Cato Institute Digs Into MPAA's Own Research To Show That SOPA Wouldn't Save A Single Net Job

from the let's-dig-in... dept

One of the things we’ve noticed in the debate over SOPA and PIPA is just how the other side is really lying with statistics. We’ve done a thorough debunking of the stats used by the US Chamber of Commerce to support both bills, as well as highlighted the misleading-to-bogus stats used by Lamar Smith in his support of the bill.

But every day, more bogus stats are rolled out. Julian Sanchez, over at the Cato Institute, has decided to dig into one specific bogus number, the supposed claim of $58 billion in “losses,” and to show how the numbers don’t hold up to any scrutiny. In fact, using the details of where the numbers came from, Sanchez makes the case that SOPA won’t save a single net job for the US economy. Read on to find out how.

First off, the $58 billion comes from an absolutely laughable report for the Institute for Policy Innovation, done every year by Stephen Siwek at a firm called Economists Incorporated. We’ve challenged this ridiculous number in the past, but not to the level of detail that Sanchez has here. He starts out by bringing up (as we have many times), Tim Lee’s excellent debunking of the ridiculous “ripple effects” that Siwek/IPI always use, despite them being a trick to double, triple, quadruple, etc count the same dollars:

In IPI-land, when a movie studio makes $10 selling a DVD to a Canadian, and then gives $7 to the company that manufactured the DVD and $2 to the guy who shipped it to Canada, society has benefitted by $10+$7+$2=$19. Yet some simple math shows that this is nonsense: the studio is $1 richer, the trucker is $2, and the manufacturer is $7. Shockingly enough, that adds up to $10. What each participant cares about is his profits, not his revenues.

It turns out that the $58 billion comes from this process, making use of a dubious multiplier on a different MPAA report that claimed merely $6.1 billion in losses for the US movie industry, multiplied to about $20 billion — as the portion of the “losses” that come from movies. But, as Sanchez notes, that number itself is highly questionable:

That original $6.1 billion figure, by the way, was produced by a study commissioned from LEK Consulting by the Motion Picture Association of America. Since even the GAO was unable to get at the underlying research or evaluate its methodology, it?s impossible to know how reliable that figure is, but given that MPAA has already had to admit significant errors in the numbers LEK generated, I?d take it with a grain of salt.

Okay, but even if we assume that $6.1 billion is accurate, Sanchez explains how that’s not even what’s at stake with SOPA, since the $6.1 billion is a global number:

Believe it or not, though, it?s actually even worse than that. SOPA, recall, does not actually shut down foreign sites. It only requires (ineffective) blocking of foreign ?rogue sites? for U.S. Internet users. It doesn?t do anything to prevent users in (say) China from downloading illicit content on a Chinese site. If we?re interested in the magnitude of the piracy harm that SOPA is aimed at addressing, then, the only relevant number is the loss attributable specifically to Internet piracy by U.S. users.

Again, we don?t have the full LEK study, but one of Siwek?s early papers does conveniently reproduce some of LEK?s PowerPoint slides, which attempt to break the data down a bit. Of the total $6.1 billion in annual losses LEK estimated to MPAA studios, the amount attributable to online piracy by users in the United States was $446 million–which, by coincidence, is roughly the amount grossed globally by Alvin and the Chipmunks: The Squeakquel.

Okay. So now we’re down from $58 billion to… $446 million. That’s less than 1% of the original number. But, still, you might say, $446 million is a fair chunk of change (and the $58 billion doesn’t just include movies, but other content, like music and software). So perhaps something like SOPA still makes sense to protect a few jobs? Nope. Again, Sanchez points out how this ignores reality:

As one expert consulted by GAO put it, ?effects of piracy within the United States are mainly redistributions within the economy for other purposes and that they should not be considered as a loss to the overall economy.? In many cases–I?ve seen research suggesting it?s about 80 percent for music–a U.S. consumer would not have otherwise purchased an illicitly downloaded song or movie if piracy were not an option. Here, the result is actually pure consumer surplus: The downloader enjoys the benefit, and the producer loses nothing. In the other 20 percent of cases, the result is a loss to the content industry, but not a let loss to the economy, since the money just ends up being spent elsewhere. If you?re concerned about the overall jobs picture, as opposed to the fortunes of a specific industry, there is no good reason to think eliminating piracy by U.S. users would yield any jobs on net, though it might help boost employment in copyright-intensive sectors.

