As Expected, Ridiculous, Wrong, Exaggerating And Misleading Report Claims That 'Piracy' Is Killing Jobs

from the oh-come-on dept

As was leaked earlier this week, a study paid for by the International Chamber of Commerce has come out with ridiculously misleading and misguided report about how “piracy” is killing jobs all through Europe. The tagline is that it’s “costing” 1.2 million jobs and about $330 million. And, of course, that sort of report is the kind that the press loves, and so we get a series of headlines:

And on and on and on and on. Of course, it’s not even close to true. The real story is that for certain companies who refuse to adapt and refuse to embrace what consumers want and what technology allows, modern technology will cause them to fail. However, at the same time, it has already opened up new opportunities and created new jobs while making it easier and more efficient to create, promote, distribute and consume content. Somehow, however, none of that seems to show up in these studies.

Honestly, the claims by this research firm, TERA, read like “automobiles costing buggy makers jobs and money, something must be done!” It’s based on a fundamental misunderstanding of basic economics and the nature of dynamic markets (and, frankly, calls into question anything put out by this particular firm). The only thing “costing” companies money are their own actions. If they are failing to adapt to a changing market, that’s their fault. Don’t try to pin the blame on new technologies and consumers getting better access to content.

Even worse, when you start to dig into the report you find all sorts of highly questionable or downright incorrect assumptions. TorrentFreak put together a starter list of problems (feel free to add more in the comments):

  • The report suggests that there’s a direct correlation between Internet traffic growth and lost jobs. That is, the more traffic that is generated on the Internet, the more money will be lost. This correlation is 1 according to the report, which assumes that all growth in Internet traffic will increase piracy at the same rate.
  • The report makes another bogus assumption by stating that more traffic will mean more piracy and thus more lost revenue. It does not account for the fact that people might consume higher quality files which are greater in file-size. All projections are based on bandwidth and not the number of pirated goods.
  • The report cites some academic literature which suggests that piracy leads to a decrease in sales. Studies that reported the opposite or a null-effect were carefully left out. This bias defines the entire outcome of the report. If they used studies that found a positive effect they would have found that piracy would create hundreds of thousands of jobs in the years to come.
  • The report uses fixed substitution rates. They assume that 10 downloaded albums results in one lost sale and this figure is not adjusted for the projected increase in piracy. One would think that the public’s budget for entertainment is limited and that the substitution rate would go down as piracy goes up.
  • Related to the previous point, if the industry did indeed lose over €240 billion in revenue by 2015, consumers would have a lot of extra cash to spend. Depending on where this money was spent it might create more jobs than the entertainment industry claims it is losing. As a report commissioned by the Dutch Government showed last year, the overall effect of piracy on the economy might actually be positive.
  • It gets even more ridiculous when we take a closer look at the claims. In the UK consumers spent €6.3 on audiovisual products. If the projected trends continued, the ‘lost’ revenue because of piracy would exceed the actual revenue, meaning that the music and movie industries would end up having to pay people for pirating their products.
  • Lastly, the researchers seem to have trouble putting a decent report together as they messed up the legend of one of the critical figures. In this figure the bars for “file-sharing” and “global Internet traffic” are switched around. This makes us skeptical about the other statistics that are published in the report.

In other words, it looks like a typical study where the folks who created the study had the answer before they did the study, and then just needed to fill in the blanks carefully to make sure they got the results they wanted. It’s basically a blatant lie. The unwillingness to look at studies that suggest job increases or that look at the positive impacts from greater and easier distribution and promotion is clearly a joke.

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Comments on “As Expected, Ridiculous, Wrong, Exaggerating And Misleading Report Claims That 'Piracy' Is Killing Jobs”

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48 Comments
NAMELESS.ONE says:

"In canada you get the shaft by hollywood"

so this leads to the idea that other sections of the economy will suffer badly VERY badly cause people aren’t saving money that much are they? considering the recent bank problems anyhow

this leads you to the fact that if hollywood sucks 240 billion away form what other things you buy how good will the economy be afterwards

steve says:

Re: and just how many artists are there

“get ready for an up your butt month coming”

lolz, sadly this might be quite an understatement good sir.
..worse case scenario ..in the UK..try “get ready for an up your butt decade”

don’t worry , i got my /rant out on another forum..i’m /calm and /mellow now.

but just in case it’s of any interest to readers of this forum i’ll post a couple of links if i may

december 2006 “gower review” on copyright infringement (pdf format)only 146 pages long.
http://webarchive.nationalarchives.gov.uk/+/http://www.hm-treasury.gov.uk/media/6/E/pbr06_gowers_report_755.pdf

and “the register” on maximum penalties for copyright infringement (1 page only)
http://www.theregister.co.uk/2008/08/12/big_piracy_fine/

namely max penalty of £50,000.00 and/or 10 years in prison
hence the “up the butt decade” comment.

