Perspectives on Piracy

by on December 8, 2005 · 4 comments

The Business Software Alliance is touting a study reporting that: “Cutting the global piracy rate of 35 percent by 10 percentage points over four years could generate 2.4 million new jobs, $400 billion in economic growth and $67 billion in tax revenues worldwide.”

Tax revenue, huh? Sounds like a wonderful public-private partnership brewing. (Yes, sarcasm.)

What’s interesting about it is the interpretation or lack of interpretation being given the study in various quarters.

TechDirt, where I read about it first, provides a lot of interpretation:

Every so often the Business Software Alliance comes out with a press release, based on a study they paid IDC to do, where they misrepresent the issue of illegal software copying. They make huge claims that anyone with half a brain can see is incorrect. . . . The BSA pretends that every copy of software would have been bought if the copy wasn’t available. That seems to be their basis for saying it would help stimulate economies. They say things like: “Some companies know they are losing 40 percent of their business. If they could recoup that, they could employ more people.” Indeed, any company would like to sell more product–but many of the people copying software could never afford it, and never would buy it–so it’s pretty difficult to say they’re really “losses.” At the same time, the BSA seems to completely discount the other side of the equation. That is, companies who are illegally copying software are saving money that they can then invest in hiring more people. Also having the software often makes companies more productive, thereby helping the economy.

Over on another favorite resource, IP Central, the recounting of the BSA report entertains no such skepticism. Indeed, the conclusion is treated as obvious: more law enforcement. PFF was equally uncritical of the previous report, which TechDirt, a sensible market-oriented site, lambasted.

PFF is a good group of friends, old and new. They had a nice holiday reception last night and I took the opportunity to encourage a few of said friends to read TLF and, specifically, to engage with Tim Lee because he has a lot to say. (I ought to hurry and publish this post because he probably will have something to say about the BSA report before me if I don’t.)

Copyright is not only about income for content producers, but also overall welfare. More nuance in our thinking about copyright seems warranted and a more careful discussion of the issues among us free-market-types is needed.

  • evan

    2.4 million new jobs?? c’mon… I dont buy it. What it would mean is more money for the people that already have the jobs, and maybe some extra tangential employment, but 2.4 million new jobs?

    What they probably did was take 400 billion and divided 50 grand as the average income into that and came up with 2.4 million or something.

  • evan

    2.4 million new jobs?? c’mon… I dont buy it. What it would mean is more money for the people that already have the jobs, and maybe some extra tangential employment, but 2.4 million new jobs?

    What they probably did was take 400 billion and divided 50 grand as the average income into that and came up with 2.4 million or something.

  • http://www.jasonamartin.com Jason A. Martin

    Here is the problem with all those numbers.

    Let’s say someone steals a copy of Adobe Photoshop CS2. Adobe will say that they lost $650 in revenue as a result. They will then estimate how many copies where stolen and multiply that number by $650 and do so on all products to get a final loss amount.

    However, who is to say that the person who stole a copy of Photoshop would have purchased it if the option to get it for free was not there? I would think it could be proved that many people who take high priced software would not buy it even if that was the only option.

    So all of these reports are seriously flawed.

    As to the job claim, that’s just marketing. If the company says they lost $X in revenue due to piracy, only the shareholders care. However, if they say it costs jobs, now they have personalized it for the public. In other words, it’s just spin.

  • http://www.jasonamartin.com Jason A. Martin

    Here is the problem with all those numbers.

    Let’s say someone steals a copy of Adobe Photoshop CS2. Adobe will say that they lost $650 in revenue as a result. They will then estimate how many copies where stolen and multiply that number by $650 and do so on all products to get a final loss amount.

    However, who is to say that the person who stole a copy of Photoshop would have purchased it if the option to get it for free was not there? I would think it could be proved that many people who take high priced software would not buy it even if that was the only option.

    So all of these reports are seriously flawed.

    As to the job claim, that’s just marketing. If the company says they lost $X in revenue due to piracy, only the shareholders care. However, if they say it costs jobs, now they have personalized it for the public. In other words, it’s just spin.

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