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BSA's Latest Piracy Claims 'Shockingly Misleading,' Says Geist
An anonymous reader writes "This week the Business Software Alliance published a new study
which purports to estimate the economic gain from a ten percent reduction in piracy of business software. For Canada, the BSA claims that the reduction would create over 6,000 new jobs and generate billions in GDP and tax revenue. But Michael Geist says the BSA claims are based on nothing more than the economic gains from a ten percent increase in proprietary software spending. The BSA now admits its estimate is based on the presumption that every dollar 'saved' by using unlicensed software would now be spent on proprietary software."
Glyn Moody pointed out more flaws in the BSA's report.
For every 10% increase in broken window glass over 6,000 new jobs would be created and billions in GDP and tax revenue would be generated.
There is a finite amount of money.
Thus, if $1000 more is spent on software, $1000 less is spent elsewhere. Roughly speaking, 6000 new software jobs equals 6000 fewer other jobs.
This is approximately a zero sum game.
There are benefits to reducing piracy, but their argument doesn't hold water.
How is it shocking? Every study released by industry groups on the effects of piracy, thus far, has been way off the mark in estimating the economic impact of piracy. This is about as unshocking as you can get. Did anyone really expect a trade advocacy group to not mislead you when they report on stuff like this?
My postings are informational and does not constitute legal advice. Act on it at your risk.
Even the US Government Accountability Office has announced that you can not accurately make economy-wide estimations for this type of thing.
Most experts observed that it is difficult, if not impossible, to quantify the economy-wide impacts.
Generally, the illicit nature of counterfeiting and piracy makes estimating the economic impact of IP infringements extremely difficult, so assumptions must be used to offset the lack of data.
Nor does it account for the jobs created by the money *saved* by not paying for said software.
"the reduction [of software piracy] would create over 6,000 new jobs and generate billions in GDP and tax revenue"
That also assumes that any money not spent on proprietary software is being stashed under a mattress.
The truth is more like the money would be diverted from other spending, and these "billions" of dollars would just be distributed differently, with no plausible increase in net GDP or tax revenue.
It comes from reduced spending someplace else? Or increasing consumer or business debt, right?
This is an old, old economic fallacy. I tried to debunk it once in a blog post: "Broken Windows and the Ghost of Keynes" but you can't kill the undead.
If you were to increase software sales by 10% for an equal reduction in piracy, you would be causing billions of dollars of HARM to the economy because those former pirates would experience no increase in value in the software they have and now have fewer resources to spend elsewhere.
Piracy does cause some harm to the software/entertainment industry, but it does so by enriching the greater economy by creating a net gain in value when you consider the big picture.
Their argument is fundamentally flawed in ways far beyond the fact that they are making up random numbers.
And for the next twenty years, we'll be seeing this study cited as fact in Government position papers, other MPAA/RIAA/BSA "studies," Congressional testimony, treaty discussions, etc.
Lacking <sarcasm> tags,
Unfortunately, the new jobs will not be in product development, but rather in legal prosecution and defense, as companies spend more time hunting "pirates" with very little result per dollar spent, then are sued themselves by companies using the same tools they use to attack others.
Oh, and the law teams will almost certainly end up costing far more per 'employee' than developers.
The BSA is what you get when lawyers see how this cycle works, and band together to accelerate the process, while maximizing leverage against companies to keep the cycle going. It's like a union, without the meager shared humility of strenuous work to justify the pride involved - it's all union bosses playing with money here.
Ryan Fenton
A lot of people who pirate (eg.) Microsoft Office will only use it once a month or so.
Spending $600 so they can use Office a dozen times a year is probably worse for the economy than spending it on something else.
No sig today...
Most pirates would not bother buying the software they get for free if they were forced to either buy it or go without. So reducing piracy would not increase legitimate sales, or only marginally at best.
What's even more disturbing is that this along with anti-piracy of music and movies is being touted by many as a significant part of the cure to the poor US economy. We also have similar attempts by the broadband providers claiming net neutrality will cost jobs. Verizon has already stopped their Fios rollout in the US regardless of the net neutrality outcome. It's a total joke how every industry that wants some government concession or intervention uses "loss of jobs" as their primary tactic.
Conclusion: YES, you want people to pay for software they use but (IMHO) measuring the economic impact is a devil's game. At best.
I will create a sig when innovation restarts in the U.S.
All I hear is how taxes hurt the economy, by taking money away from small businesses, so they have to lay off workers.
So, equivalently, the software industry should stop taxing all the other businesses by charging them money at all, and give away software for free. That way, 100% of the money companies spend on software would go towards creating jobs!