In other words, we’re right back where we started. The whole thing is based on the bogus assumption that money not spent on movies (which, again, have been making a ton of money lately) somehow disappears from the economy. But that’s simply not true. So, really, why is it that anyone in the press, or in elected office, is allowed to quote that bogus $58 billion number without it being challenged?

Filed Under: , , , , , , ,
Companies: economists incorporated, ipi, mpaa

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Cato Institute Digs Into MPAA's Own Research To Show That SOPA Wouldn't Save A Single Net Job”

Subscribe: RSS Leave a comment
96 Comments
PaulClarkSaintJohn (profile) says:

As an OutSider Looking in ...

So as an outsider looking it, it looks like an awful lot of money and time has been wasted on $446 million. Any chance a patent troll will take a break and file a class action lawsuit against the supporters of the bill arguing that they are attempting to defraud the American people. I think $1000 per citizen would be a reasonable amount (and a nice economic stimulus).

gorehound (profile) says:

Re: As an OutSider Looking in ...

I third this !
And I up it by adding that if these SOPA/PIPA actually pass then we as citizens should not only gather our forces for a March on Washington but we also hopefully see millions worldwide join in to bring the MAFIAA down once and for all on the Internet anyways.
I hate the idea of Censorship so much it is making me not only angry but disgusted at Washington (Land of the Corrupted).

Anonymous Coward says:

One thing I like to point out is that the $58 billion is the picture of the total movement of money inside a system and that is a good number to gauge economic activity which is important, but anybody trying to use it as a measure of revenues or profits is a dishonest person, simple because it is used as a compass, a trend marker and not to gauge specifics or losses since it cannot show that, specially in a subset of the system, that doesn’t show all the movement of money occurring elsewhere that could account for ups and downs.

Anonymous Coward says:

Re: Re: Re:

And how exactly is such parasitic behavior justifiable?

Duh. It isn’t.

For every American kid that pays 10 bucks a month to a foreign cyber-locker so he can rip off movies and music, that’s 10 dollars less going to American creative industries. Direct negative effect on the American economy.

10 more dollars going to fat, gluttonous pigs like the slob that runs megaupload.

No thanks.

egghead (profile) says:

Re: Re: Re: Re:

“For every American kid that pays 10 bucks a month to a foreign cyber-locker so he can rip off movies and music…”

Really? Those are some quite idiotic individuals if they are paying $10 to pirate material. It just sounds like they are the less adept individuals that would agree to send all their bank account information to a “trusted” Nigerian business so they can deposit a check for $47 million US Dollars, withdraw 75% for themselves, 5% for fees and leave the remaining 20% for the individual as a “thank you.” It’s a shame all that money in their bank account went to some Nigerian scammer; after all, they just might have spent all that money on movies or music!

E. Zachary Knight (profile) says:

Re: Re: Re: Re:

Why would anyone pay money to get pirated content when the pirate bay is free? This is the problem you Copyright Maximalists have. You believe that there is money in piracy and that people readily part with cash to get said pirated content.

In reality, people who pirate to “get free stuff” do so but make sure that they are not paying money for it. That money they are not paying to copyright holders or pirate websites goes to other things such as food, electronics, clothing, cars etc. That is money that stays in the US economy.

mischab1 says:

Re: Re: Re:3 Re:

Oh please. Cyberlockers charge for higher speed and/or extra space. Those things cost money to provide and it makes sense to charge for them. They offer slow speed/small amount of space for free as loss leaders to get people using their service. That is just basic business sense.

If you get to claim that cyberlockers are profiting off of piracy, then I get to claim gun manufactures are profiting off of murder. Same diff.

E. Zachary Knight (profile) says:

Re: Re: Re:3 Re:

Cyberlockers, for example Mega Upload, do not charge $10 a month to make ripping off movies and music faster, they charge $10 a month to make sharing files stored on their servers faster. There is a HUGE difference there.

