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Mar 7, 2011

Data download: lies, damned lies and piracy reports

Illegal downloading will cost the industry over $5 billion by 2016 and "8000 fewer jobs in the core content industries last year", according to a report in Fairfax papers. But that's not telling the whole story.


Always keen to advertise how downloading of content is a serious crime, the copyright industry got some great free publicity in the Sunday papers when Fairfax covered a report claiming that downloading music, movies and software was costing us $900 million a year. According to the report — or, at least, the article about the report — that cost would rise to over $5 billion in 2016 and there were “8000 fewer jobs in the core content industries last year” because of downloading.

The advertising came complete with a case study of one, now suitably remorseful,  “pirate”, James Burt, and the suggestion that “it seems we’re all James Burt now”. The one problem with that was that Burt was convicted of uploading a pre-release copy of a new game, not downloading anything, but as we know from NBN media coverage the whole upload/download difference is a problem for some.

Now, if you’re thinking that there’s something familiar about claims about the cost of internet piracy, you’re right. They’re a bit of a staple of the copyright industry and its operatives. The Australian Federation Against Copyright Theft — a front group for the major Hollywood studios — has for some time cited an LEK report from 2006 showing piracy costs the movie industry $230 million annually in Australia. That was part of an international study that costed piracy at $6 billion globally, although the report itself wasn’t released, and eventually the Motion Picture Association of American admitted problems with it.

But in 2008, Home Affairs Minister Bob Debus claimed that a report to state and federal police ministers showed DVD piracy was costing $1.7 billion a year. This was allegedly only the cost of pirated DVDs, not of downloading as well. How did we get from all piracy costing $230 million annually in 2006 to just one, rather quaint, form of piracy costing seven times that in 2008? Good question.

Debus stood up in parliament and used the figure, saying DVD counterfeiting operations were linked to “illegal weapons, drugs and child p-rnography”. “I do urge the public,” Debus, um, urged, “to stop and think where their money might really be going next time they pay 10 bucks for a cheap DVD.”

Last month there was another report commissioned by the big studios, this time from IpsosMediaCT and Oxford Economics. It concluded movie piracy cost the economy $551 million, cost taxpayers $193 million and cost more than 6000 jobs.

For a long time one of the basic criticisms of these claims has been that one download does not equal one lost sale. People download things they would never buy — they try out new bands or watch films they wouldn’t see at the cinema. And they download things they can’t buy — Australians are enthusiastic downloaders of TV programs our TV networks won’t broadcast, or won’t broadcast until months or years after they’ve been screened in the US or UK.

The IpsosMediaCT/Oxford report, to be fair, actually tries to deal with this by removing from their modelling both people who downloaded or otherwise obtained a film and then saw it legally anyway, and people who would not have seen the legal version regardless. The number for the latter looks a little underdone — just 23% — but the number for the former looks quite high — it assumed 32% of people who watch a pirated version subsequently watch the real thing. But regardless of how realistic those numbers are, give the authors of the report some credit for trying. There’s so much rubbish-in-rubbish-out modelling coming out of “independent” consultants these days it’s nice to see someone trying a bit of rigour.

That’s not to say there aren’t problems with the report. It’s unclear how it costs a lost sale — whether at the exorbitant price our cinema cartel is allowed to charge if you go to the movies, or at the $1 or $2 you might pay to rent a DVD months later. More problematically, when it moves beyond the cost to the industry and tries to estimate a wider cost, it appears to assume that lost sales are, literally, lost, in space and time, out of the economy.

In reality, money not spent on a movie ticket or hiring a DVD simply goes elsewhere in the economy, offsetting any lost jobs with jobs elsewhere, and offsetting any lost tax revenue with revenue elsewhere. Unless the copyright industry has some magically greater multiplier effect than other industries, it’s hard to see how piracy costs any net jobs at all.

And sharp-eyed readers will already have spotted another problem with the report: the AFACT report says movie piracy alone costs $190 million in tax and 6000 jobs; the “Sphere Analysis” report cited in yesterday’s papers says piracy of all kinds also costs $190 million in lost revenue, and 8000 jobs in total. Is the AFACT report wildly overstated, or is the ACIS paper undercooked?

Well, it’s hard to tell, because the ACIS report isn’t available, except of course to Fairfax journalists. I’ve contacted Music Industry Piracy Investigations twice to get a copy of the report but haven’t received a response.

