And Just Like That, Bogus Piracy Stats Become Fact

from the how-it-works dept

The various industry associations like the BSA, RIAA and MPAA really enjoy publishing bogus stats about piracy as if they’re factual, but that’s their job as industry associations/lobbying groups. What’s worse is when those bogus numbers are cited as being factual by the press. Last week, we noted that a think tank, backed by the MPAA, had put out a fairly ridiculous report on how piracy was actually “costing” the industry much more due to the “ripple effect” throughout the economy. Specifically, the report claimed that the cost was $20.5 billion — much higher than any previous study. Of course, the think tank just happened to ignore the full “ripple effect” and only focused on it’s impact directly in the movie industry, rather than the other aspects of the economy, such as the fact that people would spend the money elsewhere, or perhaps on other things like better consumer electronics to watch movies. Not that it makes it legal, but the overall economic impact was greatly exaggerated by double, triple and quadruple counting costs. Earlier this week, Tim Lee ripped apart the study, explaining how the think tank seemed to get the basic math wrong in explaining the impact. However, in a separate news story about some random patents up for auction that cover a system for catching people in theaters with video cameras, the article tosses out the $20.5 billion number as if it were fact, as a way to justify why such patents might be considered valuable. Whether or not the patents have any value is a totally different discussion, but to have such stats reported as fact without any note of the controversy over how they were derived shows why it’s so difficult to have a serious economic discussion on these issues.

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Comments on “And Just Like That, Bogus Piracy Stats Become Fact”

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Bull Shifter says:


I was not surprised to read your latest diatribe which is again a veiled justification of piracy. The article by Mr. Lee is indeed a rebuttal to the Entertainment Industries inflated figures. However their ripple effect and yours are entirely different. Your ripple effect erroneously concludes that money saved by theft of intellectual property is actually good for the economy. Mr Lee’s ripple effect summarizes a scenario in which increased sales positively impacts the economy through inscreased demand for goods used to produce more of a certain product through increased demand. Your statement “the think tank just happened to ignore the full “ripple effect” and only focused on it’s impact directly in the movie industry, rather than the other aspects of the economy, such as the fact that people would spend the money elsewhere, or perhaps on other things like better consumer electronics to watch movies”, I assume, is a justification of theft, pure and simple. I would have to conclude, then, based on your assumption in the statement above that shop lifting a canned ham from Publix is actually not a loss, per se, but rather a benefit, due to the theif realizing a cost savings of said pilferage and then going to the nearest liquor store, spending said savings, and purchasing some fine, vintage MD 20 20.

In this instance, sadly, you’re just as guilty as the IPI in distorting facts.

Anonymous Coward says:

Re: Re: Misleading

i don’t understand why any of you would read this as a justification for piracy. you guys are missing the point of the entire article and focusing on some small detail and pretending thats the crux of the article. if you have something against mike’s views on piracy, don’t try to distort every article into some campaign to spread piracy all over the world.

Wolfger (profile) says:

Re: Misleading

Bull, you need to quit assuming. How can you possibly conclude that *saying* “their studies are distorted” is “justification of theft”? Mike is not justifying anything, he’s just calling the industry out on its lies and half-truths. Even if it were “justification”, it would only be justification of copyright infringement, because nothing is being stolen here.

Bull Shifter says:

Re: Re: Misleading


The assumption is valid, based on previous posts by the author of this article. He has posted numerous opinions in support of the practice of piracy.

I agree one hundred percent that the IPI article is probably inacurate as far as their numbers go. Mr Lee is correct in assuming that all sales lost are NOT from new sales of music/movies/etc. How inaccurate is dabatable, however. One would have to assume that walking into a Circuit City or other retail outlet to purchase some form of entertainment, that one would be purchasing “new” merchandise. But for this author to justify his argument with the rationalization that money spent on piracy actually benefits the economy is just as bad and plain out wrong.

I would disagree on your last statement. Intellectual property is being stolen. It’s not something you can put your hands on, but it is something that has value.

We also fall into the quagmire that the RIAA has been accused of falling into by believing all the “facts” of Mr Lee’s article. This author accuses the IPI of misleading the public with inaccurate estimations. But, aren’t Mr Lee’s supporting numbers, in fact, estimations? Shouldn’t we look at both articles with skepticism when what we’re dealing with, for the most part, are “guestimations?”

