lost sales – Techdirt (original) (raw)

Denmark Trying To Brainwash Schoolchildren With The Tired Old Lie That Copying Is Theft

from the are-you-a-thief? dept

One of the copyright world’s key weapons is a constant barrage of propaganda about the alleged benefits of this intellectual monopoly, and of the supposed horrors of its infringement. This is typically conducted through massive lobbying of politicians, funded using the copyright companies’ generous profits that could have been distributed to the poorly paid creators that generate them. There are also the general awareness campaigns, like the famously laughable “You wouldn’t steal a car” public service announcement and its parodies. But such is the lack of any sense of proportion or decency in the copyright world, that it believes it also has the right to brainwash children with its dogma. TorrentFreak has spotted another such effort, this time over in Denmark.

There is an associated site, with the charming title “Are you a thief?” – an indication that this particular propaganda will be using scare tactics and attempts to frighten children with the prospect of being punished in the courts for downloading unauthorized copyright material. Here is the central thesis of “Are you a thief” (all translations via DeepL):

Few people realize while consuming illegal content that it’s actually the same as stealing. It’s stealing directly from the people who produce TV, movies, series and sporting events for a living – and every time you do it, you’re breaking copyright law.

This is completely untrue, of course, even if the copyright industry parrots the idea endlessly. Theft involves taking something from someone; downloading material involves making an additional copy – that is, not taking away, but adding. Of course, there is then the argument that this is still stealing because the unauthorized version represents a lost sale. But numerous pieces of research have debunked this simplistic claim. Indeed, there is evidence that after downloading such unauthorized copies, people go on to buy official versions, thus boosting sales, rather than harming them. Needless to say, none of these more subtle points are mentioned in the one-sided Danish presentation. Instead, we get this weirdly moralistic take:

In the real world, we learn to control desire, postpone needs and resist temptation. This lesson also applies in the digital world. Stealing is wrong and punishable by law.

Again, the aim here seems to be frightening and shaming children by tapping into other frameworks of social control – what their parents tell them, what the church says etc. Alongside this tired old trope of “theft”, there’s a curious attempt at revisionism:

On the Internet, there are two kinds of Internet, one legal and one illegal.

We call the legal Internet the light web and the illegal Internet the dark web.

This is trying to conflate unauthorized downloads – something that the “Are you a thief?” site itself admits is common – with the much more obscure and dangerous “dark web” (aka Darknet). Of course, most children will trust that equation, because they are taught to believe what they are told at school. But it’s nonsense: downloading unauthorized material is nothing like navigating through the real Darknet.

What’s really depressing about the “Are you a thief?” site is not just its attempts to shame and frighten children into accepting unthinkingly copyright dogma, but the fact that the Danish state has allowed this, and is even supporting it financially. It is deeply ironic – and sad – that the Danish Ministry of Culture is promulgating the copyright industry’s outdated and selfish views on creativity and sharing, when in fact they are the antithesis of modern, digital culture, as Walled Culture the book (free digital versions available) explains in detail.

Follow me @glynmoody on Mastodon. Originally posted to Walled Culture.

Filed Under: copyright, denmark, lost sales, piracy

Are ‘Fast Movies’ Really A Substitute For The Real Thing? Or Just Good Marketing?

from the psst:-they're-good-marketing dept

There’s an interesting post on the TorrentFreak blog about “fast movies“:

These heavily edited copies of mainstream movies aim to summarize key plot lines via voice-over narration in about 10 minutes. While no replacement for the real thing, these edits accumulated millions of views and incurred the wrath of rightsholders, leading to the arrest of three people in Japan.

As that rightly points out, fast movies are not a substitute for watching the entire film. An earlier report on the same Web site indicates that the Japanese film industry disagrees:

the losses cited by rightsholders are huge – 95 billion yen (US$ 856.7m) in the past 12 months alone, roughly $10 per ‘fast movie’ view when working in the 80 million views cited by CODA [a Japanese anti-piracy organisation].

This seems to be the classic “lost sales” fallacy – that every unauthorized copy of a work represents a $10 sale that didn’t happen. That’s unrealistic: many people browse movie clips online out of curiosity, and never had any intention of paying to watch the entire film. As the US District Judge James P. Jones wrote in a criminal copyright case in 2008, reported by Ars Technica:

Those who download movies and music for free would not necessarily purchase those movies and music at the full purchase price. [A]lthough it is true that someone who copies a digital version of a sound recording has little incentive to purchase the recording through legitimate means, it does not necessarily follow that the downloader would have made a legitimate purchase if the recording had not been available for free.