But as I said, why would anyone spend $10 a month to pirate stuff when they can pirate the same stuff for free? You haven’t answered that.

You'readickweed says:

Re: Re: Re:3 Re:

“The cyberlockers charge 10 bux a month so people can rip off music and movies with faster speeds.”

You know absolutely nothing about illegally downloading content. My net connection is maxed out at 2mbps, I constantly reach that maximum speed while torrenting(btw torrenting itself isn’t illegal if you happen to think so). So, please take your head from betwixt your buttocks and take a look at the real world, Mr. CorporateShill.

techflaws.org (profile) says:

Re: Re: Re:3 Re:

The only one stupid is you. There is NO WAY that a cyberlocker regularly is faster than a torrent swarm. NO MATTER how fat their pipe is, an average swarm sharing wanted content has so enough members donating their bandwidth, they’ll max out pretty much any pipe you might have at home.

That’s how torrent was designed, you clueless moron.

Shallgale says:

Re: Re: Re:3 Re:

Anon you forgot how to spell Bucks I see and it would be more appropriate to say dollars as we are talking about US currency.

As for pirating there are many reasons people have to do so. Some can’t afford it, some want to “try before they buy”, and some are as another user stated here looking to watch prior purchased content.

I work hard for my money and I am not saying the film industry doesn’t as well but they are acting like a spoiled child that doesn’t want to share the sand box. There are plenty of smaller studios and film makers that offer free versions of their intellectual property by download because they understand that consumers will then support them by purchasing the media afterward because they have confidence in what they are buying.

Personally I am more likely to spend on a movie I have 1) watched before purchase 2) enjoy the content and feel the price is justified 3) want to support of that intellectual property of the artists.

However, that being said. I do NOT want to purchase a new DVD for 20 dollars (see it’s not hard to write, stop being lazy) for a movie that I may or may not want to watch again. Nor do I want to spend 14 to go to a theater if I’m not sure about the content. I would however be more willing to purchase a new DVD for 5 dollars and more likely to purchase a wider range of content because my buyer’s confidence would feel the value is not exceeded by the dollar amount.

Shallgale says:

Re: Re: Re:3 Re:

Anon you forgot how to spell Bucks I see and it would be more appropriate to say dollars as we are talking about US currency.

As for pirating there are many reasons people have to do so. Some can’t afford it, some want to “try before they buy”, and some are as another user stated here looking to watch prior purchased content.

I work hard for my money and I am not saying the film industry doesn’t as well but they are acting like a spoiled child that doesn’t want to share the sand box. There are plenty of smaller studios and film makers that offer free versions of their intellectual property by download because they understand that consumers will then support them by purchasing the media afterward because they have confidence in what they are buying.

Personally I am more likely to spend on a movie I have 1) watched before purchase 2) enjoy the content and feel the price is justified 3) want to support of that intellectual property of the artists.

However, that being said. I do NOT want to purchase a new DVD for 20 dollars (see it’s not hard to write, stop being lazy) for a movie that I may or may not want to watch again. Nor do I want to spend 14 to go to a theater if I’m not sure about the content. I would however be more willing to purchase a new DVD for 5 dollars and more likely to purchase a wider range of content because my buyer’s confidence would feel the value is not exceeded by the dollar amount.

E. Zachary Knight (profile) says:

Re: Re: Re: Re:

Also, I want to respond to this:

And how exactly is such parasitic behavior justifiable?

Because no one is entitled to be paid any amount of money. If you want that money, you better be working extra hard to convince me that my $10 is better spent with you than someone else. And no, extortion is not the way to do that.

E. Zachary Knight (profile) says:

Re: Re: Re:5 Re:

Again, they are not entitled to that money. If you create a movie, there is not requirement that people pay you to watch it. That doesn’t mean you can’t charge for views, but you are not entitled to be paid for it. If you want people to pay you for it, you have to convince people to pay you for it. You have to work to get paid just like everyone else.