Anonymous Coward says:

Re: Re: Re: Misleading

Making a copyrighted work available for public download is not stealing, it is infringement. Period.

The majority of downloaders are probably using peer-to-peer based services to acquire their content. Since these services require you to distribute as you download, the act of downloading becomes infringement.

While simply downloading copyrighted content may be illegal under some other statute, it is not included under copyright infringement.

The federal government does not go knocking down people’s doors for stealing software. The RIAA isn’t bullying teenagers, college students, single moms and grandparents for shoplifting CDs. The term here is “copyright infringement”, which is not at all the same crime as “theft”. I invite you to inform yourself. Try the Wikipedia.

I completely agree with you that all estimations of lost revenue due to piracy are simply guesses. I seem to remember a number of $4 billion being tossed around a few years go. To think that piracy has grown to a staggering $20 billion in such a short time is amazing, and not at all believable.

I’m not worried about piracy. I trust my government to remove the pirates from the internet, just as they have removed the drugs from our streets.

Mike (profile) says:

Re: Re: Re: Misleading

The assumption is valid, based on previous posts by the author of this article. He has posted numerous opinions in support of the practice of piracy.

Bull Shifter, this is blatantly false. I have NEVER supported piracy. I DO NOT support piracy and will not. It is illegal. I have never practiced it myself at all.

Please point out where I have support piracy. It’s impossible, because I have not.

What I have done (and there’s a BIG distinction) is point out why the industry would be better off learning to embrace free distribution of content, using basic economic models. I do not condone any unauthorized use of content — but I do believe the companies that own the copyright on that content are making a big mistake in not opening up that content. That’s very different from saying piracy is okay.

However, based on that, I will point out when the industry is being misleading, because I believe that it’s in the industry’s best interest to be honest with themselves, as well as everyone else.

So, again, do not make baseless claims about stuff I have said when I have not said it.

MadJo (profile) says:

Re: Misleading

@Bull Shifter,

How can it be theft, if nothing per se is missing?

In fact, it’s not stealing at all, much to the contrary what the media industry likes you to think.

Instead in most cases it’s called ‘copyright infringement’. That is certainly illegal, but not the same as theft. Nothing is stolen.
Factually it’s not applicable to downloading stuff, but rather the uploading/making the ‘pirated’ versions available.

And they can’t back their claims up that every copyright infringement equals a loss of sale.
It is proven that many people who’ve downloaded music (allegedly) ‘illegally’, did also bought more media later on.

Another example:
many people have downloaded a ripped version of Photoshop… but how many of them would actually have gone out and bought the product? Not that many, because the tool is very expensive. Too expensive for people who are just curious how the tool works, and also too expensive for the home-users. (the majority of the users of the ‘pirated’ version of Photoshop)

If it weren’t for this ‘piracy’ Photoshop wouldn’t nearly be as popular as it is now.

So it could easily be said that ‘piracy’ actually helps with brand-recognition.

On a sidenote, in many countries it’s not illegal to download music/movies, rather the uploading of copyrighted media is infringing copyright.

Seth says:

Re: Misleading

Heh heh. Bull, you are right on the mark. Now, read every other blog entry on this site and tear them apart the way you just did this one! I’m finding the info on Techdirt to be less and less valuable and more and more misinformed and blatantly biased. The conclusions that these authors present are weakly written, confusing, obvious, and in some cases contradictory. Nowadays, I just read them for the links they contain to the real news, and ignore the text.

Anonymous Coward says:

Not that it makes it legal, but the overall economic impact was greatly exaggerated by double, triple and quadruple counting costs.

i think that line says this article doesn’t support piracy. the intent of this article is to bring attention to the fact of the AA’s placing false facts into the information stream. If piracy is that bad, i’m sure they could come up with real numbers. the scary thing, is now that the AA’s have “so much cred.” right now, any figures they toss out will be preceived as fact. once that happens, lawmakers can easily say, oh yes..regulation…saves xxxbillion a year. and so on.

while i don’t condone piracy, the aa’s have had a mafia style strangle hold on the industry. and i thought there were antitrust laws and anti mob laws…

but then again, that’s just me.

