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The Flawed Logic Behind Estimates Of File Sharing’s Economic Impact – and the piracy-X factor

I’ve just read a fantastic blog by Brian Proffitt with the above titled topic.

Here is the direct link to his post: The Flawed Logic Behind Estimates Of File Sharing’s Economic Impact 

But I will quote the content here then add my addition to the subject.

Even as antipiracy forces step up their war on copyright violations, the economic impact of software and media piracy remain questionable. Without credible estimates of the true scope of piracy, efforts to thwart file sharing will lack credibility as well.

File sharing represents a huge proprotion of traffic online, and much of that activity is devoted to unauthorized distribution of copyrighted material, including application software, music, and movies. But how much economic impact does it really have?

Don’t ask the antipiracy advocates. The intellectual property industry likes to trumpet large numbers representing the losses incurred by file sharing. In May, the Business Software Alliance (BSA), a U.S.-based software trade organization, reported that “software piracy cost the industry a record $63.4 billion globally in 2011 with emerging economies listed as the main culprits.”

That’s a sizeable sum, but it doesn’t carry any weight.

The method behind such assessments goes like this: First, estimate the average amount of software installed on PCs within a given country, using data from surveys and the like. Next, subtract the amount of software known to have been sold in that country. The difference is the rate of piracy. Multiply that figure by the revenue software companies would get if the software were sold at its commercial value, and you get a figure like $63.4 billion.

There are multiple problems with this line of reasoning:

• It uses surveys to determine the amount and types of software installed on PCs. Doing this with any statistical significance requires a sample size far larger than researchers tend to muster.

• It supposes that, if piracy were not an option, the same software would be purchased and installed. But people indiscriminately grab free stuff they don’t really want or need simply because it’s fun or satisfying, whereas they deliberate over purchases.

• It assumes that consumers pay the same commercial rates for the software whether they reside in a developing nation or a Western country. But, in fact, prices in the U.S. and Europe are substantially higher than those in emerging markets.

“Almost every year BSA’s total ‘commercial value’ estimate grows, generating headlines about piracy and fostering wrongheaded policies like those we saw in SOPA and PIPA,” wrote Josh Mendelsohn in a blog post for Hattery Labs, a firm that specializes in marketing, branding, and product and business development. “What’s missing from this conversation is unbiased, statistically sound research that shows the true nature of online piracy.”

No one is denying that software piracy is a concern, not even critics of the BSA. The same is true for media piracy, which generates similarly inflated estimates of lost revenue by organizations like the Motion Picture Association of America (MPAA) or the Recording Industry Association of America (RIAA). But the scope of the problem has not been examined honestly. Until antipiracy forces undertake research designed to discover the true impact of file sharing, antipiracy forces will look like their aim is scare lawmakers into enacting protectionist laws rather than solve real problems.

He has really said the point many people have been talking about for some time but to add to this argument is the fact that NO price or cost could ever be truly gathered to any real known degree on piracy because of the piracy-X factor as I like to call it.

This piracy-X factor is the factor that takes into account how much actually software/music and film has been purchased that wouldn’t normally be purchased because they have used/listened/watched because of piracy. For example, I myself have watched movies at friends houses, films that I either didn’t know of or wanted to watch but after seeing it at a friend’s house I’ve actually enjoyed it and gone out and purchased the film after.

It’s the same with music and software. How many people have illegally downloaded a song to simply listen to a track to find out if they like it or not then gone on to still purchase the track or album? This is the piracy-X factor. The passing trade so to speak which is generated purely from the initial illegal activities. These companies don’t question when someone buys a DVD if they have seen it illegally first. They just assume the purchase is legit from the start. They only concern themselves with the perceived loss of money but have no clue about actually how much they earn because of piracy.

Now don’t get me wrong as the above blog also said “Piracy is wrong and illegal” which we all know and I have never personally done this but I can see the alternative view which many cannot grasp on the subject.

I know work colleagues who have illegally downloaded software simply to test it out and then because they liked it they have then purchased the software afterwards which would never have been purchased if they had not tried it in the first place. I understand that not everyone would do this and there will be some who never buy the product after illegally obtaining it but the point goes back to the unregistered and unknown piracy-X factor that cannot be monitored but firms ignore what positive aspects can actually come out of the illegal downloads.


About jobloggsexplains

Opinionated northerner


4 thoughts on “The Flawed Logic Behind Estimates Of File Sharing’s Economic Impact – and the piracy-X factor

  1. Great post!

    I wholeheartedly agree that piracy is wrong, but I also disagree with Hollywood’s tactics. Instead of resolving the issue by actually paying the artist more, they try to misdirect people to the problem of piracy.

    Finding information, though, or definitive evidence that piracy doe snot equal a lost sale would be valuable indeed.

    Posted by lowestofthekeys | September 6, 2012, 4:24 PM
  2. Reblogged this on Goddamn Movies.

    Posted by lowestofthekeys | September 6, 2012, 4:24 PM
  3. thanks for the repost and comments…

    Posted by jobloggsexplains | September 6, 2012, 7:47 PM
  4. I do not even know how I ended up here, however I
    assumed this publish used to be great. I do not recognise who you’re however definitely you are going to a well-known blogger when you are not already. Cheers!

    Posted by Romeo | November 18, 2012, 6:48 PM

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