Where the funny piracy numbers used to justify SOPA/PIPA spring from

Writing for Cato At Liberty, Ars Technica alum Julian Sanchez has a timely redux of the research he did on how the made-up piracy numbers quoted during debates about SOPA and PIPA come from, and how little relation they bear to reality. It seems like every discussion of SOPA/PIPA includes a phrase like "Everyone agrees that piracy is huge problem," but in fact, the "huge problem" they're agreeing on has been inflated to farcical proportions through the most transparent financial funny business.

Siwek takes an estimate of $6.1 billion in piracy losses to the U.S. movie industry, and through the magic of multipliers gets us to a more impressive sounding $20.5 billion. That original $6.1 billion figure, by the way, was produced by a study commissioned from LEK Consulting by the Motion Picture Association of America. Since even the GAO was unable to get at the underlying research or evaluate its methodology, it’s impossible to know how reliable that figure is, but given that MPAA has already had to admit significant errors in the numbers LEK generated, I’d take it with a grain of salt.

Believe it or not, though, it’s actually even worse than that. SOPA, recall, does not actually shut down foreign sites. It only requires (ineffective) blocking of foreign “rogue sites” for U.S. Internet users. It doesn’t do anything to prevent users in (say) China from downloading illicit content on a Chinese site. If we’re interested in the magnitude of the piracy harm that SOPA is aimed at addressing, then, the only relevant number is the loss attributable specifically to Internet piracy by U.S. users.

Again, we don’t have the full LEK study, but one of Siwek’s early papers does conveniently reproduce some of LEK’s PowerPoint slides, which attempt to break the data down a bit. Of the total $6.1 billion in annual losses LEK estimated to MPAA studios, the amount attributable to online piracy by users in the United States was $446 million—which, by coincidence, is roughly the amount grossed globally by Alvin and the Chipmunks: The Squeakquel.

How Copyright Industries Con Congress (via Making Light)


  1. Both Barbara Boxer (D-CA) and Dianne Feinstein (D-CA) are co-sponsors of the bill and still in support. This isn’t surprising, but if you live in California then get on the phone to their offices.

    Also, turncoat Senator Al Franken is also a co-sponsor and still in support. Funny how everyone thought he was going to be the new liberal powerhouse, and he’s done nothing but sell America down the river in vote after vote.

  2. Is there content I want? Yes.
    Is there a lot of it? More than ever.
    Is it cheap? Very.

    If all those things are true, we can conclude that piracy at its current rate is not an actual problem.

  3. Even crazier is that they seemingly treat every act of piracy as a loss of income when in reality I imagine a lot of people download and watch movies they wouldn’t pay to see (in theaters or by renting it). That doesn’t make it any less wrong to pirate movies, of course, but it’s incorrect to label it as a lost income since that person wouldn’t ever have paid to see it.

    1. some act of piracy even lead to an increase in income. I know of people who have downloaded TV shows to check them out, have liked them and then have bought the season box set later.

  4. CATO has its own problem with funny numbers. They don’t believe in global warming. Cato fellow Patrick Michaels has published a series of articles arguing global warming would be good. 

    So I’m not inclined to trust anything coming from them, even if it’s conclusion agrees with my conclusions. 

    1. Every issue has it’s good and it’s evil.  In the case of global warming, however, the evil is human extinction, which might not be bad for the cock-roaches but certainly would ruin my day. So yes, in the short term there are advantages to global warming and Canada will be a major recipient.

  5. Unless Verisign implements a pr ip filtering system on the TLDs under their control, any US move to take down such a TLDed site will be taken down globally…

        1. They only control .com because the owners of DNS servers agree that they do. But if the rest of the world were to decide that TLDs should come under a neutral UN based agency it would not take very long to make it so.
          The only problem is that US citizens would see different domains to the rest of the world.

  6. Its completely absurd. There is NO WAY to know how manypeople would have bought more if there would be no piracy. Many people who download entertainment, would not buy it if they could not download it (most stuff the RIAA produces is trash). And the others, after downloading something, do buy what they like from it. IN FACT, it looks like piracy does generate sales, much like mouth-to mouth does.

    1. Actually, Hollywood has over 100 years of data on viewing and purchase patterns and they’ve worked hard to condition us to follow them. They have attendance models for every week of the year, they know pretty closely who’s going to see what and when and they manipulate their target audiences pretty well. They tier their models on who will see what on each week of a movie’s release, who will wait for the video and who will wait for TV. The anomaly of illegal copying is an irritant to their system, so they will come down like a hammer to stop it, until they are able to profit from it themselves.

      1. It’s good to know that they make business decisions based on whether my grandfather preferred Clara Bow or Norma Talmadge.

  7. They also roll into their number acts which are legal under fair use. If I need an installer for Illustrator CS4 and Adobe has stopped hosting that installer and then I go to Pirate Bay and get the installer — it’s “piracy” even though I’m using a registration code I bought to install it on a machine I own for my own use. If I buy a hardback textbook and then go to Pirate Bay and get a pdf version so I look up references in class on the laptop or ereader I already have with me, that’s piracy. 

  8. Yup! That’s what were getting from Hollywood: Alvin and the friggin’ Chipmunks..

    That’s supposed to be the acme of cinematographic art, is it?

    Make something that won’t make barf at the trailer and I might consider going, but this [expletive deleted] stuff I wouldn’t waste the electricity to steal,

  9. Interestingly, a few click-throughs lead to the idea that piracy is GOOD for the economy: See Fig. 1 in the IPI article, http://www.ipi.org/IPI/IPIPublications.nsf/PublicationLookupFullText/23F5FF3E9D8AA79786257369005B0C79

  10. For people wondering what the US Government Accounting Office (GAO) thinks about these numbers and their methodologies, there’s a nice little report here: http://www.gao.gov/new.items/d10423.pdf (Warning: pdf).

    Basically, they say that NONE of the figures being thrown about are valid,or can even be verified, since either the agencies quoted say they NEVER released those figures, or the methodology used to produce these numbers is non-existent/non-verfiable/based on wishes. Therefore, the multi-billion dollar “costs” to “society” by “piracy” are “bullshit”.

  11. Is there an analysis of the 2.2 million figure given as employees of the motion picture industry?  This sounds high (Sen. Harry Reid has quoted this figure, but his home state of Nevada has a population of less than 2.9 million), if it’s USA-based employees working fulltime, as it is meant to imply.  If it’s extended to include farmers who grow popcorn and those who change the oil on the cars of key grips, of course, the number becomes bigger but less valid.

  12. Actually, the article is wrong in this quote: “It only requires (ineffective) blocking of foreign “rogue sites” for U.S. Internet users. It doesn’t do anything to prevent users in (say)
    China from downloading illicit content” 

    It doesn’t actually block the site, it only makes it so that we have to use the IP address to get to the site.  So, this is even more inefficient than one would suspect.

    However, this has nothing to do with “protecting” intellectual property.  This is about the government having more control over us and trying to damage uncontrollable industries.  It’s about damaging our constitutions and stripping away more of our 4th and 5th amendment rights.

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