Respected Dutch Researchers Note That Piracy Has A Positive Impact On The Economy

from the well,-look-at-that... dept

Stanley de Vries wrote in to let us know that TNO, a respected Dutch research firm has come out with a large, 142-page, report about piracy, commissioned by the government, where it noted that piracy appeared to be net beneficial for the economy -- as opposed to some other studies you may have heard about from the entertainment industry. You can download the full report as a PDF, but it's in Dutch. Some translated news stories cover the high points. The report notes that there's little evidence that downloading is the cause of CD sales falling -- noting indications that downloaders actually buy more music on average, and that a much more likely reason for CD sales declining was that people had finished "re-buying" all the CDs they had owned on cassette before that format was killed off. Stanley was also kind enough to translate a few excerpts from the first 5 pages (meaning there's still plenty more to go through):

"The economic effects of file sharing short- and long term are strongly positive" [Interesting approach here: They give the well-being of people also economic value...]
"With regards to the music business we can say that downloaded recordings are not necessarily a lost sale"
"Lot's of people download for free to learn about new music and eventually buy when they like it"
"The calculations of the industry [about the losses caused by illegal downloads] are not necessarily correct because they are based on a lot of assumptions and contain a lot of uncertainties because underlying data is not known with any accuracy"
(So far we were still only on page 3)
"Downloading goes hand in hand with buying"
"Among downloaders of music and movies, the percentage of buyers is as high as among non-downloaders and with games the percentage of buyers is even higher"
"People that download music visit concerts more often and buy more merchandise"
"The practice of file sharing implicates that the producers [their definition is a bit vague here] need to change their business model"
"That is why innovation of the business model is now of the utmost urgency"

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How Much Harm Do Bad Patents Do To The Economy?

from the billions-and-billions-of-dollars-worth dept

We've been discussing how patents can have a serious economic downside (as was recognized by Thomas Jefferson and James Madison as they designed the patent system). It appears that some researchers are trying to quantify just how much damage bad patents are doing to the economy. Against Monopoly points us to a blog post at Technological Innovation and Intellectual Property that discusses the results of a preliminary study (pdf file) that estimates a loss of $22.5 billion due to bad patents. The researchers admit that the findings are preliminary, but it does create an initial framework by which to look at the negative impact of bad patents on the economy. Among other things, the paper lists out the following ways that bad patents harm the economy:

• Cause consumers to absorb monopoly prices over "inventions" that were already effectively common knowledge
• Direct resources away from productive research and instead towards strategic accumulation of patents already filed over innovations already deployed
• Divert resources to "defensive patenting" or securing offensive "blocking patents
• Direct research away from areas of existing patents that should not have been granted
• Direct resources toward acquiring and enforcing substandard patents and collecting royalties rather than other more-productive fields of economic activity.

We've seen all of these in action lately. And, of course, this doesn't even get into how much is thrown away in legal resources to litigate patents and defend infringement claims on patents that should not have been granted. Also, it's worth noting that the TIIP blog post reminds us that the author's own book Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk comes out next month.

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