Entertainment industry made up $250 billion/750,000 jobs losses due to piracy

Ars Technica's Julian Sanchez takes a long, investigative look at the entertainment industry's claim that piracy costs the American economy 750,000 jobs and $250 billion and discovers the truth: they made it up and repeated it until they forgot they had made it up.
With Customs a dead end, we dove into press archives, hoping to find the earliest public mention of the elusive 750,000 jobs number. And we found it in–this is not a typo–1986. Yes, back in the days when "Papa Don't Preach" and "You Give Love a Bad Name" topped the charts, The Christian Science Monitor quoted then-Commerce Secretary Malcom Baldridge, trumpeting Ronald Reagan's own precursor to the recently passed PRO-IP bill. Baldridge estimated the number of jobs lost to the counterfeiting of U.S. goods at "anywhere from 130,000 to 750,000."

Where did that preposterously broad range come from? As with the number of licks needed to denude a Tootsie Pop, the world may never know. Ars submitted a Freedom of Information Act request to the Department of Commerce this summer, hoping to uncover the basis of Baldridge's claim–or any other Commerce Department estimates of job losses to piracy–but came up empty. So whatever marvelous proof the late secretary discovered was not to be found in the margins of any document in the government's vaults. But no matter: By 1987, that Brobdignagian statistical span had been reduced, as far as the press were concerned, to "as many as 750,000" jobs. Subsequent reportage dropped the qualifier. The 750,000 figure was still being bandied about this summer in support of the aforementioned PRO-IP bill...

The number the ITC actually came up with, based on a survey of several hundred business selected for their likely reliance on IP for revenue, was $23.8 billion–the estimated losses to their respondents. That number was based on industry estimates that the authors of the study noted "could admittedly be biased and self-serving," since the firms had every incentive to paint the situation in the most dire terms as a means of spurring government action. But the figures at least appeared to be consistent and reasonable, both internally and across sectors.

The $60 billion number comes from a two-page appendix, in which the authors note that it's impossible to extrapolate from a self-selecting group of IP-heavy respondents to the economy as a whole. But taking a wild stab and assuming that firms outside their sample experienced losses totaling a quarter to half those of their respondents, the ITC guessed that the aggregate losses to the economy might be on the order of "$43 billion to $61 billion."

750,000 lost jobs? The dodgy digits behind the war on piracy


  1. Hmmm. Reminds me of Big Oil reaping the biggest profits ever while gas is more expensive than ever and ditto crude.

    The comparison? Thin at best but…


  2. $250 billion…. really.

    Well, we know that these facts have been fabricated to start with, but for governments around the world joining hands with 4 letter named cartels this is their reality.
    They’ve bought into the lie of IP protection/enforcement, and it’s too late.

    The sad part is, is that I doubt these people will ever be satisfied without any outcome to this situation OTHER THAN increasing government subsidies around the world for the arts (to pay for fat bald execs, hookers & coke).

    When the pressure continues to build, spurred on by the constant thrashing of the tentacled beast that is the entertainment industry hopefully those capable of stopping this will realize that there is no $250 billion just waiting out there to be captured.

    While I’m sure that there’s a small portion of people that use filesharing as a way of getting resouces to resell, it’s hardly bringing the industry to it’s knees.

    Fuck with guys like Depp making $50+ million for 1 flick… they can’t be doing that bad.

    I forsee this future, when the **AA finally convinces western governments to assign as % of collected income tax directly to them as reparations for the billions of dollars lost due to piracy, that yet another industry will line up and cry that they’re failing… due to a loss of… wait for it… $250 billion.

    The rich demand more riches, but I hope soon they do realize that these billions that are “owed” to them do not actually exist.

    If I had to pay for content (audio, text or video) I doubt I’d bother even considering viewing/consuming/paying for it.

    Not because I’m cheap, but because in this world we (those of us that aren’t executives) don’t have disposable income like we did in 1999.

    I do apologize for my ramble, but this should be a more sensitive issue here in this North American election year.

    Parties should make it known who they work for (who they’ve sold out to and take ‘donations’ from) and what their policies are when it comes to copyright.

    Here in Canada I hope the PC’s lose their leadership for attempting to sell out the country with their copyright reforms ie; $500/song downloaded.

    I really am sorry for this wall of text,
    I love you boing boing!

  3. “As with the number of licks needed to denude a Tootsie Pop, the world may never know.”
    Cory – I LOL’d.

