Julian pinpoints exactly what’s wrong with the ludicrous claim that copyright infringement is a bigger problem than ordinary property crime:
There’s a big difference between a the cost of theft to an industry or firm and the cost to the country. If I steal your bike, I’ve cost you one bike, not America. America still has the same number of bikes in it. The cost to the country of the theft of physical resources is not the cost of the resources themselves, typically, but rather the efficiency loss of shifting those resources to less valued uses, the cost of resources expended preventing or prosecuting it, the opportunity cost of the effort expended on a zero-sum transfer, and so on. By contrast, piracy is actually positive sum in static terms: Nobody has any fewer programs, songs, or movies, while the pirate has (at least) one more. Nothing has been redirected to a lower-valued use. So the only actual loss in this case is the value of new IP that doesn’t get created because piracy prevents prospective creators from fully internalizing its value. (There may be further losses if we think piracy induces companies to raise the prices of their products, and there are consumers who are priced out of the legal market by this, but don’t avail themselves of pirate copies.) I don’t know how significant that number is—or even how you’d measure it accurately—but “hundreds of billions” just doesn’t pass the straight face test.
A software industry study released a few years back tried to translate piracy losses into job losses in the tech sector. And again, even if we take that number at face value, just looking at one specific sector is worse than useless. By that mode of reckoning, Bastiat’s satirical “Petition from the Manufacturers of Candles” should be read as a serious guide to policy.
Quite so. As I’ve argued before, attempts to inflate the costs of movie piracy fall equally flat. Even if we equate the lost revenue of the movie industry with the lost wealth to the country (which is almost certainly an overstatement), the losses to the movie industry are measured in the billions (about $6.1 billion, to be precise) not tens or hundreds of billions. And the software industry’s inflated figure is only $34 billion. “Hundreds of billions” isn’t even remotely plausible.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.