Stop taxing us, software companies! Clearly you hate small businesses and the American worker!
Since the results of the study are self serving, the result mean nothing. The conclusion means nothing. This is not a story, it is propaganda disguised as news. Thusly, this is garbage and should be thrown out with yesterday's chicken carcass.
Athiesm is a religion like not collecting stamps is a hobby.
I get it! It's so clear now!
My new plan is to pirate $100,000 worth of software, movies, and games every year. The money I save I will put into a retirement account, and I'll be able to retire in style in no time!
Now, I don't make $100,000 a year, and my current expenses are only a little less than my current income, but that's neither here nor there. The BSA has shown me that this logic is sound!
A penny pirated, is a penny saved, is a penny earned, right?
"BSA. Because not enough people are using Open Source"
XKCD:Xeric Knowledge Comically Dispen
Er. I am not sure how "Shocking" it is. Anytime the BSA or the RIAA or CRIA etc... use "statistics" to prove a point they usually aren't worth the paper they are printed on. They don't even make an attempt to be even remotely accurate or truthful. They just use it for "Shocking" talking points, that they feed their bought and paid for puppet politicians to repeat over and over again in the media so they people buy the hokum they are selling.
I would be hard pressed to even think of organizations that I would trust less in their use of statistics and the "general use of numbers". In other words all they spout is BS, why would I ever consider anything that they spout not to be BS.
This article would make more sense if they only put quotes around "Shockingly" in a smarmy sarcastic way, unless that was the intention anyway...
Skimming through the comments so far, I get the impression that most people are concentrating on the argument that if a person can't pirate, that doesn't mean they will buy. TFA makes an even better point: They BSA assumed that, by value, 50% of the software in use is pirated. Otherwise a 10% reduction in piracy wouldn't result in a 10% increase in sales, even if all of the ex-pirates purchased. Gee, doesn't 50% seem a little high?
How did BSA get 50%? A questionable study said greater than 40%, and since 50% is greater than 40%, it must be the correct number. (The actual number was 43%, FWIW.
The earlier study included countries such as China and Russia and it appears (even the detailed version didn't really say) that they assumed that each piece of unlicensed software counted as much as each piece of licensed software. So every unlicensed copy of Windows 98 running on an underpowered PC in a third world or BRIC country was as valuable as any piece of brand-new business software.
One thing that makes this look like so much hoo-ha is that the "detailed studies" available as PDFs don't contain any collected data or details about methodology. It's just nicely presented conclusions and spin.
Knowledge is the small part of ignorance that we arrange and classify. (Ambrose Bierce)
Or people who wanted to be lawyers, but were too dumb to get into law school?
Seriously, you'd have to be really stupid to be able to write such a report and not have heard of opportunity cost. Yes if $X worth of software was bought instead of pirated the software makers would have an extra $X, but someone else (the now not pirating company, or more likely their workers or suppliers) would have $X less.
So any economic benefit depends on the relative multipliers of the software companies and those sombody elses. I put my money on the sofware makers having a much lower multiplier for the local economy.
Or of course they aren't stupid, but are intentionally lying.
And that's ignoring any issue with the whole "people who pirate would buy it rather than not having it at all if we reduced piracy" assumption.
Software pirates (commercial and noncommercial alike) certainly need to be caught and punished. However, when people like the BSA prove themselves to be liars, there aren't any "good guys" in the picture. When the enforcers are as much scumbags as the pirates are scumbags, there is no credibility. It's like being in New Orleans - deal with a mugger or deal with one of the corrupt cops. Hell of a choice.
It should be sufficient to be able to say "Software is not a pirate's property for him to take or use, but they're doing it anyway" and prosecute on that basis. An argument of "I wouldn't have bought it anyway" should be wholly irrelevant. But resorting to histrionics like this just plays into the hands of the pirates and stirs up anger against the people who should have been the ones on the moral high ground, and makes the enforcers rightfully more despised than the pirates.
Everybody gets what the majority deserves.
Even if you have the receipt you get charged.
Even if some paperwork obviously got mixed up (you have 5 running copies and 5 licenses, but one of the running copies has the wrong serial number) you get charged.
Even if the licenses were known to have been destroyed in a fire or flood, you get charged.
If you say different, you have declared Uwe Bolle's movies to have a non-negative value, which is plainly false.
It is really hard to argue that selling additional copies of software will create more jobs. Maybe little with packing of software boxes and tech support. Otherwise all extra copies of software sold are pure profit. All it achieves is to transfer money from software users to software companies shaderholders.