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Latest Music Piracy Study Overstates Effect of P2P
Blackbeard writes "A new study from pro-business think tank Institute for Policy Innovation claims that music piracy accounts for $12.5 billion in lost output to the US economy. That includes 71,060 lost jobs and $422 million in lost tax revenues... if the figures are accurate. Ars Technica's write-up points out a number of flaws in the IPI's reasoning. 'The study makes for some alarming reading, but it suffers from a few significant flaws. First and foremost, it appears to fall into the "illicit downloads = lost sales" fallacy, the view that each song obtained over a P2P network is a lost purchase.' There's more: 'The IPI study also assesses the increased demand for music if piracy didn't exist and assumes the market would remain as "intensely competitive" as it is today. The problem is that music fans are largely disenchanted with the market. By and large, music fans think that music is too expensive, and that much of what is available isn't very good.'"
What kind of idiot still believes illicit downloads = lost sales. Simple economics, if the price changes (to nothing) then you're going to see a lot more use. . if right now the world downloads 100 million songs a day that doesn't mean that if piracy didn't exist they would instead buy 100 million songs a day. . .It's just such a blatant twisting of facts who wouldn't see through it? If someone hands you a pen and says "it's free" would you take it? Now if someone handed you a pen and said "10 cents please" would you take it? I bet those "free" pens would move quite a bit quicker even though 10 cents isn't a bad price for a pen. There is a huge difference between "free" and. . well. . anything else really.
If you are about to mod me down, keep in mind that this post was most likely sarcastic.
There must be some effect here. I know plenty of people who don't buy any music at all, but certainly would if they couldn't download it for nothing. Obviously the 1 to 1 correspondence between downloading and lost sales isn't useful, but does anybody know of any reasonable estimates of what the loss actually is? Or even how you'd calculate it?
Music piracy INCREASES economic productivity because piracy is ULTRA efficient at copying and distributing songs. When consumers get the same (or more) stuff while LESS resources are required (labor and materials), that's an economic gain.
Now, it IS also true that piracy causes economic losses for record companies. But, economic losses for record companies are not necessarily bad for the economy, any more than economic losses for carjackers put in prison are bad for the economy.
To use another example, when the US instituted the Do Not Call list, it caused a lot of losses for companies whose business was paying people to call people who didn't want to be called. And it caused a lot of jobs in that industry to be 'lost'. Was this bad for the economy? NO! All the money that used to get spent interrupting people's dinner just got spent on something else, creating more jobs elsewhere.
So when someone pirates a song instead of paying for it, yes, the record company has a loss, but the economy does not - that money instead gets spent on something else, like a trip to the movies. That's an economic GAIN - the consumer gets to listen to music AND they get to go to the movies, whereas before, when they were paying for extremely inefficient record company distribution, they only got to listen to the music.
paintball
They assume: Most of what's pirated is clearly of good enough people would buy it anyway quality that it's a direct loss of sale.
The poster assumes: Much of what's pirated is of poor enough quality that no one would buy it but high enough quality that they'd go to the trouble of downloading it.
Both sides have pretty much retreated to their corners and are refusing to meet in a middle. Most likely, the situation is: Piracy, having a lower cost, allows people to consume more than they would otherwise do but that isn't a consumption that would go away if forced to pay the price requested, either. Instead, both retreat to their corners, pointing out how the other one's wrong whilst refusing to look at how their arguments are flawed too. It becomes a somewhat pointless discussion when neither side is capable of considering anything other than their own views.
Actually, I'd like to see the correspondence between downloading and gained sales, and more importantly, gained revenue.
Gained sales of dropping stupid DRM schemes would come through increased word-of-mouth advertising and a much better relationship between movie/music labels and their consumers, as well as a lot more avenues for the media to be used for personal purposes. (E.g. watching a movie on tv, burning a copy to take in the car with you on vacation, etc.)
Here's the kind of thing I'm imagining. Let's say you buy a copy of Shrek 3 on DVD and pay, say $20 for it. $3 could be called the media cost, and $17 could be the licensing cost of having the movie. With the DVD, you get a code you can use to register the fact that you own the rights to watch Shrek 3. Now let's say that you really want a copy of it for your iPod. You get on the web site, pay an incremental $2 fee (you don't need to pay the other $17, you already have!), and you have the movie on your iPod. You want an HD-DVD version? Pay an incremental $5 fee for the media, and there you go. There's a Platinum Extended Edition released a year later? Add another $5 for the content, plus $3 for the new media cost, and you don't have to buy a movie you already own again. Maybe even have a $50 or so "master" version that guarantees you the movie in all formats and with extended material going forward.
Also, there would be a TON of gained revenue from not having to spend any more ridiculous amounts of money on complicated DRM schemes that, in the end, have proven perpetually useless.
Would there still be piracy? You bet, and probably a lot of it. But I look at it this way. The media industries can either lose a billion dollars a year to piracy and make, I dunno $50 billion in revenue, or they can lose five billion dollars a year to piracy and make $100 billion in revenue. So far, they've been pretty stupid in choosing the former. It's just a matter of time (and a matter of the MPAA and RIAA suffering a complete overhaul) before they figure out that the latter is better for us and better for them and that there is a ton of money to be made.
>>There must be some effect here. I know plenty of people who don't buy any music at all, but
.02
>>certainly would if they couldn't download it for nothing. Obviously the 1 to 1 correspondence
>>between downloading and lost sales isn't useful, but does anybody know of any reasonable estimates
>>of what the loss actually is? Or even how you'd calculate it?
I'm not sure that is possible. I have purchased hundreds and hundreds of music CD's over the years. I have quit. After hearing what the RIAA was doing, I could no longer support such a company. How can you quantify that affect? I do admit that I've purchased some un-signed (indy?) artists CD's. I have a co-worker that in un-signed and I have his. I have one from a group in NYC and another from a signed but non RIAA member. In the last 3 years..
But I've quit buying music like I previously did. And no, I don't download it from P2P networks either. What I've done is switched to XM Radio. I have two subscriptions. I now understand the RIAA gets a cut of my subscription. I don't like that as I mostly listen to Fox News, XM Comedy, and other stations like that.