Fear Mongering and Delusional Piracy Report Upsets Aussies

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A new study commissioned by several entertainment industry outfits made the rounds in the Australian news yesterday. It claims that illicit movie, music and games downloads cost the industry $900 million a year as well as 8,000 jobs and that an increase in broadband adoption could propel the losses to a staggering $5.2 billion in the next five years. However, it looks like the public isn't buying it, figuratively speaking.

Over the years anti-piracy and pro-copyright organizations have published dozens of reports on the billions of dollars they claim to lose because of piracy. Many of these reports have been scrutinized, such as the infamous LEK study, but despite the criticism they are still an influential tool for fear-mongering and political lobbying efforts.

Yesterday yet another study was announced, this time by the Australian Content Industry Group, an umbrella organization of pro-copyright groups that conveniently doesn’t have a web presence. According to a news item the report claims that of the 22 million Australians, nearly 5 million are pirates.

Together, these downloaders were responsible for $900 million in losses the games, movies, films, music and software companies suffered in 2010, and that’s just the start. According to the report Australia’s National Broadband Network will cause the losses to rise to $5.2 billion by 2016.

As is often the case, the study itself is not available online, neither are the publishers responding to any requests to get a review copy. This makes it impossible to point out where the flaws are, but anyone with a calculator and some sense of economic reality will realize that the numbers are bogus.

If we believe the researchers, 6.5 million pirating Australians will be responsible for $5.2 billion in losses by 2016. This means that without piracy those people – including children and the unemployed – would spend an extra $800 per year, on average. Right.

Even if we assume that this would be even remotely possible, why would it go to $800 per head from the $187 they estimate now?

We suspect of course that the report makes some wild claims, such as arguing that every download is a lost sale. So with more and better broadband connections people will download more, and so cause more losses. Of course, this type of reasoning lies far from reality.

Insane, yes, but we’ve seen it before. A similar report published last year had a trend line where the ‘lost’ revenue because of piracy would actually exceed the actual revenue. Not impossible by definition, but highly unlikely. We expect that the Aussie report is based on a similar faulty trend.

Although the above suggests that even without seeing the full report, it’s not that hard to cast doubt on the validity of the claims, journalists simply pass it on without a critical note. This resulted in a fair bit of criticism in the comment section of the SMH article.

SMH wasn’t too happy with the critical readers and instead of addressing the concerns and valid commentary, they decided to close the comments section. How convenient.

Luckily there are still independent journalists who are rather more skeptical, and favor some analysis over a scoop, but they are in the minority. Most news outlets simply republished the industry-fed numbers without a critical comment.

This makes it easy for the entertainment industry outfits to influence public opinion with their fear-mongering propaganda. But even more importantly, these flawed and delusional reports are used as leverage to convince politicians to put the industry’s revenues before the rights of citizens and implement harsher anti-piracy legislation.

This time it will not be different. If only the industry representatives would get their heads out of the sand and address the gap between consumer demands in the digital age, and their offerings. That would really make a lasting impact.

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