$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."

Comments

ACTA propaganda campaign?

[SIGBUS]

When they start using rectal numerology to prop up a story like this, I can't help but think that this is a propaganda piece to grease the skids for ACTA.

Direct or Indirect?

[cdrguru]

The place to start with this is doing something like purse shopping. You can go to a Coach store or Prada and find a really nice purse for $1500 and an OK one for $500. Then go to a store that sells similar knock-offs and you can see things that look more-or-less like the Prada ones for $100. Then stop by the street vendor with a absolutely faithful Prada copy for $35.

There are two things that the average Joe learns from this adventure:

1. Only an idiot would buy a "real" Coach or Prada purse.
2. There has to be cheaper version of just about everything else.

What this does is by the mere presence of the counterfeit goods in the marketplace is reduce the willingness of the public to buy originals. It doesn't matter what the "original" is, obviously there has to be a cheaper counterfeit version available. This applies to everything from caviar to computers and automobile parts to luggage.

$200 billion lost because of the presence of counterfeit goods? Easy. The direct losses might only be a few million, but pushing the idea of "just as good as" in front of people pushes the originals out completely.

Re:Direct or Indirect?

[Urza9814]

Eh, I'd say the lesson there is 'don't buy overpriced name-brand'. I mean, I'd never buy a Rolex watch. I see a counterfeit Rolex and all that tells me is 'this is what that expensive watch is actually worth, in terms of parts and labor'. But I'm not gonna buy the counterfeit either. Instead I'll buy a Casio or a Yes.

If there's a dramatically cheaper counterfeit of something available, that means you're probably being ripped off when you buy that item. Notice that it's mostly the overpriced luxury goods that get ripped off. And movies and such, but that's just because blank DVDs are dirt cheap compared to a DVD movie - again, you're getting ripped off when you pay $20 for a piece of plastic. Money too - worth $100, costs a couple cents.

Anyway, my point is that there only has to be a cheaper version if the original version is a colossal waste of money.

Re:Not surprising

[Teun]

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).

Indeed, I recently bought a fake Breitling watch for $100.-.

Even though I have to take it off in the shower (yes I bathe) I would never buy the +$4000.- real deal that's water proof to -500 meters.

Yet some lawyers would tally this as a $4000.- lost sale.

I don't see why this is a problem.

[feepness]

The "victim" still has their product to sell. It's not like I'm "stealing" something from them.

Re:Can't really hurt many US jobs...

[feepness]

So all we have left is design and marketing, which is what counterfeiting "takes".

Re:It is killing retail too

[cpt kangarooski]

Well, did the person selling the fake skirts make it clear that they were fake (or at least, did the customers know)?

If so, then all they wanted was a skirt that looked a particular way; they didn't care who made it. Your ex's store, or the designers who supply her, can only try to compete in three ways, it seems to me.

First, quality; their skirts may be made of better materials than the fakes, or may be made with better techniques. If so, try to differentiate based on this. Of course, some people are satisfied with synthetics instead of natural materials, or poorer materials instead of finer ones, or single stitching instead of double stitching, so it won't always work, and the price difference may remain substantial. (There was an interesting article in the NY Times the other day about the Italian fashion industry and wool quality)

Second, price; how cheaply can the real skirts be made? Maybe it would be more efficient to sell skirts out of a van, instead of out of a store that is expensive to lease. It looks like the fake guys are winning on this front, but there's no reason that they necessarily have to.

Third, brand; there may be some cachet that can be used to make money out of the brand of the manufacturer or the distributor. Some people presented with identical products from different vendors at different prices may prefer the more expensive one as a form of conspicuous consumption. (You can see it elsewhere; a real Picasso is worth a lot, but a forgery, no matter how identical, is worth a lot less to people who care about this sort of thing) It can work, but it has problems. Some people don't care about brands, but just want a nice skirt. If the fake is good enough, they'll probably buy it since it costs less than the same thing from elsewhere. Some people care about brands, but are excluded due to artificially high prices set by the people controlling the brands. They'll deliberately seek out the fake skirts in order to most closely approximate the real thing.

I suspect that the ex et al have been trying to compete only on brand, and perhaps partially on materials (although usually brand justifies more of an increase in price than materials). If it's not working as well as they'd like, perhaps they ought to try a different approach?