RantMax says:

OMG the riple effect!

All those “predictive” stats are consistent with the rest of the predictive stats, charts, plans, focus groups and so on that Big Business uses: based on precisely dick and wishful logic.

“Hey if I farted more to left yesterday, I’d sell more books today!”

You can always claim there’s some logic in it. But you can’t prove or disprove it.

I have another question: would the US economy be so much better if people spent a lot more money on what is basically entertainment?

There’s better stuff to spend money on.

But when you pirate entertainment, you get more of it, and you may get addicted and watch it all day and night and accomplish nothing.

And you can’t stop since it costs you nothing except your cheap Internet connection.

Well… from this point of view, maybe piracy does suck you guys! I’m erasing my pr0n collection tonight.

chris (profile) says:

you forgot to say the magic words

“piracy” and “theft” and “stolen intellectual property” are all magic words that automatically defeat any argument that the entertainment industry is corrupt, regardless of the facts. therefore, if you want to criticise the entertainment industry, you have to use the magic phrase “all pirates are scrum”.

Anonymous Coward says:

Re: you forgot to say the magic words

Whether an industry is corrupt or not doesnt give you the right to just take someone elses property and copy and distribute it.

Freedom of information I can understand – but movies, music, books, etc… IS ENTERTAINMENT – NOT INFORMATION!!!

you dont have a god given RIGHT to ENTERTAINMENT!

Pissing on other peoples rights and trying to justify it. Douchebags…

Anonymous Coward says:

guestimations!!! LOL haven’t heard that since like 3rd grade. like guestimate how many ping pong balls will fit in the rosebowl

first, copyright infringement is theft. in a certain point of view. when you dl a song, you “steal” the workof the artist. i.e. you didn’t pay the assigned value to view the medium. so you rob the artist of payment for their works.

now, obversations doesn’t mean td is all about piracy. what i have gathered from the articles is that piracy is a reprocussion to the actions taken by the aa industries in unfair marketing and distributing methods. furthermore, td goes to show at what lengths these orginizations will go to, to allow themselves to keep their entire marketshare.

thank you, and have a good day

Obvious Man says:


Honestly, when these fuckers are able to slap enough money down on the table to add ‘mp3 file-sharing’ onto the list of topics to be discussed at the G8 convention on poverty, hunger, and other “world problems,” do you really expect something so insignificant as the “truth” to stop them?! As Steve Colbert says, “The truth has a liberal bias.”
I’m surprised. Why can’t we get rid of these assholes? a decision-making committee is just one small part of a company after all! What the fuck are they doing?! Don’t they realize their customers now fucking hate them?! They’re like a dying snake that lashes out and bites anything in reach, even up to 24 hours after death, simply out of reflex …

gee says:

my piracy helps

“Your ripple effect erroneously concludes that money saved by theft of intellectual property is actually good for the economy”

This is true, I download music that I would never buy in the store, so the industry isn’t losing any sales when I download music. After I download the music I of course need something to play it on, so I buy a pack of CD-Rs, a cd burner, and a stereo.

Therefor his theory is true and not flawwed. I cost the music industry absolutely nothing (no ripple effect for them) and boosted sales in other industries (positive ripple effect).

Scheffy says:

I fail to see where the article specifically points out that spending money elsewhere and piracy in general is “beneficial” to the economy. I think you’re missing the point of what he’s doing. If the industry is going to claim to analyze this ripple effect, they should probably do it like everybody else will: by considering all of the factors that actually form this ripple effect (like the money paying for extra electronics that people have to buy in order to play their songs/movies that won’t work in all their other electronics because of ridiculous DRM schemes, for instance). Instead, they pick out the factors that are directly aligned with that immediate loss from piracy, throw them into a smoking black cauldron with some bat’s blood and shrunken heads, and POOF! out comes a number bigger than the GDP of some small countries. And we’re supposed to do a double-take and realize it’s a “b” instead of an “m” in front of that illion and regardless, when it’s quoted in another article, we’re just supposed to accept it because somebody else said it. Nobody ever believes the late-night infomercials that claim their product is the best due to “independent research” and yet they want people buy the same line coming from an organization with such a spotless record as the MPAA? Come on…

Luke (user link) says:

Copyright infingement is NOT theft

The definition of copyright excludes it from possible theft. it is copyright enfringment. Not theft.