  4. This is why we need to wave “citation needed” signs every time a politician speaks. In the academic world, every time you mention a number, it better have a footnote attached to it, but in the political world, numbers and figures are thrown around without a single care for verifiability and cross-checking.

    I wouldn’t invest $100 in a multi-level marketing scheme without some demonstration of being able to be paid back. I sure hope the politicians representing me would require some sort of proof that $250 billion dollars of revenue is actually lost to piracy.

  5. This reminds me of the being called before the musicians local board when it was discovered that I had purchased one of those new-fangled synthesizer keyboards back in the late 70s.

    They didn’t want me to use in in performance because I would be putting a half dozen string players and a couple of horn players out of work. Totally made up numbers like the piracy figures above.

    I told them they were crazy. My job was only for two musicians – a drummer and a keyboardist/organist – and there was no budget at the small club where I was working to hire 8 additional musicians. The same kind of stupid arguments were made when the electric organ was introduced since it eliminated a bass player.

    I quit the musicians union.

  6. As I’ve early and often, these are phantom losses, just as with most copied software. What–do the bastards think the recipients of free copies would have bought ’em if they couldn’t get ’em free? Not fucking likely for most of them–that’s why they’re getting free copies. What’re they after, tax dedictions?
    –Mike (No copied software here, and I’m even a registered user of WinZip.)

  7. #6 thats an argument I’ve used before, and I stand by it.

    Consider the fact that I am a fresh college graduate with a zillion dollars in loans to pay back. and I want lets say hypothetically a new album by band X (or whatever)

    we have 2 choices

    I either download a copy and they don’t get paid.

    Or I don’t buy it because I don’t have extra money for stuff like and guess what….they don’t get paid.

    The majority of people only pirate things because they cannot afford to buy it in the first place. It’s not like we sit around and plot to destroy their company(although someone probably should, considering shady business practices they take part in).

    If I had extra money to buy cd’s, movies, software, you bet I would purchase them, im all for supporting the people who worked on it. Often enough when I do have extra money, I do go out and buy things I have pirated in the past.

    Just more greedy corporations, sucking the soul out of the world

  8. they do tend to assume that every download equals a lost sale.
    That simply isn’t the truth.


  9. What makes me laugh about all of this is the assumption that if piracy is stopped today, everybody will immediately run out and start spending wads of cash on movies and music, not.

    I can get all the music and films on my TV, when I want, I am on cable (UK). I am already paying for the privilege so why should I go and buy DVDs which make me site through massed of EULAs in umpteen languages every time I want to watch it!!!

    The world is moving on as it always does and those that stand still or do King Kanute impressions will go under or at the worst will crush original innovative creativity (read stupid patents and unwarranted extensions of copyright).

    Until the next revolution…

  10. Hmmm – let me see if I get this right. If their losses were $250 billion/750,000 job back in 1986, and their losses today is still $250 billion/750,000 jobs – doesn’t that mean that all the piracy and file sharing the last 20 years have had no negative impact at all?

  11. I’ve been saying the whole “if they download it, who’s to say they’d buy it anyways?” thing for years. I’m glad there are others who understand that method of thought.

    Being a poor college student, I can’t really afford to buy a lot of CDs. I, however, can afford to go out to local shows (I live in a state with great local music) and pay under 10 bucks for a great show and maybe buy a CD. That money goes straight to the bands. I have no problems giving my limited cash straight to local music. Frankly, local music gives me so much more than going to see a “popular” artist’s big show.

    I will purchase a few artists no matter what (Zappa, Porcupine Tree, Wilco). But if there’s a new band that I haven’t heard, I need to hear the whole album before I buy it. It’s so hard to trust signed music these days because honestly, a lot of it is crap.

    Maybe people would start buying music more if the bigger record labels signed actual ARTISTS. If mainstream music had more meaning beyond “get rich, have sex, I’m a diva with big boobs singing about my dog”, people would feel more inclined to buy.

    Most mainstream music has nothing to say, and that is why their business is going down.

    Independent labels are doing fairly well (well, were, now that the economy is messed up, who knows). With myspace and all that, non-mainstream music is becoming more popular and I don’t think the suits are able to cope with their failures.

  12. Dear peoples,
    I am/was/will be a musician in the great southern land and work closely with many people in the music industry or should I say many people who used to work in the industry. My experience of this “situation” is that digital technology has decimated the recording industry on every level. I’m not saying that this is a good or a bad thing. I’m just saying – people who once had jobs don’t – musicians who once were given money to make records aren’t being given money. People who used to make money selling albums no longer do. No one is “developing artists”. The whole infrastructure is gone. What will replace it?