It’s a pity there isn’t an independent arbiter here who could make an objective assessment of all this. Except … there is, kinda. Two years ago, the Australian Institute of Criminology looked at intellectual property crime. Looking at industry claims about the extent and impact of piracy, the Institute concluded: “…the validity of the data is open to some debate. The methodology used in some industry research is not publicly available and details of samples surveyed and precise methods of calculation are often not disclosed.”

The Institute went on to raise specific questions about the 2005 LEK study. It concluded: “Based on international research, most sectors in Australia experience relatively low levels of piracy and counterfeiting, with the exception of online pirated television show.” And overall:

“…while it is recognised that piracy and counterfeiting are serious issues affecting IP rights owners and the Australian economy as a whole, the impact on legitimate business cannot be quantified reliably nor is it calculated consistently by industry-instigated research across sectors.”

Except, of course, at Fairfax.

As you might have guessed by now, the numbers themselves don’t matter, any more than actual connections between piracy and drug trafficking, terrorism and pedophilia matter. This is about trying to slowly change the view of millions of Australians that downloading content is acceptable, by repeatedly insisting that it is a serious crime with real victims and a high cost.

As many commenters on yesterday’s article pointed out before Fairfax shut off the torrent of criticism by closing comments, Australians’ attitudes are unlikely to change while they are so ill-served by content providers who refuse to provide legal, accessible, timely content free of restrictions on how they can use it and free of mechanisms to invade their privacy. This is particularly the case for Australian televisions networks who continue to treat viewers as mugs happy to be dictated to about what they’ll watch and when and how they’ll watch it. That’s why, as the Institute of Criminology noted, we have such a healthy appetite for downloading TV shows.

We’re well over a decade into this, and the transnational companies who make up the copyright mafia still think they can sue and propagandise their way to victory. But that’s only the visible part of the war they’re waging. Tomorrow, we’ll look at some of the remarkable power wielded by the copyright industry across the world.



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27 thoughts on “Data download: lies, damned lies and piracy reports

  1. Altakoi

    What the consumer wants is content. There is no part of that economic proposition which says that the consumer also wants advertising content, a requirement to be in a particular place at a particular time or a requirement to watch or listen to whatever a few corporations decided they were going to distrubute that year. It is therefore not content providers who are challenged by piracy, it is those who make money from the means of distribution which allow these hangers on to take a cut. I will pay for TV I want to watch, when I want to watch it, ad free. I will pay in money, not in eye-ball-on-screen time which allows my time to be sold at vast profit to whoever is selling whatever crap I don’t want to know about. The exhange rate of AUD:tedium is now far too high for the current funding model to continue to make a buck.

  2. AR

    To quote Yogi -“it’s deja vu all over again”. From the daze of the first cassette recorders, circa 1970, the music moguls were warning, in dire terms, of their inability to fund new bands (as IF!!) if wicked teenagers taped LPs.
    Let the dying bury the dead.

  3. MLF

    The UKs ‘creative industries’ reckon they lose 1.2 billion pounds annually through piracy etc. So influential is this industry that UK Gov passed the Digital Economy Act in their favour. The Act is now being repealed on the basis of, amongst other things, breaches of privacy and human rights concerns.

    I’m against piracy on principle. But i agree Altakoi, people will generally pay for decent content that they want – if they can restrict it to only what they want and not all the advertising crap that goes along with it.

    Although saying that, the ‘kids’ today have grown up thinking they don’t have to pay for anything (music, movies etc.) It’s like news – when everyone can get it for free, they do, and they forget there is a difference between good and bad. So we end up with mass produced, homogenous, bland everything.

  4. Sir Lunchalot

    I think the Australian consumer is sick of paying a higher price that overseas content buyers. Even apple could not explain why we pay higher.

    We are being ripped off.

  5. arty

    Bernard, so why do I have to pay Crikey to get a password? Surely you blokes (and sheilas) would happily produce it for free.

  6. freecountry

    [More problematically, when it moves beyond the cost to the industry and tries to estimate a wider cost, it appears to assume that lost sales are, literally, lost, in space and time, out of the economy. In reality, money not spent on a movie ticket or hiring a DVD simply goes elsewhere in the economy, offsetting any lost jobs with jobs elsewhere, and offsetting any lost tax revenue with revenue elsewhere.]
    A pity you didn’t ask a similar Laffer-curve question about naive claims that the MRRT would miss out on $60 billion revenue compared to RSPT.