Anonymous Coward says:

Re: Re: Re:6 Re:

Because game devs working 12+ hour days to develop a video game, or a musician spending months on their album and marketing it isn’t “work.” LOL. It sure is a lot easier to justify getting stuff for free when YOU aren’t the one that owns the studio that had to lay off 1/3 of their employees. Or better yet, how would you like if your boss decided that you “aren’t entitled to money?”

Ninja (profile) says:

Re: Re: Re:7 Re:

You see, if my work is not good enough or I’m not good at marketing what I do I will get fired. No money for me. If I build houses, I’ll receive if I build the house and it’s good enough. If I build a bad house I will have to face the consequences. If you buy a product in some store and you don’t like it you can give it back and get your money back. Even consumables, if they aren’t what is advertised you can fight for your rights.

It doesn’t matter if I worked 12h a day. If the work is bad it won’t be paid.

Nobody is entitled to any money. Nobody. Until they deserve it.

Anonymous Coward says:

Re: Re: Re:7 Re:

This is a bad argument. No one’s saying they aren’t doing work. But what people are trying to point out and explain to you is that they are NOT working consistently. Think of it like this (and I’m going to put it as simple as possible so you can possibly grasp the concept, but I wouldn’t wager on that happening anyway):

YOU work at McDonald’s. You get paid hourly. You work from 9-5. At the end of your shift, you get paid for the work you did. Fin.

You work, you get paid for the work you do. That’s it. Nothing more, nothing less.

Now here’s what people are saying is entitlement.

You work as an artist of some kind. You get paid for the work you do (be it the album you made or the movie you made). Fin.

But oh no, you don’t want that. You want more. You want to get paid indefinitely and as much as possible for that one work you did. If someone watches the movie, you want to get a cut of that. If someone buys the movie, you want to get a cut of that. If someone streams the movie you want to get a cut of that. And so on and so forth. And all that is on top of your original pay.

Do you not see the problem/difference/point people are trying to make?

In one, you get paid for the work you do and that’s it. You will NOT get paid for the rest of your life because you made 1 hamburger.

In the other, you get paid for the work you do and then on top of that you want to keep getting paid for the rest of your life because of the 1 album/movie you made.

This is what people are saying. That is a sense of entitlement. Along with the thought that “I made something, thus I deserve money by default”. No, you don’t. I make stuff all the time, I don’t automatically get money. That’s not how life works (except for those overly entitled few).

As for your “how would you like if…” pure nonsense. Like you didn’t think that fully through. Let’s pretend someone’s boss did say “you aren’t entitled to money”. What would the average person grasp from that? Well, they’d say, “I know, I have to WORK for my money. It’s not going to just be given to me.” And then they’d move on. As in, they’d get to work to EARN their money.

See how that’s okay and normal?

As for games, movies, music, etc. No one is entitled to profit. You MAY profit. You CAN profit. No one’s saying otherwise. They’re just saying “just because you made something DOES NOT mean you automatically get money for that”. This is the MAIN point people are trying to explain to you, which you’re either being completely ignorant about (intentionally so) or you just seriously can’t see past whatever bias you may hold.

Anonymous Coward says:

Re: Re: Re:8 Re:

(and I’m going to put it as simple as possible so you can possibly grasp the concept, but I wouldn’t wager on that happening anyway)

*hands you a cookie* Congrats for insulting someone in an argument instead of being mature! +1 for you.

You work as an artist of some kind. You get paid for the work you do (be it the album you made or the movie you made). Fin.

But oh no, you don’t want that. You want more. You want to get paid indefinitely and as much as possible for that one work you did. If someone watches the movie, you want to get a cut of that. If someone buys the movie, you want to get a cut of that. If someone streams the movie you want to get a cut of that. And so on and so forth. And all that is on top of your original pay.

All of this is assuming you are talking about a work for hire. Not every project is a work for hire. Your description is certainly true for say, a composer hired to score a movie, but not for the start up act who doesn’t get paid first and NEEDS that money in order to fund future creations for their fans.