There is a difference. Stealing a can of ham is different from recording my favorite TV show, or sharing music via P2P software.

Plus, if piracy is costing the system $20.5 billion; don’t you think the government would step in a little harder? That’s a LOT of lost taxes in all kinds of ways. And last I checked successful entertainers are still rolling in the money – piracy can’t be making that big of a dent or actors and successful musicians would be making as much as I do and not millions of dollars.

Doug says:

Have they considered

Just wondering if in the process of considering how much piracy is costing the industry (which appears they are looking at the number of pirated and downloaded films on the internet and multiplying that number to tickets sales, marketing etc) if they are taking into account that people would not be downloading or watching/purchasing pirated copies if the cost associated was the same as the price the movie industry puts on them?

In other words, people will always watch or listen to something if it is free and then decide if they like it or not but not necessarily pay for it first without some type of guarantee. In other industries where you must pay for product first you have the option to return the item if it does not work, you dont like it or it doesnt live up to its claims. The entertainment industry is not like that. If the trailers deceive you and you pay for hte movie and then think it sucks, you dont get your money back.

My belief is this is why music retailers about 10 years ago quit letting you come into the stores and listen to CDs before purchasing them, the sales figures dropped dramatically because people realized before spending their hard earned money it was better to buy the one song on the cd they liked. Again, this is why single downloads have gotten more popular as well.

Oh well, just my two cents worth.

Anonymous Coward says:

However, in a separate news story about some random patents up for auction that cover a system for catching people in theaters with video cameras.

I don’t go to the theater very often but I would really like to know what method of catching people with video camera is so valuable that it needs to be patented and said patent can be auctioned off.

And to the general discussion of the article being a cover to justify piracy: When trying to prove an argument why not just stick to the truth? If you stoop to lying to catch a crook does that make you any better than the crook?

Bull Shifter says:

Re: Re:


I think both sides are lying. Each does so to sway opinion. But rebutting with a lie makes one’s statements no more valid than the other. The bottom line is that on this site, the prevailing opinion is to take Mr. Lee’s statements in the article referred to in this original post as gospel. This is what a majority of people that post on this site want to hear – so, presto chango – a ‘fact’ based rebuttal to an ‘erroneous’ report by the IPI is born.

Valhalla Rising says:

Yes and No

These industries rarely hand out thier methods only thier results. You ask someone how they pirated this they tell you, you ask these ppl how they got thier figures they go all Psycho-supercomplicated theory of applied physics of ecomomy in the posttraumatic accounting dimension and its paralell in this reality. Even the government has a hard time getting the numbers so what chance does anyone else have. It can be proved that pirated material however wrong in principle does generate a revenue in its related field. All else is theory

RantMax says:

Please go be pedantic elsewhere

Why all of those conversations turn into retarded flamewar on whether it’s theft, crime or infiringement, or compliment, or terrorism or what have you.

Are you dudes not smart enough to realize what MEANS anyway. A company made a product, sells a product, and someone creates copies he keeps for free.

Is that so difficicult to comprehend? Or it’s more fun grabbing heavy dictionaries and arguing over bullshit.

Products, contents, copiable or not, if set a price tag on, should not be copied against the producer’s intentions.

Are you with me, or you went elsewhere to argue on semantics?

So what you call it doesn’t matter. What matters is that piracy is merely an excuse for the recording / movie industry to perform activities upon the people that are totally inadequate to the problem and just good old money grabbing.

Jesus I’m tired of this bs.

James says:

The MPAA cronies sure are busy...

…I wonder how much they pay these guys to troll blogs and such and try to respond to these messages?

Is piracy justified? No. But every case of piracy IS NOT a lost sale……….read that again, EVERY CASE OF PIRACY IS NOT A LOST SALE.

Don’t scratch your head… if I buy a CD, and share it with a friend who wouldn’t otherwise buy it and he/she makes a copy? Lost sale? Don’t think so… its only a lost sale if he/she would have bought it but didn’t because I gave them a copy, or they copied it. Thats reality. Be it music, be it a movie, or be it a computer game for that matter.