Chronno S. Trigger (profile) says:

linked to articles

I like how in the six linked articles two have comments (hollywoodreporter and torrentfreak) and two have links to the actual report (PDF) (guardian and torrentfreak). Why is it that an Anti-Anti-Piracy website is the only one that has the balls enough to not only have a link to the actual study and comments, but will lay the details out in their own article?

I also don’t like how the study states that it’s intent is to show the losses to the industry. Not if there are losses, not if Europeans are feeling the loss. The objective is horribly non-scientific.

Anonymous Coward says:

Competition kills jobs but it also creates new jobs. These companies are upset because now everyone can make and release free CC music and it competes and yes, competition may harm some jobs but it increases aggregate output (ie: more free music that people consume) and the whole purpose behind having jobs and an economy is exactly to increase aggregate output.

Call me Al says:

I love these reports, they always seem to start on the assumption that the consumer has limitless resources to spend.

They always ignore that if you save £10 by pirating a DVD you will spend that same £10 on something else, such as a meal out or even a music album. It doesn’t take the money out of the economy, it just changes which industry is in receipt of it.

Flakey says:

Lost income

At any time these same businesses that are bitching about how much damage the net is doing their business could turn it all all around into how much good they were getting from the internet just like the VCR.

All it takes is a willingness to license rather than holding a death grip on the control of who gets and who doesn’t. At present if some site is willing to give over 60% of their total income to the holders then they are all for giving a license, provided they haggle for months and sometimes years to get the gnat’s whisker defined.

What if there was a rewrite on what was acceptable terms for licensing? What if any pirate site (as so now termed) could just go apply for a license and get it? All those same sites would be contributing to the economy and jobs. This is not going to happen because the IP holders see that is loosing control and they will go down the drain rather than loose that control.

The point of this, is that it is the licensing system that is being wielded as the final straw to be loaded on camel back. Those same usual suspects are in the end, the ones causing all the distress. It’s not the pirates (most of who would give their left nut to be legal) but rather it’s the established players in the market who are to blame and no one else.

Chronno S. Trigger (profile) says:

Poking around Google News

I found this. I was reading that and found this:

“A report was commissioned by a partisan wing of the International Chamber of Commerce (ICC) corporate lobbying group called Business Action to Stop Counterfeiting and Piracy (BASCAP). Its directive was to investigate the “alarming rise in piracy driven job losses in Europe’s creative industries.””

Is that true? None of the other articles say that the study was done by the “Business Action to Stop Counterfeiting and Piracy”. I know it’s the Inquirer, but with all the dumb ass things done in government, I can’t tell anymore.

vastrightwing (profile) says:

Increase use of seeds leads to drop in farm revenue

The explosive growth of seed use is causing an unprecedented decline in farming and retail food revenue as more consumers opt to grow their own food. With the advent of cheap seeds and land ownership, farmers and food retailers are being denied of their normal sales and profit. We need to stop allowing people to do whatever they want on land. Farms should only belong to farmers. Levying a high tax on seeds and on arable land might help this desperate situation.

Anonymous Coward says:

Re: Re: Re:

it is only filling the two parameters discussed. it is technically possible and consumers want it. thank you for getting the point there are other issues outside of those two to consider for a fast car or pirating stuff. only using those two parameters isnt enough to make a complete and valid conclusion.

Anonymous Coward says:

Re: Re:

“i want a street car that can do 200 mph and i want to be able to drive that fast on the streets.”

The autobahn allows for it and yet the accident rates on the autobahn are less than those of California and many other places with much lower speed limits. Heck, even in California the majority of accidents don’t happen on the freeways, freeways have lower accident rates if I remember correctly.

Anonymous Coward says:

“”Consumers have to understand that there will be nothing to consume if it’s impossible to make money making the content.” “

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/17/AR2010031701791.html

Why does the mainstream media put out such BLATANT lies.

This is blatantly false, provably so by all the content that people offer freely through creative commons and other similar licenses. Yet I’m supposed to believe anything the mainstream media tells me after they lie to me like this? This puts everything they say into question and puts their whole studies into question. Why should I take such liars seriously?

Pessimistic Optimist says:

Good journalism is dead.

Oh look, a biased content industry reporting on a report put out by a biased content industry and patting itself on the back. /s

I think the most obvious question these so-called main stream journalism outlets should be asking is: if consumers really have that much cash lying around and aren’t giving all of it to the industry, where is it going? Under the mattress?

Just goes to show once again that good journalism died long ago. It isn’t about reporting the news in an accurate and unbiased fashion anymore, but is instead about sensationalizing the news in order to serve ones own purpose (profits mainly).

mc says:

If the article you cite is misleading, what about your article?? Ok, yours is an opinion article so you can say what you want, and I respect it. But really, after reading the article that you cite, I find your comments misleading, and exaggeratedly subjective, led by your feelings towards copyrights and general IP. But anyway, it is your blog, your can say what you want. Apart from this, I am happy that you allow others to comment openly, which is rare lately.

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