And BTW, maybe if studios didn’t actually FACTOR in the “entitlement money” you are talking about into the contractor’s pay, perhaps people wouldn’t need to collect it. When people have to choose between getting a bit from the studio and a bit from the royalties and whatnot, or not being hired to a project, you certainly can’t blame them for choosing the project. It’s funny how you guys tell us AC’s to research before opening our mouths, yet you guys don’t seem to know much about the hiring process and job nature of people in the industry…because pretty much everyone on the “creative” side is a contractor, (unless there is some place that actually has enough work to keep them occupied year round!) not a 9 to 5er.

As for your “how would you like if…” pure nonsense. Like you didn’t think that fully through. Let’s pretend someone’s boss did say “you aren’t entitled to money”. What would the average person grasp from that? Well, they’d say, “I know, I have to WORK for my money. It’s not going to just be given to me.” And then they’d move on. As in, they’d get to work to EARN their money.

That isn’t what I meant…lol. Don’t take everything so literally. The point I WAS trying to make is that you probably would not like if your boss told you to work the entire month (aka, prove yourself before payment, just like you guys are saying) BEFORE seeing any money.

SomeGuy (profile) says:

Re: Re: Re:7 Re:

I can, if I choose, spend 12+ hours a day rolling rocks up a hill. This is a lot of work, let me tell you, and has huge costs involved, such as lemonade, hamburgers, and sunburn cream.

By your logic, because I did work and incur costs, I’m entitled to some monetary compensation. In reality, this is patently false. No one is required to give me money just because I did some work.

The point others are trying to make is that if you do work and can’t attract customers, that’s your fault.

Justin Olbrantz (Quantam) (profile) says:

Re: Re: Re:6 Re:

I’ll let you in on a little secret: he’s a troll. Trolls do not intend to win debates; they are there to insult people, piss people off, disrupt other conversation, indulge their belief that they’re smarter than all the stupid people they insult, and if they’re really lucky hurt some people’s feelings (big win). Debate is the least of their concern, which is why they suddenly disappear when faced with something they have the slightest difficulty arguing against or (more commonly) laughing down.

Atkray (profile) says:

Re: Re: Re: Re:

If you spent any time at all around American kids you would know they don’t spend $10 a decade on megaupload or any other site. They spend their $10 on Jimmy Johns, or 5 Guys but the only money they spend on “American creative industries” is when they all go to the dollar store and load up on snacks to go see a double feature at the dollar movies.

Machin Shin (profile) says:

Re: Re:

These numbers also are failing to take into account the number of “stolen” copies that are really just someone downloading a copy of something they already have. I have the entire MASH tv show on DVD. I bought them all as they were released to DVD. When I am traveling though and I get the urge to watch some MASH I will go and download some. This is hardly me stealing the show but the way they are recording their numbers it will show up as me having done just that.

Anonymous Coward says:

Re: Re: Re:

No those numbers are not accounting for use, just a measure of economic activity inside a system, they are not used to measure other activities that don’t involve money moving around.

They simply state in an easy way how much money moved around, not how much was gained or lost, it is not accurate for any kind of projection to be based on it.

It has one purpose on that is to show if the economy is moving or not in a very general sense.

If it is up consumption is occurring, if it is not, something is happening and people should look at the reasons it is happening, they don’t show anything else, they don’t show what are the factors that are causing something, just like a tripwire don’t show what is tripping it, it is not a security camera.

Think of it as an economic tripwire.

Anonymous Coward says:

Re: Re: Re:

Now, the fact is that the $58 is based on assumed losses, and so it can’t be even used as an economic marker because is based on fantasy numbers, it is not based on real numbers, that is the dishonest part about that whole thing, they are using something that has some use in economics to try and show something else which is not true at all.

Ninja (profile) says:

In the other 20 percent of cases, the result is a loss to the content industry, but not a let loss to the economy, since the money just ends up being spent elsewhere.

Ding, we have a winner ladies and gentleman. I recently exchanged an external HDD with a friend (the contents actually) and he had got with other friend and added his own content and so on and so forth and we reached a staggering conclusion: our HDDs were worth over $50k in content. Then we reached a second somewhat staggering and ridiculously funny conclusion: we’d probably actually see less than half of that content (why? real life, I tell you, it eats up a lot of my time).