  7. Arena1234

    meh like when South Park covered this issue in one of their episodes…”OMG poor Britney Spears can’t afford to Upgrade her G-5 Private Jet to a G-61″ Artists are still getting their money..Studios are still getting their money, movies are still being made, music is still being written and produced by…. and Justin Bieber is still on the Radio? Why are we talking about this at all, just realise it is a war that cannot be won..Technology in this case is impeding the ability for the Studios and the Archaic Industy Associations to be able to do anything about it anytime soon and as soon as they can something new will come out that will make it easier….note: after Napster fell Kazaa rose, and after Kazaa fell PirateBay rose!

  8. Elan

    “Although saying that, the ‘kids’ today have grown up thinking they don’t have to pay for anything (music, movies etc.) It’s like news – when everyone can get it for free, they do, and they forget there is a difference between good and bad. So we end up with mass produced, homogenous, bland everything.”

    Here we go again MLF..!!

    Kids have this attitude because profit driven (a new gadget everyday), has given them the tools to do so! When those who get themselves upset about piracy look at cause and not effect, them maybe I will have a tad more sympathy.

    When my grandson was twelve-he was happily swap/selling games/DVDs. He was visited by someone with an interest to purchase. That man was an agent.

    My daughter received a letter from lawyers representing Sony with an enclosed ‘contract’ that the kid would give a written assurance that he would never indulge in this heinous behaviour again. Or else.

    They were scared; very scared. It took some strong questioning of my lad-and reducing him to tears-to establish beyond any doubt that he had no damn clue about pirated ware. I didn’t think so. I had to be sure though.

    My daughter faxed that document to me-a very interesting read….

    I phoned that lawyer. We had a very meaningful discussion. No ‘contract’ was signed. And my family was left alone. Sony lawyers thought it prudent to back off. Good call.

    Is he more careful now? Well of course he is!!

    I have little sympathy for these whining organisations whose own technological expertise is starting to bite them on their own a.rse.

    …………and for the record I have absolutely no problem with expecting some quality in free content. I am not a subscribed member of Crikey. Neither do I intend to be. But I do not expect to see less quality content in articles written here that all can access.

    They don’t do that; neither should they.

    Though this is not my problem, this ‘you get what you pay for’ rationale makes absolutely no allowance for those who cannot afford to pay. (And yes I DO know that if some people gave up smokes etc..,etc.,).

    If we accept this as a working model, then we will split society neatly into haves and have nots < who should be grateful for any damn thing that is thrown their way.

    Be buggered to it.

  9. MLF

    You may have misinterpreted me about free/good/bad. I wasn’t commenting on how the quality SHOULD be, I was saying if you grow up only reading news.com, then you’re not going to understand what ‘good’ news, i.e. investigative news, is. You are going to be accustomed to what you know, your world view will be formed on that basis etc.

    I don’t agree with piracy – its stealing. I also don’t agree with a generation of kids growing up who don’t/ cant/ won’t value the work of someone else because society no longer places a value on creativity, only profit and ‘me’.

  10. Elan

    And you may have misinterpreted me.

    What constitutes ‘good’ news? Who decides? What quality are we actually getting in this morass that is considered to be in some? (who decides?) cases, ‘good’ news? Most of it is opinionated pap, and it’s getting worse.

    How can we expect the younger generation to select this so-called good (quality) news when we are so bereft of same? What choice have we left them?

    The world is shaped by those who have gone before. It is changed by those who come.

    But just as you cannot expect to make a gateau from just flour and water, you cannot expect great change from those who have been set no example!

    I am tired of listening to comments (you haven’t said it, granted), that the young/younger have ‘ never had it so good’. What utter rubbish!

    It’s all very well to expect good standards from the next generation, if those standards have been set; if those standards are apparent. They are NOT!

    I don’t agree with piracy either, but I don’t stop there. I don’t agree with Corporate Piracy, I don’t agree with Corporate stealing that is ‘sanctioned’ by opinion that seems to revere the ‘all powerful’, the ‘successful’ ,- and even laws that can be ‘utilised’ to protect the powerful and adroit.

    I’ve had it with the view that concentrates on just one part of such problems, but does not look at its cause.

    You are talking about ‘SHOULD’ MLF.

    When we set a far better example than we have done, THEN we can expect more from our children.

  11. MLF

    Exactly. Most of it is opinionated pap. You are right. Again, if you grow up reading opinionated paper instead of the New York Times (or whatever) then you wont no any better. We really are not disagreeing at all.

    What makes ‘good’ news? Well, I mean it either is or isn’t. Its objective rather than subjective.

    “When we set a far better example than we have done, THEN we can expect more from our children.”