And no I do not support someone making 50 copies and selling them at a flea market for a buck a peice, that to me is 50 lost sales, and the kinds of folks these guys should really go after. Once you copy something and start selling it, its a whole other realm.

Wizard Prang (user link) says:

Re: I'm going to cross the floor on this one....

A few years ago a co-worker wanted to borrow a CD. The following day she returned the CD… after making a copy.

I never lent her another CD.

While I don’t balk at distributing the odd song or even the entire CD at low-quality, there has to be a good reason to buy. Once you have a high-quality copy, many of justifications for purchasing vanish.

The rule that I apply to myself is this “If it’s worth copying a CD, it’s worth buying”. That doesn’t mean I have to pay full rice, or even that I have to buy new… that’s just the point at which I make the decision to buy.

RantMax says:



“I’m finding the info on Techdirt to be less and less valuable and more and more misinformed and blatantly biased. The conclusions that these authors present are weakly written, confusing, obvious, and in some cases contradictory.”

Right on… At least we know why big companies are in such a sorry state: I mean they use techdirt’s intelligence.

I’m sick of this BS, I’m opening a blog where I’ll spread my wisdom upon all of you, whiny bitches 😛

It may hurt to hear some common sense versus “omg piracy rulez” crap.

Kevin Murphy (user link) says:

Misquoting reporters again

The article says:

“Movie piracy costs the U.S. economy more than $20.5 billion per year in lost business, jobs, wages and taxes, according to a study released Friday by the Texas think tank Institute for Policy Innovation.”

That is a FACT. It’s the same fact that you use in this post above, when you said:

“Specifically, the report claimed that the cost was $20.5 billion”

The reporter may or may not have been aware of the controversy, but he didn’t state the $20.5m figure as a fact, he attributed it to the study.

Anonymous Coward says:

Copyright ingringment is illegal but not theft

Forgive me for copying from Wikipedia, but the elements of theft listed there seem accurate:

Theft was codified into a statutory offence in the Theft Act 1968 which defines it as:

“A person is guilty of theft, if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it”.

Pay special attention to the 6th element: with the attention of permanently depriving another”

Infringement is illegal. You may also argue it is morally wrong. It is not theft. Using the term in “educational” materials discredits the RIAA and MPAA.

It’s the constant overstatement of their case and use of fear tactics that causes so much lack of sympathy for the RIAA and MPAA. If you say it’s like shoplifting, then the penalties should be similar to shoplifting. I’m sure everyone would agree with punishing teens for copyright infringement if it were a reasonable punishment.

I teach high school. If my students shoplifted a CD they would pay a fine and go on probation. If my students left songs they didn’t even really listen to in their shared folder because they didn’t know better, they are supposed to skip college or work 3 jobs to pay off the unreasonable damages awarded against them. There is no way I can honestly tell them to spend that money on lawyers and fight it out in court. There is no way I can’t tell them the whole thing isn’t BS. I think it is and so does most of America (those not being paid by RIAA to say otherwise). All the twisted studies and bad reporting in the world won’t change that. It just makes people mistrust studies and the press.

If the purpose of the obscenely inappropriate damages is to make the entertainment industry whole, the numbers need much more scrutiny by any honest court. Most people simply do not believe $750.00 a song. They just say the courts are as corrupt as our law makers and become even more unwilling to believe that the law will ever be fair. Untill it passes the “BS on it’s face” test, I will always believe RIAA’s damages are an example of injustuice.

Pick your poison. If it’s “theft” the prosecution should prove intent to permanently deprive the owner of the property beyond a reasonable doubt. If it’s infringement, then the courts need to look more closely at the numbers thrown out by the RIAA in the interest of justice.

Anonymous Coward says:

Re: two kinds of people...

There are 2 kinds of people. People who know the difference between the crime of theft and the civil action of copyright infringement and those who don’t. The second group invites abuse of power and influence because it has no intention of following the law anyway. It doesn’t make them less fruity than the first group.

