capacity of several Petabyte" -- All legal content, eh?

      Do you actually think you're fooling anyone?

       

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    •  
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      Josef Anvil (profile), Nov 30th, 2011 @ 12:41pm

      Re: "Storage capacity of several Petabyte" -- All legal content, eh?

      What the hell is wrong with you? One more time for all the idiots and trolls that don't get this....

      Piracy ( copyright infringement ) is bad !

      We AGREE on that. That doesn't mean that broad legislation that can (probably will) cause a lot of unintentional collateral damage is the proper way to deal with it.

      Sharing is natural human behavior. If my friend buy's a DVD of a movie I want to see and invites me over to watch it and I don't like the movie or have neutral feelings about it and then choose not to buy it for myself; am I a lost sale? Did I pirate the movie?

      It seems that the only thing that defines piracy is space/time. If someone shares (not commercial distribution) content that they bought over the internet, that is basically the same as sharing with your friends but on a larger scale. The difference being that no one had to take the time to visit the owner of the content to view it.

      I had more to say, but the whole thing just generates a headache....

       

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  •  
    identicon
    Digitari, Nov 30th, 2011 @ 12:27pm

    RE shut up!

    Great, now the cops will just pull anyone over that has a vehicle that can go over the speed limit, way to go guys

    /s

    ....any bets on how fast this will get implemented somewhere, and does this make the value of a smart car more??

     

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    •  
      icon
      nasch (profile), Dec 2nd, 2011 @ 10:46am

      Re: RE shut up!

      Great, now the cops will just pull anyone over that has a vehicle that can go over the speed limit, way to go guys

      The Cartalk guys want it to be illegal to register a car that has over a certain power to weight ratio. Not exactly the same, but a similar idea. Fortunately I don't think that's going anywhere.

       

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    PW (profile), Nov 30th, 2011 @ 12:31pm

    Someone does need to sit w/Larry Downes however and do some media training. Tepp's intellectual dishonesty is steeped in definitive unwavering responses. Downes doesn't do enough to cool "bullshit" or simply state a clear position that the uninitiated could easily grasp on to. For Tepp's arrogance and clearly devious approach to outlining the problem, he does so clearly and with enough stats (even if those can be debunked later) that one can easily see the reasonableness of his position. In this sort of short interview format, it's more important to have a stronger position to combat the insanity that Tepp lays out. It can be rooted in truth rather than lies, as Tepp has taken to, but for example, one could paraphrase the breakout you've laid out (and in your other post, http://www.techdirt.com/articles/20111122/04254316872/definitive-post-why-sopa-protect-ip-are-bad-ba d-ideas.shtml), here and come up with very direct speaking points that could offer an equally compelling but diamtrically opposed story that shows that gov't's and the entertainment industry's current approaches are the works of ignorant and some times disturbed and corrupt people.

     

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  •  
    identicon
    Anonymous Coward, Nov 30th, 2011 @ 12:38pm

    Mike, perhaps YOU could set up an interview with him and ask the tough questions?

     

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    •  
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      Jay (profile), Nov 30th, 2011 @ 4:41pm

      Re:

      He would have no part of it. Tepp's dishonesty won't hold to the scrutiny of someone that did ask him tough questions.

      It's similar to one AC here who constantly mimes about how piracy is killing industry and yet is proven wrong on multiple occasions when you look at the evidence against it.

       

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

  •  
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    sniperdoc (profile), Nov 30th, 2011 @ 2:32pm

    Really...

    Wow... about that filtered water thing. In Egypt less reputable street vendors sell you refilled water bottles! Each bottle could be a $200,000 fine AND up to 6 months Jail time according to the FBI...!!!! Go GET 'EM Zephyr Hills Water Co.!!!!

     

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  •  
    identicon
    Anonymous Coward, Nov 30th, 2011 @ 4:05pm

    I must say it was refreshing to hear Downes' comment at about 8:50 in which he backed away from asserting censorship.

     

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  •  
    identicon
    Anonymous Coward, Nov 30th, 2011 @ 7:18pm

    "contribute more to the economy than IP laws themselves. You can't except one report without excepting the other"

    except should be accept. The trolls missed that one by a long shot

     

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


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