    Again – agree.

    And the example we should be setting is to value the work of others, not to steal it.

  12. Elan

    “And the example we should be setting is to value the work of others, not to steal it.”

    The example we should be setting…

    We are not.
    Global Corporations are not.
    Governments are not.

    The only ‘values’ they instill, are deceit and greed. Are to ‘steal’.

    The day they set any honourable example, is the day I will feel some sense of moral outrage at the behaviour of those people these scum sit in judgment upon.

    In the meantime these morally bankrupt nonentities should have more care before they send out ‘roaches to bully those they see as powerless to challenge them-to make an example of those poor sods, many (not all) who have ‘stolen’ a mere fraction of what these creatures have under the guise of best practice’.

    Some-some, who have done nothing at all, but who can be sacrificed to make a point.

    It’s simple MLF. Talk to me about integrity, get upset/angered about stealing, WHEN the worst example of that does NOT come from those who have the bloody gall to take the moral high ground.

  13. MLF

    Thats fine Élan, i don’t disagree with that either. I’m not bothered one inch about the impact to Sony et al, as you’ll see from my first post where I had a dig at the power of the ‘creative industries’ lobby.

    But corps aren’t the only ones who suffer – artists suffer. Art itself suffers.

    So, when all is said and done, that is the example I am setting.

  14. Elan

    Corporations never suffer. Never.

    I take your point on art. But until we unite (I really cannot find a better word than that), until we unite, and uniformly condemn the ‘greed is good’ operating system of the 20/21, this will continue. Piracy I mean. Stealing.

    We not only don’t condemn, many actually condone, and even revere the ‘survival of the fittest’.

    We have gotten the society we damn well deserve. I simply refuse to point to one end result that’s all. I abhor and detest the so-called ‘values’ of today. Those values inevitably spawn what they have.

    And whilst we bash away at the spot fires, the bushfire rages. Such an ethic will inevitably have its victims.

  15. drsmithy

    And the example we should be setting is to value the work of others, not to steal it.

    Piracy I mean. Stealing.

    It’s not “stealing”, it’s copying. There is a distinction, and it’s not trivial.

    Nor is it anything remotely comparable to rape and pillage on the high seas.

    Do not let the bad guys set the parameters of the discussion.

  16. Elan


    Can you explain what you mean DRS?

  17. drsmithy

    Copyright infringement is not stealing. It is not theft. The “victim” is not deprived of any property. As the ad says, “you wouldn’t download a car”. Well, yeah, actually, if I could “download a car” and have a perfectly working car, while the original owner also retained his perfectly working car, you can damn well guarantee I’d be downloading a car !

    Copyright infringement most certainly bears not the slightest resemblance to the assault, murder, theft and property destruction inherent to actual piracy (ie: the stuff involving boats).

    By allowing the media empires to define the terms, and subtly (or not so subtly) liken copyright infringement to the real things those terms refer to, we are inherently giving them an advantage in the debate.

  18. Elan

    Gotyer! Agreed.

    (Would you believe me if I told you that I put quotes around ‘stealing’, and then removed them).

    Though I suppose these people can argue that because you copied that car, you have no need to purchase one. There are big bucks at stake here. And I have absolutely no sympathy for them. IF this is defined as stealing, then I will always debate who are the real thieves!

  19. MLF

    Excuse me Elan, but if I write an album full of songs and then license them to a record label, sales of those albums is how I earn my living. If you copy that album without authorization and without payment, you have taken earnings from me.

    Explain to me how that is not stealing.

    Call it piracy, which they’ve been doing for about 500 years, don’t call it piracy – I don’t care. Its wrong.

  20. Elan

    I have to wonder if a moderation flag has been put on this thread. I see nothing that is inflammatory?

  21. drsmithy

    Excuse me Elan, but if I write an album full of songs and then license them to a record label, sales of those albums is how I earn my living. If you copy that album without authorization and without payment, you have taken earnings from me.

    No. If he breaks into your house in the middle of the night, cracks the safe you keep all your money in, and takes it, THEN he’s taken earnings from you.

    You need to make them before they can be taken, otherwise you’re just counting chickens before they’re hatched.

    Explain to me how that is not stealing.

    Nothing was actually taken. You’ve lost nothing. You *might* not make as much, but that’s entirely hypothetical.

    There’s a somewhat stronger argument for prosecuting uploaders (and that’s what the law usually focuses on), but little moral justification for doing it to people not doing it for profit.

    Call it piracy, which they’ve been doing for about 500 years, don’t call it piracy – I don’t care. Its wrong.

