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$200B Lost To Counterfeiting? Back It Up
An anonymous reader writes "Over the weekend, the NY Times ran a story about how the recession has impacted product counterfeiters. In it, the reporter regurgitates the oft-repeated claim that counterfeiting 'costs American businesses an estimated $200 billion a year.' Techdirt's Mike Masnick asks the Times reporter to back up that assertion, noting two recent reports (by the GAO and the OECD) that suggest the actual number is much lower, and quoting two reporters who have actually looked at the numbers and found (a) the real number is probably less than $5 billion, and (b) the $200 billion number can be traced back to a totally unsourced (read: made-up) magazine claim from two decades ago."
Trying to get more free money from the government?
Gasp!
I don't see how counterfeit products could do much damage to the US job market. Most of the legit products are made overseas too, right?
Help me fix my brother's injured butt!
Maybe newspaper articles should cite their sources and have a list of references at the end like academic papers do. That way at least readers or other interested parties could independently verify the facts in the article.
Slashdot: Failed Car Analogies. Amateur Lawyering. Anecdote Battles.
It's the counterfeiting capital of the universe. Because of Brazil's 60% duty on imported goods, an a very unfavorable exchange rate, a pair of Nike sneakers made in Singapore for $5 in materials and $0.30 in slave labor costs about R$600, which is a month's wages (or more) for a lot of people there. So, there's a huge demand, and therefore supply, of counterfeit goods.
On one hand, they are trying to salvage old media, and on the other hand they are trying to kill efforts like Wikileaks.
It seems pretty obvious.
CNN can just say anything they want, even if it's completely inaccurate and has no sources to back it up. They can just say their source is secret, and nobody is even going to ask.
Wikileaks, OTOH, shows you the actual docs. That's why they are being persecuted as criminals.
Encyclopedia Britannica is written by an unknown number of employees under unknown circumstances, and they cite no sources clearly (In the best case, they just cite a bunch of sources that might or might not back up their claims, and there's no direct way to check them easily).
Wikipedia is edited by the general public, each edit can be easily identified and accredited to a single author, and all sources are directly linked to in most cases.
And yet, Encyclopedia Britannica is considered more credible than Wikipedia, even when it's been shown that it's far more inaccurate, not to mention outdated.
Old media has to die, but the almighty economic powers that run this world won't let it go without a fight.
WTF am I doing replying to an AC at 5 A.M on a Friday night?
The missing element in these claims is the citation of some sort of study that combines an examination of buying power and psychology to determine when piracy or the purchase of a counterfeit good represents a lost sale to the afflicted rights holder and when it does not. You can't just multiply retail cost of original good by estimated number of IP violations; that very likely surpasses the upper bound of the "damage" that has been caused. It's faulty journalism to ignore this fact or pass the responsibility for the veracity of this information to somebody else, but that doesn't seem to stop anybody from breathlessly regurgitating these sky-high numbers.
Try not. Do or do not, there is no try.
-- Dr. Spock, stardate 2822-3.
We all know that the Federal Reserve prints more money all the time
without anything producing any goods for it.
Let me introduce a little friend I call Hayek.
The assumption that some number of people would have bought the real deal isn't a bad one and most reasonable people wouldn't dispute it. Where the dispute generally lies is what the number would be. 1% of people? 90% of people? The "lost sales" numbers companies claim often are based on 100% of people buying the more expensive real product (which most of us would agree is a completely bogus number). I certainly don't know enough to come up with a reasonable counter number though? 20% maybe?
Yeah but $200B 20 years ago is worth in the trillions in todays dollars! They better get on that counterfeiting before the losses are greater than the economy can possibly produce!
5 billion is a small number in the context of the national economy. In fact, it is so small as to be dwarfed by the margin of error when Considering economic trends.
Five billion dollars is still a lot of money.
But put the numbers in perspective.
US GDP $14,260,000,000,000 (2009 estimate, courtesy of the CIA)
$200 Billion equals 1.4% of the GDP
$5 Billion equals 0.035% of the GDP
One is a problem worthy of immediate attention. The other is a problem to worry about when nothing else is pressing.
Don't tell me to get a life. I had one once. It sucked.
Not only is $5,000,000,000 a relatively small number compared to GDP and the market as a whole, but you have to look at who is losing the money.
The counterfeit manufacturers only sell this product once. Once they sell it to a distributor (most likely someone in the US) the product becomes part of the economy.
Those counterfeit goods that are sold on the street (as in pictures article) were originally purchased from China (probably also true for the legit product) but the one making the money is the street vendor. That street vendor in turn probably uses this money to buy food, clothes, other retail goods, etc.
While it is very wrong to use a trademark without permission and there is no legal way to justify this type of counterfeiting, the economic arguments aren't necessarily so strong against it. That money is going to stay fairly locally to where that good was purchased, consumption is going to increase, and dollars spread more evenly. Instead of the mall/retailer getting a half decent margin and the trademark holder getting a decent margin, the street vendor gets a very good margin and the consumer gets a steep discount.
