IP industries exaggerate cost of piracy…

music piracy

Every year, groups like the MPAA and their international cohorts complain about the cost of so-called “piracy” to their industries. However, these reports are usually extremely biased, lack peer review, and are built on poor economic assumptions.

music piracy

For instance, they will often assume that every single bootlegged or downloaded copy of one of their films is a “lost sale” that costs them the full price of a DVD or theatre ticket. Yet many of these bootlegs or downloads are acquired by people who won’t or can’t pay the full price charged.

(Think of a poor worker in Vietnam who earns the equivalent of $40 per month and is expected to pay $29.99 for the latest release of Superman II on DVD.)

Thus, they don’t actually constitute a lost sale because there was never the potential for any sale in the first place. That’s not to say there aren’t some lost sales due to downloading or bootlegging, but it hurts the IP Owner’s arguments to exaggerate the numbers so much.

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Recently, the Financial Times reported on an OECD study on some of these losses and found out that are approximately three times smaller than industry groups estimate. The report, due for endorsement by the OECD board later this summer, could prove embarrassing for international business lobbies, which have used the higher estimates to lift intellectual property rights up the global political agenda and to demand crackdowns in China and elsewhere.