The Freakonomics Of Hollywood’s Piracy Claims

MPAA2The Freakonomics dudes have called BS on Hollywood’s piracy claims. Adrianne Jeffries reports for BetaBeat:

Anti-piracy rhetoric holds that online piracy is a devastating force on the U.S. economy, responsible for the theft of between $200 billion and $250 billion per year and the loss of 750,000 good American jobs. “These numbers seem truly dire: a $250 billion per year loss would be almost $800 for every man, woman, and child in America. And 750,000 jobs – that’s twice the number of those employed in the entire motion picture industry in 2010,” write the economists over at Freakonomics.

But those numbers are wrong, the authors say, citing a breakdown by the Cato Institute’s Julian Sanchez.

In 2010, the Government Accountability Office released a report noting that these figures “cannot be substantiated or traced back to an underlying data source or methodology,” which is polite government-speak for “these figures were made up out of thin air.”

More recently, the Institute for Policy Innovation (IPI) placed the number at $58 billion; but that reporter is methodologically flawed, Mr. Sanchez and tech journalist Tim Lee have deconstructed, and is guilty of double-counting with results that “swell the estimate of piracy losses considerably.”…

[continues at BetaBeat]


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13 Comments on "The Freakonomics Of Hollywood’s Piracy Claims"

  1. “…would be almost $800 for every man, woman, and child in America.”
    They neglect to mention that every man, woman, and child in the United States probably saved a few hundred dollars by not spending their hard earned money on a terrible film they’d normally be paying for.
    Also that $800 for every man, woman, and child goes to a few rich guys anyways… that still get rich.

  2. Woot! Called it!!! Hey…I’ve only been chanting the same mantra for a cpl years…so I’m damned glad someone ran the numbers and proved them to be as fishy as I’ve been saying. The losses the media corps claim they suffer….are WAYYY beyond even their most optimistic earnings. The media market has a saturation point…and most folks who will casually stream a movie for free…aren’t looking to make a buck or even save a buck…they just don’t care either way. Make them have to pay for that product…and they just won’t buy it because they don’t want it enough. Ergo the entire concept of countless millions being ‘robbed’ from corporate pockets is a fiction. They break even either way…either people with little money find ways to see a flic for free…or they ignore it…but either way the industry can’t get blood from a turnip.

    • Which makes me wonder why they do it. I remember when people first started streaming South Parks from their websites, and Comedy Central would shut them down. How many years did it take CC to figure out that they could just put some commercials on it and stream it from their own site? 
      It seems like we just need to wait for the generation currently running the media companies to die off before they come to the obvious conclusion that they need to work with the technology, not against it. Meanwhile, one has to wonder how much they’re costing themselves in opportunity costs by focusing all their resources on alienating their fans. 

  3. THE joiner | Jan 23, 2012 at 5:56 pm |

    When i was a kid things were talked in the millions these days everything is talked about in billions so $.250 billion is a lot of money i think it just a lot of bull.SOMEBODY IS HAVING A LAUGH

  4. Mr Willow | Jan 23, 2012 at 5:57 pm |

    Vox pretty much nailed it. Most of what is produced by the entertainment industry these days just isn’t worth paying for, and in general is not worth experiencing at all beyond an itching curiosity. If people who can’t afford to go to a theater, or buy a Blu-ray—or can, but don’t want to take a risk on what they already expect to be poor quality, entertainment wise—can’t see it for free, that doesn’t mean they’re going to go to the cinema, or buy it, or sign up for a subscription-based rental service. In a majority of cases, they will simply avoid it altogether or begin bootlegging it.

    Not that it matters. Hollywood has the final say, open internet be damned.

    Another one bites the dust:

  5. DeepCough | Jan 23, 2012 at 6:16 pm |

    For an industry that produces a lot of fiction, I’m not surprised that these numbers themselves are made up.

  6. MadHierophant | Jan 23, 2012 at 8:37 pm |

    I pray for the day where people just decide to support indie entertainers instead of heeding the call of Hollywood’s recycled shit-whistle. Louis C.K. showed that they’re basically superfluous middlemen with his self-distributed comedy special. 

    • MadHierophant | Jan 23, 2012 at 8:41 pm |

      Oh, and another thing:


      If you are an artist, you need to watch this.

      If you are a consumer of entertainment, you need to watch this. 

      And if you are a corporation that parasitically exploits creators, then I wish you actually were people, so you could be fucked inside out by Satan’s jagged cock. 

      • DeepCough | Jan 23, 2012 at 10:29 pm |

        That was the most righteous, informed rant I ever heard about how industry insists upon absolute monopolization instead of proper competition in the free marketplace and the artistic fields. Check out the Jimquisition. No one rants better than a fat British man.

  7. “Cites a study by the Cato Institute?”

    Any astute reader or non sheeple knows that The Cato Institute, a Koch Brothers think tank is in the business of screwing the average American. 

    Go Google Bernie Sanders + Koch Brothers. These billionaires are trying to take away Medicare, Medicaid and destroy the heath care system that has been passed by Congress. 

    If there were ‘an enemy of the people’ it would be the Koch Brothers.

    This country will only breturn to greatness once people like these have their pictures in the Post Office.

    Frankly, I’m sure they want to buy the USPS to prevent this from happening. Meanwhile, back at the ‘We
    steal music and movies’ ranch, I haven’t met one kid under the age of 30 during
    the last 12 years who hasn’t bragged about their ability to get the latest
    music for free. Not a single one has paid A DIME for a CD…and they watch first
    run movie online and burn them to disks. 

    Oh, and these movies are available to
    them within a few days of the movies debut in the theater. 

  8. PIss In Obama's Ass | Jan 25, 2012 at 4:34 am |

    Fuck Hollywood, most movies and or music that is produced and shoved down the throats of Americans is worthless garbage. Multiple times I had bought music, or movies, and completely regretted it the instant I watched or listened to it. SOOOo instead of WASTING my money (Seeing as how I couldn’t return the junk I had just thrown my money away for), I decided I was going to save my money instead, and download their shit first to make sure I wasn’t getting ripped off again. Once in a while I WILL find something that’s actually worth money, and I will buy the product even if I already had a lower quality, water marked version of it.

    If any of these SOPA, PIPA bills EVER become law, I just wont bother at all. I don’t need movies and music that bad. They get so much fucking money anyways its ridiculous. South park does a fucking fantastic job of putting this into perspective. <3 South Park.

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