Anonymous Coward says:

seriously downloading a song / movie / game / etc etc etc causes NO LOSS to the original property in question. The original CD doesn’t burst into flames because someone made a copy of it… Computers are magic duplication machines that can make infinite copies of a thing without causing harm to the original, if there was a machine that spit out duplicates of mercedes cars without causing any damage to the original i would be PISSED to see someone try to charge $50,000 for one, just as pissed as I am to see some idiot walk into a record store and pay $20 for a disc with 9 songs on it. You know as well as I no one would buy the cars when they were so easily produced, the same applies to digital content.

Annoyed@Congress says:

Lies are... American as apple pie. Look at the defense bill that just got passed. The billions of dollars we have now pre-spent for US defense is being divvied among 2000 special interest pay-offs. Meanwhile troops in the middle east have difficulties getting their basic needs met. Compared to that the fabricated statistics of the ‘AAs are minor. Everyone with half a brain knows the ‘AA are full of crap. But our law-makers are too busy taking bribes and favors to exercise common sense.

Obvious Man says:



IT’s not like you have some FUND stashed away where you keep ALL of that money you WOULD’VE spent on MUSIC and MOVIES, right? WTF are these dumb fucks smoking? And besides, I buy all my music off of Ebay, anyway – the only music that’s ever costed me more than $5 besides multi-disc sets is “No One Here Gets Out Alive” by the Doors!

SHILL says:

to the MPAA Shrills reading-

Suck it up, Piracy is a part of culture that will NEVER go away. And remember if you start suing like the RIAA your asses will really lose 20Billion, the RIAA’s losses are real because people HATE them, if the MPAA was wise they should learn to stay away from making a big deal over downloads. dan glickman all you do is piss off a younger & smarter generation. bad move

Anonymous Coward says:


When it comes to the copyright infringement you get extreme views but never the balanced one. You have two basic camps of people when it comes to copyrights:

1. People who believe that copyright infringement is NEVER theft.

2. People who believe that copyright infringement is ALWAYS theft.

You’re both wrong.

a) Copyright infringement CAN be theft in those instances where a person would have purchased but instead d/l,copied for free. In that instance, the labor that I invested is lost. I have been robbed of compensation for my time and work.

b) However, there are people who would have never purchased and I would never have received any compensation from these people. These are merely freeloaders who got something for nothing, but at the same time, have not deprived me of anything because they wouldn’t have bought it anyways. This is not theft. Its dishonest, but not theft.

Another scenario: A whole room full of people can watch a rented movie without paying for the rental. Every single one of them COULD have rented individually, but they didn’t. Are they all thieves?

Both situation a) and b) occur but nobody really knows to what exact extent. But every MPAA/RIAA/BSA study assumes b) never occurs and that every d/l or copy is equivalent to a lost sale.

People need to STOP trying to simplify the complexities of copyright. Copyright is a new thing that cannot and will not fit into an old fashioned notion of theft. Copyright is copyright. No more, no less.

Anonymous Coward says:

How CI can be theft

The only way copyright infringement can be spun successfully as theft is if the person who has the ‘copied’ material actually made money for it. That money then belongs to the owner of the copyright.

A legitamite theft would actually occur if a person stole a copyright (all original material) for himself/herself and thus commandeer the profits from it. That is the definition of ‘copyright theft’.

Newob says:

The real thieves

“A legitamite theft would actually occur if a person stole a copyright (all original material) for himself/herself and thus commandeer the profits from it. That is the definition of ‘copyright theft’.”

Which is exactly how the recording industry operates. Except they make unfair contracts which require artists to give up their copyrights, or they pay what is the equivalent of pocket change to them. It’s legal but that doesn’t make it moral or right. In fact it is legal piracy, because record studios make profit while artists lose profits; whereas non-commercial downloading is not for profit.

Copyright should be non-transferable so that artists, not recording studios or movie studios, can benefit from their creations directly, which was the original intent of copyright law.

Johnny Jones, Pirate Hunter says:

ok ....

It’s easy to call someone a liar – but remember your “facts” are no more respectable because you are on the “freedom movement” side…

Pirates are just thieving freeloaders – disrespectful freeloaders who piss on their fellow man – especially the small business who produce entertainment stuffs, like myself.

and all those ideas about “internet distribution helping sales” – bullshit.

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