    Maybe this is a good thing – maybe now the only people who will make music are the ones that really want to do it – because they’re going to have to do it for free. But, if I read another article about how this is good for the industry because the money is going straight to the musicians when there isn’t any money anymore, I’ll probably write a really long and inappropriately detailed message on the messageboard of a website like boingboing – but guys, give me a break – how many times are we going to be told that bands can now make money – “selling T-shirts” or “playing live”. The last time I looked, bands who were once stalwarts of the anti consumer, art for arts sake are now being forced to play on the “Vans tour” or the “Coca Cola” tour because their “fans” don’t buy their CD’s anymore – they just copy them from their friend’s hard drive.
    In a small country like Australia, the money is gone – music is free and musicians do it for the love. I know I do – where as once I didn’t have to. But that’s okay, maybe I’ll come up with a really good T-shirt design to fund my next record…
    No one is going to stop piracy
    No one is going to protect intellectual property
    Everything has changed
    But don’t pretend that its a good thing. You only do that to make yourself feel better.

  13. Piracy is not a good thing. There’s no way of adding nice colors and perfumes to make it look better.

    I live in a country where you buy your PlayStation, Wii or XBox or anything “destravado” (“unlocked”) and after that purchase games at R$10,00 (something around US$6,00 or less depending on exchange rates). Not a single f@ck1ng cent to the people who developed the games, not a single cent in taxes or jobs or anything. Only the “facções criminosas” (gangs/mafias) increase their contingents and finance their AR-15, AKs, H&K, Steirs et al. with this money.

    Problem is not restricted to games. You can purchase any movie at R$5,00/DVD and some movies at R$3,00/DVD (the media costs R$1,75/DVD).

    It is not possible to counter the abuses of the entertainment industry through piracy. It would be like countering the abuses of US government by supporting Al Qaida… utter craziness.

    I think that people like Cory are in the right direction. I don’t know anybody who didn’t purchase one of his books because of the CC downloadable versions. There are lots of sites like Jamendo where you can find music under CC. There are lots of places where you can download music at reasonable prices.

  14. Hmmm – let me see if I get this right. If their losses were $250 billion/750,000 job back in 1986, and their losses today is still $250 billion/750,000 jobs – doesn’t that mean that all the piracy and file sharing the last 20 years have had no negative impact at all?


  15. maybe they see the handwriting on the wall for the end of the marijuana prohibition profit-taking and hope to pick up the criminal creation slack elsewhere? Maybe that was the plan all along.

  16. To suggest that piracy causes a net loss to the national economy is ridiculous – whatever people save on pirated media, they spend on something else. It’s not as if all that money is stuffed under mattresses – it’s been spent on other goods and services.

    Even if I had BitTorrented my entire music collection and invested the savings, I’d just be greasing the wheels of the economy by providing investment capital.

    So yes, one industry has lost out, but it’s not as if piracy is driving our economy into a recession. Unless people are literally burning the money they save through piracy (assuming you buy the “ever pirate is a would-be purchaser” argument), there’s no net loss to the national economy.

    Maybe all non-IP industries should consider lobbying Congress to NOT fight media piracy, so people have more money to spend on their industries’ products and services.

  17. Clearly the war against piracy is being won, as the amount of jobs lost has remained constant since 1986 in spite of the growth in the business and the population.
    If we can just hold this line, in 100 years 750,000 will be an insignificant percentage of the total jobs.

  18. The stats are obviously bogus, but I also know lots of people that can afford to buy their records and videos who never do so and think they are pretty cool for this.

    The truth isn’t on one side or the other, but somewhere in the middle. I’d rather people just be honest and buy the damn stuff, especially if they love the artist and have the money. Making good movies and records does take money and does employ real people.

    And I’m pretty certain people just don’t think about this stuff or the effects on the people making the art. I just got a fan letter from someone that said they loved my big movie from last year – so much so that they said they made DVD copies to give to all their friends (and they downloaded the video from a torrent to begin with). It’s sort of like, well I appreciate that you like my work to send me a hand written letter, but the studio I work for just had layoffs last week, and my own work has slowed with the economy – they are focusing on more standard fare that is guaranteed to make money and less on the edgy work I specialize in.

  19. These huge numbers make fantastic press releases. I wonder why they don’t say like “piracy is a threat, comparable to terrorsim”

    they can repeat those numbers over and over again but nontheless they don’t get true.

    not every downloaded album equals a not bought CD. Thats what their calculations are based on, but its utter BS.

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