So if u think about it we were 100k losses for the entertainment industries. But we would never buy that much even if we couldn’t get our hands in it legally because the money isn’t infinite (darn, those pesky human customers that have to eat, get dressed and so on) and time isn’t infinite (bingo! The solution is a better business model! And a time-machine for each household!).

Bah. We need time machines to go back in time and give condoms to the parents of our smart politicians.

Anonymous Coward says:

Hahahahaha… The Cato Institute? The global warming deniers? The ones who hired back Doug Bandow, the Cato fellow who admitted taking money from lobbyist Jack Abramoff in exchange for writing columns favorable to Abramoff clients? The same Doug Bandow who left Cato in disgrace and was quietly hired back in 2009? That Cato Institute? Wow, being a bastion of objectivity and beyond ethical reproach, if they say it- it must be true. What a fucking joke. I’d place more stock in a Techdirt research study on the subject.

Anonymous Coward says:

Re: Re: Re:

Oh please you big crybaby, every study that scores any points for the pro-SOPA side is immediately dismissed as biased or faulty based largely on feelings toward the source of the study. Please don’t pretend like studies on (particularly) this subject don’t reflect the biased position of the authors- on both sides.

ComputerAddict (profile) says:

Re: Re: Re: Re:

Hey Anonymous,

I know you probably dont understand how to include links via HTML in your comment, so let me help you out so you can properly cite this.

Oh please you big crybaby, every <a href=”link to study“>study</a> that scores any points for the pro-SOPA side is immediately <a href=”link to citation of dismissal“>dismissed as biased</a> or <a href=”link to citation of faulty data“>faulty</a> based <a href=”link to citation about feelings“>largely on feelings</a> toward the source of the study. Please don’t pretend like studies on (particularly) this subject don’t reflect the biased position of the authors- on both sides.

Just Fill the bolded words with links and your done!

Justin Olbrantz (Quantam) (profile) says:

Re: Re: Re:2 Re:

He’s likely talking about the periodic reports by the RIAA, MPAA, their sibling organizations, and their various lobby groups about how piracy is destroying the world.

As best I can tell he’s saying that only studies performed by neutral educational institutions and government bodies can be trusted, and we should draw our conclusions from those. In other words, he’s saying that piracy has anywhere from zero to a positive economic effect on creators (as found by virtually every such neutral study).

Mike Masnick (profile) says:

Re: Re: Re:

In the meantime, if we’re saying that think tanks aren’t credible due to an association with Jack Abramoff, then you lose again… because there were two reporters that Abramoff was accused of paying to write columns. Doug Bandow…. and Peter Ferrara.

Where does Peter Ferrara work? Oh right… IPI. The “think tank” that put out these reports that Cato is debunking.

So, you accept the IPI’s numbers, but slam Cato?

What a slimey guy you are. Leaving out Abramoff’s IPI connection.

Anonymous Coward says:

Re: Re: Re: Re:

The shit you fling doesn’t stick Masnick:

Where does Peter Ferrara work? Oh right… IPI. The “think tank” that put out these reports that Cato is debunking.

He’s (also) a senior fellow at the Heartland Institute, that is an opponent of SOPA/Protect IP.

http://news.heartland.org/newspaper-article/internet-copyright-protection-bills-threaten-isps-web-sites-users

Mike Masnick (profile) says:

Re: Re: Re:2 Re:

The shit you fling doesn’t stick Masnick:

Where does Peter Ferrara work? Oh right… IPI. The “think tank” that put out these reports that Cato is debunking.

He’s (also) a senior fellow at the Heartland Institute, that is an opponent of SOPA/Protect IP.

I wasn’t saying that IPI was suspect because of Ferara. I was saying that if we USED YOUR DEMENTED REASONING, then BOTH places are tainted.

God, you’re stupid.

Fickelbra (profile) says:

Re: Re:

“Global warming deniers”. Cato didn’t conclude that global warming isn’t happening, but rather that the impact our footprint was having was largely exaggerated by the Bush Administration and the media. You realize our planet is in a constant state of change, and that includes weather, right? It’s not an epidemic caused by us, it’s the way our world works. It changes.

