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.

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Companies: us chamber of commerce

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Comments on “A Step By Step Debunking Of US Chamber Of Commerce's Dishonest Stats About 'Rogue Sites'”

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46 Comments
TtfnJohn (profile) says:

Re: Re: Re: Re:

At least Mike has an intellect to be accused of being dishonest with.

You were still wrong, domestic, foreign or aliens from somewhere around Alpha Centari.

I’d want to talk to whoever provides you with the “outraged” posts and ask them to spell check it first.

Of course all that would require an intellect. Honest or not.

Killer_Tofu (profile) says:

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 …

TtfnJohn (profile) says:

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.

Richard (profile) says:

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

Kevin H (profile) says:

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?

Richard (profile) says:

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.

Josef Anvil (profile) says:

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….

PW (profile) says:

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-bad-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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