No, it ain\’t

Film piracy is said to be costing the US economy over $20bn a year.

Sigh, the usual lies.

Everyone does this, from Microsoft talking about software, Luis Vuitton talking about luggage knock offs, Rolex about watches and yes, the film studios about online piracy.

They all, without exception, count cut price knock offs as having cost them a full price sale. Which is insane of course.

A lower price will increase the demand for and consumption of an item. Some part of the purchase of those knock offs is thus attributable to their being knock offs. The sale, the consumption, the purchase, simply would not have taken place at the full price.

Do not, ever, believe the numbers you are given for the costs of copyright breaches. They\’re all, sadly, lies.

12 thoughts on “No, it ain\’t”

  1. Surreptitious Evil

    Many years ago, I was having an animated and drunken discussion with one of the senior Microsoft anti-piracy folks. We’d been talking about the MPAA and how foolish they were making themselves, especially Jack Valenti, look.

    And I asked him about piracy in developing countries (I think Balmer had said something about it) – and he said that they not only was the official response “don’t care”, the unofficial one was “we’re all for it”. Get them addicted, young, to XP and Office (as I said, some time ago) and, when they are rich enough to buy proper licences, that’s business growth.

    The alternative was Linux and OpenOffice – which would never lead to a revenue stream.

    BTW – is there something strange going on with the bird in the “KwikCash” sidebar ad, or is it just me?

  2. Do you think that this is figure they use as leakage in their books?

    So rather than writing off the cost they write off the sales price and hey presto lower profits!!

    Is this possible?

  3. It was always thought that the rampant piracy of Windows in times past led to increased market share, allowing them to become the dominant player now (and you’ll note that they now have all these things like Windows Genuine Edition testing).

    And it’s amusing that the big studios who produce crap like Pirates of the Caribbean are the ones who complain the loudest. I saw the first film and loved it. Went to see the second film and it was a great big steaming pile of poo. Never bothered with the third – I’d not want to give them any money (not even the price of a cheap DVD from sainsburys) for ruining what could have been a good franchise.

    If they had any sense they’d issue poor quality versions onto the p2p networks to drum up excitement for their titles, because nothing is quite as good as seeing them in the cinema (as long as there’s not a load of noisy kids at the front)…

  4. So Much For Subtlety

    It is true that these figures are steaming piles of bat guano, but there are costs from piracy they don’t cost. So the figures aren’t all pushed the wrong way. There’s the cost of things that don’t get made because of piracy. A Chinese company that invests in its own software is run by fools. That is a cost to the Chinese economy.

    Which means that the ultimate cost is guess work I suppose.

  5. SMFS has the right way of it.

    This is a useless calculation, but so in general are GDP style calculations. If we imagine a fixed money supply (for simplicity’s sake), the total transactions in the economy per year ought to remain pretty much constant, while production rises or falls. So nothing can “cost the economy” in that sense. You would simply get MV total transactions, year after year regardless of PQ, in the long run.

    So rather than saying it “costs x dollars” we ought to say it “costs x production units”; but sadly the only production measure we have is, er, dollars, so it all disappears up its arse. What we do know is that piracy if sufficiently intense will prevent a creator recouping their capital costs, leading to a disincentive to produce and flight to other, tangible, products. or services that support the production of tangible products.

    Anti-propertarians argue that people would create for love, or something. But a quick look at Youtube shows that while many people are ready to make low-capital-cost videos of themselves ranting inanely into webcams, or collages of “found” video, there is a notable dearth of Hollywood-style blockbusters on it. Which isn’t surprising, because however much people talk about free reproduction, the capital costs are the stinger in created works. Which the cyber-commies, even the ones calling themselves libertarian, simply refuse to accept.

  6. Microsoft knows all this. I was able to get a legitimate copy of Office 2010 for £9 through Microsoft’s “home user” programme. Before that I was using OpenOffice.

    There will always be some people who use piracy to avoid the cost of something they would have bought otherwise. There will be those who are happy with a fake because they would not have bought the real thing. And there are many people across the spectrum.

    There is also a wider opportunity cost. If nobody went to the cinema then the movies wouldn’t get made, or wouldn’t get made to the same standard.

  7. mammy's little soldier

    Anyone else remember “Home taping is killing music!” on the inner dust jacket of LPs?

  8. The Pedant-General

    I’m struck by the parallel with the – really genuinely utterly ridiculous – argument that lower taxes “reduce the size of the economy”.

    The obvious counter – that the money is left to fructify in the pockets of consumers who can then use it do something else useful with – is also true in this case.

  9. “There will always be some people who use piracy to avoid the cost of something they would have bought otherwise. There will be those who are happy with a fake because they would not have bought the real thing. And there are many people across the spectrum.”

    Indeed! There’s the ludicrous idea that I’ll wait months to see a tv show I like on UK channels (if they bother to buy it at all) while it’s airing in the US and I can BitTorrent it.

    That said, when it’s released on DVD, I always buy it anyway. For the subtitles and ‘extras’.

  10. Julia, I do sometimes wonder at the wisdom of the restrictions placed on TV programmes by their owners. For example, I very nearly signed up to Sky just so I could watch Boardwalk Empire but I didn’t want to risk there not being other decent programmes on for the rest of the year. Instead I thought I would buy the DVD but it’s not available yet. So as a result I have bought nothing and when the DVD eventually comes out I will probably have forgotten all about it.

    Now who is losing out?

  11. I think iTunes does provide some US series directly to you, but NOT if there’s a deal afoot to sell them to UK broadcasters in the future…

    As you say, who’s losing out?

  12. Ian B (#5) said:
    “…many people are ready to make low-capital-cost videos of themselves ranting inanely into webcams”

    Are we being rude about Mr Murphy again?

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