by Mike Masnick

Filed Under:
assumptions, australia, impact, studies

Questionable 'Piracy' Study Found; Details Show It's Even More Ridiculous Than Expected

from the that's-not-research dept

Thanks to G Thompson for pointing us to where the BSA has stashed a copy of that mysterious "piracy" research report we were just talking about, which was apparently written by someone named Emilio Ferrer. It's embedded below, and it's even more ridiculous than we had initially expected. First, the entire thing is based on the massively and completely debunked TERA report from last year, that used such outrageous assumptions as to not even pass the most basic sniff test. The researchers here appear to have made no attempt to determine the accuracy of the TERA report, nor to respond to any of the debunked points.

Digging into what little details there are suggests that this study just gets worse and worse and worse. It takes bad assumptions, then piles on more bad assumptions and then extrapolates out to get totally unsubstantiated conclusions. For example, it assumes that the volume of online infringement grows at the same rate as IP traffic and assumes the rate at which the industry will grow. That last one is particularly silly. Since it's making up a number for what the total jobs "should" be, it can just create whatever justification that it wants.. and can claim any job loss number it wants to name. The whole thing is a house of cards built on nothing.

Of course, it's worth pointing out that there was another report, this time from AFACT (the Australian anti-piracy group) just a few weeks before that some have confused this report with. The AFACT report can be seen here (pdf). It's even worse than the other study in some cases. Check out some of the assumptions in that report: including the laughable claim that "just under half of all pirate consumers would have paid." There have been various attempts to quantify that number, and I've never seen any unbiased source come anywhere close to 50%. At best, I've seen 10% claims. The only concession the report makes is that maybe some people use unauthorized copies to "sample," and make a legit purchase later. But they only count this if the person says they would pay for that legit product, not if it resulted in them buying other authorized products or services.

It also does a laughable job with "ripple effects." It's pretty sad. We've debunked "ripple effects" reports over and over and over again. They all seem to make the same mistakes. First, it ignores that ripple effects are really ways to count the same dollar over and over and over again. Second, they only count the ripple effects in one direction. So, for example, they say movie industry people lose their jobs, and that means less taxes. But what they don't say is that any money not being spent on the movies doesn't disappear from the economy, but is spent on something else -- and that something else might actually be even more productive or value generating. In fact, looking at this report, it appears they don't even consider this point, and assume that all the money "not" spent on movies disappears from the economy.

So there you have it. Two separate reports released within weeks of each other in Australia by the entertainment industry. Each one seems to be trying to outdo the other one in questionable assumptions and extrapolations.

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  1. identicon
    Anonymous Coward, 16 Mar 2011 @ 11:50am

    Re: Re:

    So why does it matter if Mr. Fat Burger gets the 20 bucks or i give it to a plastic disk store

    See, you missed it.

    It doesn't matter on the level of that single transaction. $20 was moved. But if everyone is taking the content of the plastic disc for free and not paying for it, you have taken those people out of the economy. The result is that the economy is smaller, because those people are not longer sellers and as a result, also no longer buyers. That means they are no longer hiring all the people who work on producing that content, which ripples along through the economy that way too.

    The real goal of the economy is for you to spend your $20 however you like, and having it cycle on through to other people who may choose shiny plastic discs (or anything else), including them in the economy. In a long way around, it gives your boss more business, so he can pay you enough that you have two $20 bills, and you have both a fat burger and a shiny plastic disc.

    When you turn a part of the economy into a "free" zone, you lose that part of the economy, plain and simple. You lose the cycle, you lose those sales, you lose that "cycle" of the money.

    Remember, it isn't your $20 bill - it is the number of times your $20 bill moves that is the economy. If everyone sits on their $20 bills and does nothing, we have a recession. One of the biggest problems facing the US economy right now is that many companies have lots of a cash and no desire to spend it or move it in the economy. If it was moving, the economy would pick up.

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