    Until 2006 you couldn’t record most stuff on TV, or put music onto an iPod without infringing copyright. Was doing these things before then, “wrong” ?

    It’s still copyright infringement to create a mix tape (or whatever the contemporary equivalent is – play list ?) for some girl you’re trying to embarrass yourself in front of. Pretty much every lolcat, funny youtube video, or pretty picture that gets bounced around facebook, twitter, and others, is a copyright violation equivalent to downloading a song. Are these things “wrong” ?

    You want to know my motivation? Really? Ok. My motivation is that I worked in the music industry for years in the UK. I saw first hand the effect that piracy had. It affected every level of the industry. But do you want to know who it affected most? Do you want to know which part of the industry got the sh — it kicked out of it? The INDEPENDENTS. That’s right, the independent labels, independent artists, independent distributors, independent promoters. Week after week more of them went to the wall. MY FRIENDS AND TALENTED PEOPLE. There’s my motivation.

    Pretty much every remotely independent study done has concluded that people who download music both listen to more music and, more importantly, buy more music.

    The independents aren’t “getting the shit kicked out of them” because people are downloading their music, they’re getting the shit kicked out of them because the big media players control all the major forms of distribution, and if you don’t want to play their games and pay their royalties, they’ll screw you. The cheap and simple distribution enabled by the internet (ie: people downloading stuff) is a panacea for “independent musicians” in terms of gaining recognition and an audience.

  22. Amber Jamieson

    Hi guys.

    I work as a moderator on the website and I’ve spammed a bunch of the comments because it’s descended into personal attacks on other commenters, rather than arguing the issue.

    Check out the Crikey code of conduct for further information.


    “In short, we ask that people ‘play the ball not the man’.”

    Please lift the level of debate above trading insults.

  23. MLF

    Because Crikey is clearly selective in when it decides to remove personal attacks, for the benefit of Crikey and those who may now read this thread, DrSmithy has attacked me personally time and time again. The last time he did so I responded by saying that I would not read or respond to his posts again.

    Playing the ball and not the man is much easier when the Ref is consistent in his application of the rules Crikey.

  24. MLF

    From: MLF
    Date: 11 March 2011 9:14:17 AM
    To: bossATcrikey
    Subject: FAO Amber Jamieson


    I appreciate and value Crikey’s position on personal attacks and Code of Conduct. The fact however is that Crikey is very lax in consistently monitoring these things. I am not alone when I say I have been called a r—, a m—, a woman h—, a mis—-, an Is—-obe, oh – the list is extensive. I hope I am alone when I say that I have been labeled as someone who would go out and cas–trate and/or beat up s–ex offenders. I have been told it would be my own fault if my children were s–exually abused and k–illed.

    If you are going to leave your subscribers to defend themselves against these sorts of attacks – you should at least have an ‘alert moderator’ feature.

    If you are going to leave your subscribers to defend themselves against these sorts of attacks then you should show some balance when deleting and editing posts. Your deletion of my post on this thread but leaving Dr Smithy’s reply to it clearly suggests things about my postings that are not true. Equally, you removing my post and leaving his – without explanation of why I do not respond to his posts – leaves other readers to the conclusion that I am not capable of providing a reasoned and intelligent response. When quite the opposite is true.


  25. Elan

    Inevitable. I expected it to happen, I was hoping it would not.

    The allegation of bias is also predictable. I could have said exactly the same thing!

    I am annoyed and frustrated to have a post removed, that’s predictable, BUT Crikey does not have a reputation for excessive moderation, and when it comes, it comes with the most affable of warnings, which always amazes me!

    Adding: it was interesting to note yesterday, that another prominent site/forum is now close to imploding! It would be dishonest to say that I am NOT grimly satisfied at that result. That too was inevitable. Inevitable because Freedom of Speech there has been extended to one particular view. (Too many have made that same allegation for years).

    The inevitability (that word again!) of allowing the free right to express views that are vile, inflammatory, r.acist, and strongly homophobic because…….well;-I won’t go there, has led to ‘official support’ being withdrawn. The site is in trouble. Predictable. Totally predictable.

    This situation did not even come close.

    Crikey thank God has never attracted that kind of unbridled feral redneck view.

    My point? Moderation, even censorship is an evil? necessity.

    I would add that I was waiting for some kind of bias toward “subscribers”. It has not eventuated.

    That is as should be.

  26. Elan

    Thanks AICH JAY.

    This came as a huge surprise..


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