p2pnet view Freedom | P2P:- “It sounds too bad to be true; but, then, it might not be true”, said Britain’s The Economist five years ago, referring to a BSA report which claimed losses due to fake product had increased from $29 billion to $33 billion.
But, as p2pnet said at the time, “It doesn’t explain, in its new ‘independent’ study, how it’s able to reliably calculate this.”
Said The Economist >>>
Such jaw-dropping figures are regularly cited in government documents and used to justify new laws and tough penalties for pirates — this month in Britain, for example, two people convicted of piracy got lengthy prison sentences, even though they had not sought to earn money, it said. The BSA provided its data. The judge chose to describe the effects of piracy as nothing less than catastrophic.
The article was talking about the DrinkorDie judgement in which a group of software collectors were jailed because they were said to have caused incredible losses to the software industry.
It went on »»»
The association’s figures rely on sample data that may not be representative, assumptions about the average amount of software on PCs and, for some countries, guesses rather than hard data. Moreover, the figures are presented in an exaggerated way by the BSA and International Data Corporation (IDC), a research firm that conducts the study. They dubiously presume that each piece of software pirated equals a direct loss of revenue to software firms.
To derive its piracy rate, IDC estimates the average amount of software that is installed on a PC per country, using data from surveys, interviews and other studies. That figure is then reduced by the known quantity of software sold per country-a calculation in which IDC specialises. The result: a (supposed) amount of piracy per country. Multiplying that figure by the revenue from legitimate sales thus yields the retail value of the unpaid-for software. This, IDC and BSA claim, equals the amount of lost revenue.
But then, the Bull-Shit Component is an important element of business plans involving Hollywood, the major record labels and software houses.
They craft statistics to suit the purpose, confident in the knowledge the lamescream media and government bureaucrats will repeat them verbatim without the slightest attempt at qualification.
Now “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”, blogs Ottawa law professor Michael Geist, continuing >>>
For Canada, the BSA claims that the reduction would create over 6,000 new jobs and generate billions in GDP and tax revenue. Given such impressive claims, it is not surprising that some media reported on the study and the BSA’s emphasis on new laws and tougher enforcement.
When IT Business’s Brian Jackson asked me for a comment, I noted that such estimates were notoriously speculative (see Glyn Moody on this) and that the BSA would do far better to tell us how much Canada has gained from its recent significant reductions in piracy.
Last year, the BSA said the Canadian rate dropped by three percent to 29%, the biggest drop among developed countries and – the BSA noted – an all-time low. In fact, since 2006 the BSA says that there has been a five percent drop in Canada. Has that created thousands of new jobs and generated billions in new revenues and taxes?
The BSA did not have answer to this question, but it did reveal how it arrived at the initial estimate. It turns out that it is actually based on the economic gains from a ten percent increase in proprietary software spending.
Notes a BSA spokesperson: “what the study is looking at here is really if you’re reducing the piracy rate and increasing the legal software market by 10 points, this is what you’d see in terms of economic return.“ The BSA admits its estimate is based on the presumption that every dollar “saved” by using unlicenced software would now be spent on proprietary software.
I termed this approach “shockingly misleading” given that I don’t think anyone can credibly claim that there is a direct dollar for dollar correlation between piracy and proprietary software spending.
As the IT Business article points out, many shift to open source alternatives when confronted with the issue. Others may cut back on spending altogether given the new costs. In fact, as a commentator notes below, the BSA estimate is actually a shift of economic spending, not new spending at all.
The BSA’s claims “are so speculative as to be worthless and ultimately undermine the credibility of those trying to better understand the marketplace impact of addressing copyright infringement”, Geist adds.
No need to stay tuned.
The Economist – Dodgy software piracy data, May 19, 2005
at the time – BSA ‘piracy’ figures, May 18, 2005
at the time – BSA ‘piracy’ figures, p2pnet, May 18, 2005
DrinkorDie judgement – www.drinkordie.com, p2pnet, May 11, 2005
Michael Geist – BSA’s Latest Study on Piracy and Economic Benefits “Shockingly Misleading”, September 17, 2010
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