Ninja (profile) says:

Re: Re: Re:

I’ve spoken to a geologist and he’s rather skeptical about al the warming thing. He told me that the oceans were 3-4 meters higher than today and over 100 meters below the current level (in glacial ages). He also pointed out that we are in a pretty nice “inter glacial” period and its more likely that we will enter a new glacial era soon (geologically speaking) than see real issues due to a supposed global warming. Oh and when the dinosaurs were here the average temperature was at least 3?C higher.

I’m skeptical. I don’t think carbon dioxide is an issue (and I work with chemistry mind you). I think all the show built around this global warming effect has actually hid the real problems: toxic/polluting gases (such as the nitrogen oxides, carbon monoxide, sulfur gases and so on), garbage (specially in the oceans), soil pollution and so on.

I’m inclined to think that Al Gore only used that to promote himself with loose evidence for his assumptions and every1 jumped into the greenhouse bandwagon to hide more serious issues. Oh, I’m carbon neutral so everything is fine! Give me a break.

MAFIAA studies are just like that. Empty, flawed, broken. And hide other serious issues: their broken and rotten business model.

AC says:

HIdden benefits

Using the MPAA’s logic, you can then assume that pirates are benefiting the economy by purchasing hard drives, CDs, blurays, thumb drives, etc.. It also benefits the country by motivating young people to improve their technical skills on the Internet as well as ripping technologies.

The carriers such as AT&T also get added revenue through overage charges.

Ripple, Ripple, Ripple….
/s

BC says:

> “In the other 20 percent of cases, the result is a loss to the content industry, but not a let loss to the economy, since the money just ends up being spent elsewhere.”

This is exactly correct, and I explain it to shopkeepers complaining about shoplifting all the time. Just because someone steals something from their store – it doesn’t mean the US economy was harmed – that money gets spent elsewhere. So, the shopkeepers are just bitching about “their loss” but someone else somewhere else in the economy makes more money, which makes shopkeepers look really damn selfish!

Anonymous Coward says:

Re: Re:

Given:
Shirt = $5;
Software = $5;
In a store, a thief stole this shirt;
On the internet, a pirate downloaded this software illegally

Unknown:
How much did the shopkeeper lose?
How much did the software developer lose?

Equation:
“Total value of merchandise in-store” – Shirt = x
“Total value of products online” – Software = y
“Total value of merchandise in-store” – x = Shopkeeper’s loss
“Total value of products online” – y = Software developer’s loss

Substitute:
500 – 5 = x
infinite – 5 = y
500 – x = Shopkeeper’s loss
infinite – y = Software developer’s loss

Solve:
x = 495
500 – 495 = Shopkeeper’s loss
Shopkeeper’s loss = $5
y = infinite
infinite – infinite = Software developer’s loss
Software developer’s loss = $0

Solution:
The shopkeeper lost 5 dollars.
The software developer lost 0 dollars.

Tec_Guy says:

Re: Re: Re:

First, you can’t subtract infinity from infinity.
Second, by your logic software developers are immune to the effects of online piracy.
Third, the premiss of your argument is that theft and online piracy are equivalent, which is not true.

Also, as a minor note the shopkeeper wouldn’t lose $5 unless that’s your “cost” is manufacturing cost, in which case the “cost” for the software is $0.

Scott@DreamlandVisions (profile) says:

Re: Re: Re: Re:

Let’s look at it like this:

A store needs to sell a shirt to make $5 on that shirt. The shirt costs them $2 so their profit is $3.

Someone lifts the shirt. The store is out the shirt and needs to spend another $2 to replace it. When they sell the replacement, they’re profit is now only $1. Their net gain is $1, but they actually lost money.

They spent $4 to make $1. If they had not had to replace the stolen shirt, then that same $4 would have netted them $6.

Now, let’s look at software or music downloads.

Musician puts an mp3 of a song out on the net for $5. The cost to distributor (ie.. itunes or similar) is $2.

