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
    HothMonster, 16 Mar 2011 @ 12:40pm

    Re: Re: Re:

    I'm sorry that holywood can't safely invest 100 million dollars and 8 months to make a movie and expect a 700 million dollar profit. Boo Hoo. Now people can preview movies and tell if there junk and they don't have to buy them. But guess what people do buy shit they like because they want the people who made it to make them more shit. I do understand where they are coming from, if I could make a 700% return on my investment every 8 months I would be sad if that revenue stream went away too.

    "Mike's point of view only works if you assume that the movie and music industries are economic dead ends."

    Just like the point your trying to make assumes that everything not related to music and movies dead ends. Music and movies aren't going anywhere they just can't expect such ridiculous profit margins anymore.

    I don't think anyone is arguing that big music and big movie are not a part of the economy. Mike is just pointing out that the way these reports generate their numbers is bullshit. We are not trying to argue the polar opposite as your posts seem to think. Its just that me only buying music I actually like doesn't suck billions out of the US economy it just funnels it towards people who make shit I like and advertising campaigns and other hoopla can't trick me into buying shit I don't like because I can test it first.

    Your trying to say there are less cycles because people buy less music but that is not true. People have a spendable allowance, no I don't mean what THAT AC's mom gives him weekly for juice boxes, an amount of money that they take from their income to spend on things they don't need. Most people, that I know, are not good at saving money. I have small goals for saving, i.e. ski trip next year, bachelor party to vegas next month, boundary waters this summer, after I have met my monthly goals I spend everything else. I doesn't matter if I spend it on a movie, a beer, a plastic disc or a hooker trust me its getting spent. I don't say "well I saved 50 dollars buy not buying this video game ill just hide it for 8 years" no i say "fuck yeah 50 dollars extra this month who wants to go get some chicken wings!"

    To try and sum up my ramblings, sorry too much caffeine i think, digital infringement does not disappear money. The money cycles just as much just not through the plastic disc buying channels. However, we are not taking all the money out of those channels, music and movies are not going anywhere because people do pay for things they like. I bought the entire run of the Wire and Battle-Star Galactic after I had watched them all on Ninja Video, they are still in their shrink wrap I bought them to try and give money to the people who made something I loved. And finally just because people are saving money on plastic discs does not mean that they are actually gonna save(i.e. put in coffee can under loose board in garage) that money.

    I still managed to ramble in my ramble summary...well while im at it:
    How about the Bon Jovie quote
    "...and the beauty of taking your allowance money and making a decision based on the jacket, not knowing what the record sounded like, and looking at a couple of still pictures and imagining it..." and getting home and realizing you spent all your allowance on a piece of crap.
    Or getting tricked by the one good song on the record that is on played on the radio to find out that the rest of the album sounds nothing like it and is crap. Or some advertising campaign that portrays a movie or artist as something there are not, and I don't find out till after my money is gone. Well sorry those days are done, now i know what I am buying and its not your crap.

    Yeah, wow way to much caffeine, i need a nap

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