There’s another important angle, missing even from the judge’s wise words. The “lost sales” view completely overlooks the “gained sales” that also result from people discovering new titles in these ways. They may use the latter as a taster, and then go on to make a purchase that they had not originally been planning. That seems likely to happen in the case of the “fast movies”, since they are not only much shorter than the original, they typically have only a voice-over instead of the full audio track.

For a film that is worth watching, the “fast movie” versions act as excellent marketing material. Rather than suing the people who make these kind of trailers, maybe the Japanese film industry should support them.

Follow me @glynmoody on Twitter, Diaspora, or Mastodon. Originally posted to Walled Culture.

Filed Under: copyright, fast movies, japan, lost sales

from the fantasy-economics dept

One of the less well-known outposts of the European Commission is the EUIPO Observatory. Here?s how it describes its objectives:

> Provide evidence-based contributions and data to enable EU policymakers to shape effective IP enforcement policies and to support innovation and creativity > > Provide data, tools and databases to support the fight against IP infringement > > Provide knowledge and learning programmes for IP and enforcement authorities as well as for businesses and IP practitioners > > Develop initiatives to help innovators, creators and businesses (especially SMEs) protect their IP rights > > Design campaigns to raise awareness of the value of IP and the negative consequences of IP infringement

You may notice a certain one-sidedness there: this is all about infringement and enforcement, with nothing about whether the current copyright laws are part of the problem, or whether they are even fit for the digital age. Given that bias, the subject of the Observatory’s latest report will come as no great surprise: “The economic cost of IPR infringement in the recorded music industry.” Here are the main results:

> In 2014, the recorded music industry lost approximately €170 million of sales revenue in the EU as a consequence of the consumption of recorded music from illegal sources. This total corresponds to 5.2% of the sector’s revenues from physical and digital sales. These lost sales are estimated to result in direct employment losses of 829 jobs. > > If the knock-on effects on other industries and on government revenue are added, when both direct and indirect effects are considered, infringement of IPR in this sector causes approximately €336 million of lost sales to the EU economy, which in turn leads to employment losses of 2,155 jobs and a loss of €63 million in government revenue.

I predict we’ll be seeing these numbers a lot in the future, because the music industry will be quick to seize on them as “objective” figures that are above suspicion, unlike industry-sponsored analyses. But of course, things are not always what they seem, and it’s worth reading the full report in order to find out what is really going on here. Nearly half of the 48-page is taken up with appendices outlining the forecasting model used to calculate those “lost sales.” The mathematics there is pretty enough, but ultimately undermined by the following admission made earlier in the report:

> It is important to note that the lost sales estimated in this report represent hypothetical additional revenue that the recorded music sector would have earned, had infringement not taken place. It is not an estimate of the value of the illegally acquired music recordings; nor is it an estimate of the substitution effect — that is, the question of the extent to which the illegally consumed music would have been bought from legal sources had piracy not been possible, which is outside the scope of this study.

Thus it is taken as axiomatic that every lost sale would have converted to a real sale if a magic wand had been waved, and piracy had become impossible. No justification is offered for this huge assumption, and that’s not surprising, since it doesn’t exist: in the real world only a fraction of those “lost sales” would ever be converted to actual sales. So even if we accept the modelling in the appendices is correct, the figures that result must be reduced by some factor to take account of this. It’s hard to say what that factor is, but it affects all the headline figures — the 5.2%, the 2,155 jobs, and the €63 million in government revenue. Actually, things are even worse than they seem, because the study doesn’t explore the possibility that online sharing boosts sales, rather than reduces them. It only mentions that crucial issue right at the end, where it says:

> The question of whether piracy reduces sales of recorded music has been the subject of many studies, sometimes with contradictory results. Some authors have claimed that piracy actually increases sales by allowing consumers to sample music they would not otherwise have considered purchasing. However, a recent literature survey by Danaher et. al. (2016) shows that out of 25 studies reviewed, 22 found that piracy reduced the revenue of the legal industry. Thus, the results of the present study are in line with the prevailing consensus, albeit utilising a completely different methodology.

However, the methodology adopted by the report may be skewing the results by removing perhaps the most “advanced” digital market — Sweden, the home of Spotify — from the modelling because it is viewed as an outlier. And as for that 2016 study by Danaher et al., here are some of the 22 datasets showing that piracy “reduced the revenue of the legal industry”:

> 1994-98 IFPI worldwide CD sales data and physical piracy rates > > 1998-2002 worldwide CD sales, IPSOS survey data for piracy downloads > > 1997-2002 country-level data on music sales and broadband usage. > > 1990-2004 consumer spending on cassette tapes, LPs, and CDs.

