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New Piracy Loss Estimate
An anonymous reader writes "WSJ reports on a new MPAA estimate losses due to piracy. "The study, by LEK Consulting LLC, was completed last year, and people familiar with it say it reached a startling conclusion: U.S. movie studios are losing about $6.1 billion annually in global wholesale revenue to piracy, about 75% more than previous estimated losses of $3.5 billion in hard goods. On top of that, losses are coming not only from lost ticket sales, but from DVD sales that have been Hollywood's cash cow in recent years."
Without an independent audit of their claims, is there any reason at all that anybody should be taking these numbers seriously?
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I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.
I noticed that, too. This "study" constitutes fraud on the part of the MPAA and the company they hired. Consumers making copies of legitimate films that they bought is legally protected fair use. To count one PENNY of that as so-called "piracy" is fraud of the highest order.
This time, the survey specifically asked consumers how many of their pirated movies they would have purchased in stores or seen in theaters if they didn't have an unauthorized copy, giving studios a different picture of their true losses.That's about the least useful thing they could have done. Why? Because:
The study also shows that home video, not theatrical distribution, is the market that piracy hits hardest, accounting for two-thirds of the studio's lost revenue.
Duh. Most movies aren't available in a pirated form until long after they have left the theater, low-quality camera versions notwithstanding. I would have thought that this conclusion would have been obvious. You mean the studios were surprised?
So let's see the whole paragraph you quoted part of....
Last year, according to a person familiar with the matter, copies of movies downloaded or received from people who had downloaded them cost the studios $447 million in the U.S., whereas copies stemming from professional bootleggers cost the studios $335 million. An additional $529 million in losses came from consumers making copies of legitimate films they bought on DVD or VHS.
So what they're saying is that their figures are inflated by $529 million, or almost 60%. More than 40% of their claimed losses due to "piracy" are actually due to legal copying. Okay. So even if we naively believe that this is the only flaw in their methodology and that their estimates of how many downloaders would have otherwise bought the movie are correct (big stretch), we're really only talking about the equivalent of one blockbuster's gross per year, at least in the U.S. Cry me a river....
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Of course the study assumes that every "pirated" copy of a movie would be replaced by a ticket or dvd sale, if there was no "piracy".
Not only that, but also assumes that the sales coming as a direct result of the publicity gained by "piracy" would still be there, if there was no "piracy".
Yesterday I went to a concert of Arctic Monkeys in Paris, I paid 25 euros for the ticket. I also bought an Arctic Monkeys t-shirt for 20 euros. Their CD, which I downloaded from the net, costs 15 euros. I leave the conclusion to the RIAA.
I live in a world of people with fast internet connections and software skills, and where copying interesting data is in the blood, be it software, music, films. But just a week ago I realized how deep this P2P thing is getting into the "real world". I was doing some install in a manufacturing plant, in the production back office. It was a small office with about ten people working. Then the secretary raised the topic of a new CD of a popular band that was to be released that day. Se asked about how long she had to wait till the CD was shared. Somebody answers that he had downloaded already. The conversation involves more people. The talked about the band, asked if the new CD was any good. All was very natural, no hushing, no self-conciousness. NOBODY even thought about buying the CD. The one that had downloaded it offered for copy, the local net of the company was used to make copies of the thing, while mixing talk of music with production problems. It was all very natural, very cool, like sending copies of a joke e-mail or something like that.
Those where lower-income-bracket people, lower-computer-literacy people, that is, the backbone of the country. And they see nothing even remotely wrong in copying music. I fear the content producers are against too much of a slope now.
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To expand on this, a famous example of this is http://en.wikipedia.org/wiki/Forrest_gump/
They promised the writer, Winston Groom, a percentage of the profits, but a little cooking of the books and the top grossing film of that year becomes a commerical failure a la hollywood accounting http://en.wikipedia.org/wiki/Hollywood_accounting
Another example is eddie murphy's 'coming to america'. It grossed 350 mil worldwide but yet failed to produce a profit.
Art Buchwald received a settlement after his lawsuit Buchwald v. Paramount over Paramount's use of Hollywood accounting. The court found Paramount's actions "unconscionable," noting that it was impossible to believe that a movie (1988's Eddie Murphy comedy Coming to America) which grossed US$350 million failed to make a profit, especially since the actual production costs were less than a tenth of that. Paramount settled for an undisclosed sum, rather than have its accounting methods closely scrutinized.
Even Stan Lee had to sue marvel over spiderman profits.
What I'm curious about is if Art Buchwald didn't settle with Paramount, and these practices were exposed in court, would the studio not be guilty of tax evasion if the movie made way more than reported?