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We’ve mentioned here that something’s afoot in Washington regarding intellectual property rights: Obama has appointed an IP “czar” (them damn socialists, again), the Department of Justice is beefing up its IP enforcement section, and there’s some secret international treaty being negotiated. And while there hasn’t been much overt activity on any of these fronts yet, all of these things appear to be happening at least in part at the urging and with the support of corporate media companies. The buzzwords in the cacophony of corporate talking points are things like “stricter enforcement” and “digital piracy,” and this stuff is endlessly repeated to us blithely as real news by the mainstream media. We hear that “piracy” is costing us X billions of lost sales and X thousand lost jobs. Well, freakin’ yikes. We’d better do something, right?

Well, maybe not. Maybe it’s all a bunch of, um, hokum. The problem is that mainstream media outlets are owned by the same corporations that are hammering Washington with these arguments, so you’re not gonna hear any skepticism about this on television or read about it in the newspaper. The fact is that very few people analyze, question, or ask if we really need stricter IP enforcement, or inquire what it will cost us in terms of consumer choice, consumer cost and especially, personal privacy.

The “statistics” about “piracy”-related lost sales and lost jobs have always been a little suspect.

The federal General Accountability Office, the above-reproach research arm of Congress, was directed to look into the effects of intellectual property piracy and counterfeiting, and last week issued its report. (You can look at it at gao.gov/ new.items/d10423.pdf) Guess what it found:

The GAO found that the numbers are all made up! Now, this is a short but rambling report, a survey and analysis of the information that’s out there about “counterfeiting” and “piracy.” It also covers a bewildering expanse of territory, talking about things like counterfeit pharmaceuticals, airplane parts, circuit boards, handbags, CDs and DVDs along with digital downloading. As such, it doesn’t really go very deep into anything, but the general finding is that we’ve all been getting a snow job.

The report found that the basic raw data used for these estimates is of questionable origin, and that the assumptions used to extrapolate that data are not supportable. One of the most ridiculous assumptions, that one “illicitly” acquired good equals one lost sale, was singled out for inflating the estimates to multiples of what they should be. The “one-to-one substitution” assumption has long been used by the music, movie, and software industries in describing their losses from people acquiring free copies of stuff over the Internet, and it’s the height of absurdity: Every song we grab for free online somewhere is a song we would have paid a dollar for if it weren’t available for free? Of course not. It’s a small fraction of that. But industry takes questionable and inflated numbers about, say, how many songs are shared over the Internet, multiplies that number by 99 cents, and says, here, we’re losing billions and billions of dollars! The media uncritically repeats this nonsense and we all believe it.

Even more amusing is the GAO’s take on the federal government’s use of these bogus statistics:

“A number of industry, media, and government publications have cited an FBI estimate that U.S. businesses lose $200-$250 billion to counterfeiting on an annual basis. . . . FBI officials told us that it has no record of source data or methodology for generating the estimate and that it cannot be corroborated. A 2002 CBP press release contained an estimate that U.S. businesses and industries lose $200 billion a year in revenue and 750,000 jobs due to counterfeits of merchandise. . . . A CBP official stated that these figures are of uncertain origin, have been discredited, and are no longer used by CBP. A March 2009 CBP internal memo was circulated to inform staff not to use the figures. However, another entity within DHS continues to use them . . .”

Yeow! The GAO essentially concludes that while piracy and counterfeiting is indeed a problem, it’s really impossible to know how much of a problem it is, and that at least for digital downloading, the estimates tossed around by both industry and government are wildly overstated. In fact, it’s pointed out that the availability of free digital media online may have significant positive effects in the form of consumer sampling, free promotion, and the tempering of monopoly pricing.

You know what they say about liars and statistics . . .

—Paul Rapp


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