I'm not saying that counterfeit goods are good for the economy, I'm just saying that if you are going to throw out numbers (either high or low) without sources, support, or justification, it can lead to a lot of questions about what that number contains. Are 5/200 Billion dollars disappearing from the US economy? From the trademark holders? From local communities? From sales tax coffers?
I've said it a thousand times, and I'll say it again: the statistics that the RIAA, MPAA, BSA, etc. claim are misleading, and very wrong. They are drawing conclusions that suite their cause (wallets), not getting to the root of things. I do not condone outright piracy and counterfeiting, though hopefully this explains some of it. They count every instance of and illegal or unauthorized copy being transferred as a lost sale, or a net loss. This is not so, and I contend that most downloads or sales of cheap counterfeit merchandise are in fact a direct result of ridiculously high prices for legitimate items, rather than a cause of high prices.
Back in the days of cassettes and when VHS was king, I used to get all sorts of things from the local library. I'd often dub copies for myself and return the borrowed copy almost immediately. When we all transitioned to CDs, I kept up this practice. I was also known to download a fairly hefty amount of software from local BBS's, and later the internet. My reason for doing this? I simply could not afford to spend $12 on a tape I wasn't sure I'd even like, $15+ for a CD that might include one song I liked, or $20-$30 for a movie I'd watch once or twice then stick on a shelf. Buy a shirt, a hammer, or a TV, or a pizza that turns out to be crap? You can return it for a refund. Not so with music, movies, software, etc., even if it doesn't work right (in the case of lots of software and computer games). Nearly everyone has bought a CD they don't like, and they are all screwed.
So perhaps downloading, torrents, and p2p file transfers are rampant. I'm sure of it. But much of this is due to high prices and the flooding of the music/movie/software markets with utter crap. Were the opportunity to download for free not there, most of these unauthorized downloads would absolutely NOT translate into sales. I buy a few CDs a year to support my favorite few artists, as I have for the past 15+ years, which is what I can afford to buy. Yes, I download more than that, but if I couldn't, I still would not buy more. I did not buy movies before I could download them, and I never will - not enough re-use value. Software? I use linux and almost strictly free software now, and have no need for windows junk. A lot of people are like me, too.
This is a hacked account, for which the owner can not be held responsible.
You claim media should list their sources and that old media fails because it doesn't do so.
But you then are supposed to be new media, social media, and you don't list your sources either.
You make claims, with no way for me to verify them.
See how EASY it is to sounds like a know it all who claims to hold the one truth in his hands and expect everyone to believe you on your word alone?
I am willing to bet that the article you read that made these claims didn't list its sources either and that those sources were some highly biased research were someone found that the Britannica didn't say what he thought it should say and insisted that because Wikipedia listed the Muslin[sic] Obama was president one pico-second earlier, that is is more up-to-date, accuracy be damned.
SOURCES. Or you are just blowing air.
And what are facts anyway. Who knows what Obama believes in his own mind. He could be a scientologist! Claims he ain't a muslim are based on what? A mind probe? If he IS a spy, then he would hardly say so would he? A lot of facts can't be proven, we assume them to be true. For that matter I can't even verify he ain't Muslin, never met the guy and never met anyone who met him or anyone who met someone who met him. He could be a disney robot for all I know.
Facts, not nearly as common as people like to think.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
You think you can succeed in show business while clothes shopping at Walmart?
Yes, just hide the label.
So you're telling us that counterfeiting produces informed consumers which means that those selling high-price-high-margins branded products loose money because people ... *gasp* ... know better!?
We should close price comparisson sites then: by the same argument they cause the loss of trillions of dollars by letting consumers find out where to buy equivalent products for the cheapest price.
Same thing for reviewing sites and magazines: if they didn't inform people, they might very well have gone and bought things like $3000 Denon digital cables instead of equaly good $5 Cat5 cables.
Assuming the counterfeit dress makes any profit at all, the genuine one must be making at least 380 bucks of profit for a price of 400. That means your girlfriend and her suppliers are getting at least 95% profit margin.
In other words, cry me a river.
Frankly, if your entire business model depends on selling cheap items at insane markup because they're "genuine", you deserve to go out of business. How could you possibly avoid that, in an economic system that's entirely based on using competition to lower prices?
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
You're assuming the genuine one costs the same to produce as the fake. It might - but it equally might not.
That's not true. A custom tailored dress/suit can cost thousands, but will fit much better than a $400 dress/suit, let alone a 99$ JC/Penney special.
"Custom tailored" means someone doing alterations so that it fits you. You pay extra for that because of that person doing the work. Counterfeits are going to be off-the-rack copies of off-the-rack originals, and while there may or may not be a difference in the materials most of the savings are in the name. They're often made in the same factory with the same materials, so the only difference is not having the markup.
If by "fake" you mean "most likely made at the same sweatshop factory with the same materials as the original", then yes, you bought a "fake".