It seems unlikely that the analog world of cassette tapes and LPs tell us very much about what young people are doing online with digital files today. Of course, there’s more recent data in the list, for example, this set:

> 2008-2011 iTunes music sales in France and other European countries

Which apparently showed the HADOPI anti-piracy law “caused iTunes music sales to increase by 22-25% [in France] relative to changes in the control group [countries].” Except that it didn’t, as Techdirt noted at the time.

This quick run-through of the cited datasets is not meant to be a rigorous rebuttal, but it does indicate the superficial nature of the new report’s analysis, which accepts uncritically the Danaher paper, instead of exploring properly the really important question of whether piracy drives or depresses sales. Coupled with a failure to consider substitution effects, that renders the EUIPO report’s results of little value. What makes things worse is that the music industry will doubtless use them anyway to foist its copyright maximalist agenda on policymakers, who may mistakenly assume the Observatory’s work can be relied upon.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: copyright, infringement, lost sales, studies

Spanish Judge Gets It: Pirated Copies Not Necessarily Lost Sales, May Boost Purchases Later

from the the-tide-is-turning dept

One of the favorite assumptions of industries based around copyright used to be that every pirated copy is a lost sale. More recently, that rhetoric has been moderated somewhat, as a review of the area in the report “Media Piracy in Emerging Countries” shows, but a variation of that fallacy lives on, expressed now as vague “losses” caused by piracy.

Against that background it’s heartening to hear a Spanish judge dismissing the idea that pirated copies are necessarily lost sales, and suggesting that they can act as a kind of marketing that promotes later purchases (original post in Spanish):

it is not possible to determine the damage and corresponding compensation due to loss of benefits to the rightsholder, for the simple reason that customers of pirated copies of music and movies, when making the purchase of pirated copies, externalize their decision not to be customers of music and movies as originals, so there is no profit that could have been gained. In other words, those customers either buy a pirated copy at a low price or they don’t buy an original at a price between 15 and 20 Euros.

In any case, reversing the legal argument, it is conceivable that a customer, after hearing or viewing the pirated copy, may decide to purchase the original, finding it to their taste, so that the sale of pirated copies, far from harming, benefits the market for original items.

It’s only one judge, and in a not very important case, but it’s another welcome sign that an increasingly broad swathe of people have realised that the simplistic economic analyses of piracy offered by the copyright industries just don’t stand up to scrutiny.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Filed Under: lost sales, piracy, spain

Minecraft Creator Says 'No Such Thing As A Lost Sale'

from the give-people-a-reason-to-buy dept

Last year we wrote about how Minecraft developer Notch (Markus Persson) had been quite vocal in saying that worrying about piracy was a waste of time, and it was much more important to focus on giving people a reason to buy. And has he ever. The game keeps selling like crazy, and we detailed how he was raking in a ton of money, despite not caring if people were using his software for free.

In a short presentation at the Independent Games Summit he elaborated on those positions and again told people to stop worrying about “piracy” and focus on giving people reasons to buy. He dismissed the standard party line on these issues:

Piracy is not theft. If you steal a car, the original is lost. If you copy a game, there are simply more of them in the world.

There is no such thing as a ‘lost sale’… Is a bad review a lost sale? What about a missed ship date?

The “lost sale” point is one we’ve raised a bunch in the past, but people have a lot of trouble grasping it. There is no such thing as a lost sale, because a lost sale just means a failure to get people to buy. And that’s a marketing issue, not a legal one. If a “lost sale” is illegal, then anyone who gives you a coupon to buy their product instead of a competitors is “causing a lost sale.” But that’s ridiculous. And that’s the point Notch is making. There are all sorts of reasons people might not buy from you — and most of them may be your fault. So it’s your job to convince people to pay for something — which he’s clearly done. As he notes:

If you just make your game and keep adding to it, the people who copyright infringed would buy it the next week.

Another report of the talk showed he expanded on the “copying isn’t theft” concept:

A lot of big companies try to make piracy like theft; I wouldn’t steal a car, but I would ‘steal’ a good design. If I liked another person’s apartment, I would try to make mine look like someone else’s… but that’s not stealing.

And, of course, he’s still making money like crazy. While it doesn’t look like he posts historical data any more, he does show a running tally of the past 24 hours, and as of me writing this, he’s sold 10,348 copies in the past 24 hours (out of 36,612 registered). At 15 euros a pop, that’s over 150,000 euros in the last day — for a small indie game. And these numbers have been going on for months. It’s not even a situation where there was a big boom and then sales dropped off. It appears that the game just keeps on selling.

But it’s impossible to make money because of “piracy” right?

Filed Under: lost sales, markus persson, minecraft, notch, piracy, reasons to buy