Movie and Record Industry Piracy Figures Incendiary, But Not Fact.

By Richard Menta 6/15/06

I caught this little item from the Washinton Post today quoting losses from online file sharing.

"The intellectual property industry and law enforcement officials estimate U.S. companies lose as much as $250 billion per year to Internet pirates, who swap digital copies of 'The DaVinci Code,' Chamillionaire's new album and the latest Grand Theft Auto video game for free."

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$250 billion per year is a big number. It is also a fictional one.

Last year, the total worldwide box office revenues for the movie industry were $23 billion, of which the US generated 40% of that amount. Revenues were slightly down from the previous year, which is understandable since the movie industry had been setting box office records an unprecedented dozen or so years in a row. The record industry last year generated a total of $33.6 billion worldwide, down 2% from the previous year. That's a total of $56.6 billion.

So how do these US industries lose $250 billion per year when worldwide their industries combined only generated $56.6 billion last year?

The answer is simple. The $250 billion figure was simply made up. Why deliver such a fictional number to the press? Because the bigger the number, the more incendiary it is. The more incendiary the number the more press it generates. In this case the Washington Post, a heralded paper if there ever was one, printed the number as if it were a fact. The Post article also states that their US exports are $626 billion annually, ten times more than the MPAA and the IFPI offer as the worldwide figures in their earlier press releases.

While we are at it why not print that 5,000 lives are lost each year to file sharing? How about file sharing leads to drug use or terrorist activity? Wait, the Department of Justice already used the one on terrorist activity.

To accurately quote losses you need to isolate all of the potential causes, something that at times can be very difficult. For example, how can you truly measure the effects of bad PR acurately? If CD sales drop worldwide 2%, can you honestly say none of that loss came from sources other than file sharing? Even if you could prove it was all file sharing, 2% of $33.6 billion is still only $660 million. Throw in the 7.9% movie industry drop and you have another 1.8 billion for a total of almost $2.5 billion. But to quote five times these industries combined total worth? That's silly.

The software industry did earn $189 billion worldwide in 2004, setting another record. Maybe they are throwing that industry in just for good measure as it does get them closer to the $250 billion figure? Even if they are, so what? Adding up the total annual revenues of several industries worldwide and saying that is how much US industry lost is not just faulty judgement, it's deception (and not even very good deception). Ask anyone on Wall Street, who know that the entire US trade deficit is presently at $208 billion or $42 billion less than what the US media industries claimed they lost last year.

And you can't blame this all on the media lobbies. Their job is spin, spin that gets attention and spin that motivates action in a direction that suits them. The Washington Post knows this. The paper should have done its homework.

One more note, I originally titled this article kiddingly as "File Sharing Promotes Tooth Decay", then decided not to. I was actually concerned someone might reprint it as a fact.

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The 30GB iPod Video is available on Amazon

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