Someone downloads the song from pirate bay without paying for it. The musician has to spend $0 to replace the songe because the mp3 is an infinite resource. The download is a copy of a non-physical item, ie.. data, that does not in any way deprive the artist of the item, that is.. the mp3.

So, someone downloads the song. Some one else comes along and buys the song. The artist still makes $3 no matter how many times the song is downloaded. He makes $3 PER SALE due to the infinite nature of his goods.

Make sense now?

Physical items must be replaced. Non-physical items don’t. A physical item can be stolen, depriving the rightful owner of their material goods. A non-physical item can not be stolen, only copied, therefore there is no deprivation of goods.

How hard is this to understand?

sarcastico says:

bogus piracy numbers

even if we assume that there are some jobs lost to piracy in the content industry, how many more jobs are gained in the hardware industry. What is filling all those iPods and terabtye hard drives. How many people buy guitars, amps, keyboards and recording gear because tab and tutorials are widely available. How many TV’s are sold to watch pirated movies?

Rekrul says:

The whole thing is based on the bogus assumption that money not spent on movies (which, again, have been making a ton of money lately) somehow disappears from the economy. But that’s simply not true.

You’re missing the fact that the entertainment industry IS the economy. Everyone knows that the movie and music industries are single-handedly keeping the world economy afloat and that without them, the whole thing would crash and burn, leading to the collapse of governments, and the complete disintegration of society as we know it!

You don’t want the world to end, do you?

Drew H. says:

SOPA will, in fact, kill jobs.

Congress doesn’t even know how the Internet works. Websites require servers. These servers require maintenance from people who make a living off of it. SOPA will kill a lot of websites, thus shutting down a lot of servers, thus putting a lot of people out of work. Way to go government.

Anonymous Coward says:

Re: Re: SOPA will, in fact, kill jobs.

SOPA/PIPA does NOT only target foreign websites. The vague wording of the bills allows for the entertainment industry to remove or block ANY site that they deem to be a threat…therefore, any US (in addition to foreign servers) may be forced to lay off staff due to loss of business.

iamcarpetpython says:

Considering cable tv has been around for decades, and memberships for sites today like netflix are next to nothing, piracy of movies for most people is convenience, not solid gold leaking from a hole in the melting pot.

As far as music goes, I think people being able to get a hold of discographies at a time and rare commodities truly allows people to dig up the archives of the musical world that would otherwise be forgotten, and see the entire spectrum of music that is really out there(not the songs and artists xm and internet radio wants you to hear) and invigorates interest in music. Expanded interest equals more sales in concert tickets, vinyls, posters, and other things you can’t ‘download’.

Violated (profile) says:

Our Crazy World

What is ironic is that piracy should be the MPAA & RIAA’s greatest enemy but it is NOT. They actually love piracy when it is the perfect excuse to pass such draconian laws to grab more market control.

Then their greatest friend should be their own success but again it is NOT. Like the MPAA’s yearly gross income simply proves that their alleged damage from piracy is all a lie.

It then appears in their best interests to keep TPB and others up so they always have their excuse for even harsher laws. Their real threat is the Internet an out of control market worth trillions to the owner.

???? ????? (user link) says:

The Copyright system is unfair

The Copyright system is unfair, you make a slice of bread it cost you $1 if you sell it for $2 and the consumer discovers that, then you will be in deep trouble and will be called a thief.

But you make a piece of software and it cost you $1000 and you sell it for $1000,000 then this is OK and you should be protected! This is the real rip-off.

The copyright system should be enhanced in full, a copyright holder should report the costs and should report the selling figures and should be allowed a specific profit margin if met then the reproduction of extra copies of that software should be sold at a price = copy reproduction cost + other expenses like shipment + a fare profit. So if the cost of making one CD is $1 and the shipment is $1 and the fare profit is %50 then that copy should be sold for $3.
To explain the idea further, if you make a software and it cost you $1000 and you are allowed %50 profit then you are allowed for example (based in your research of the market) 60 copy at the price of $25 each and any extra copies should be sold at the prices of $3 as calculated above.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...
Loading...