Bogus Piracy Statistics

Say what you will about the moral or immoral nature of "piracy", but when the MPAA releases things which they call "statistics", they're really making themselves look foolish. MPAA has reported record revenues for 3 or 4 years straight now, with 3 films this year topping the $1 billion mark worldwide. What do they do to celebrate? Release an infographic that claims the US economy experienced $58B in lost revenue due to "piracy". Seems a little high, doesn't it?  Pajiba.com recently ran the numbers just to point out the ridiculousness of their stats.

So according to the MPAA, piracy cost them $58 billion last year, making movie piracy a bigger industry than the GDPs of 10 American states. To put it even starker perspective, look at it this way. The film industry gets about $10 billion from the box office, and about $30 billion from the after market of DVDs, streaming, etc. So they’re claiming that piracy costs them almost two-thirds of their business. At $10 per DVD, every household in the United States would be buying an additional 50 DVDs per year if they weren’t so busy downloading. The technical term for a statistic like that is “fictional.”

See, they also claim that 29 million adults have ever illegally downloaded a film. But since that’s only 13% of the adult population, it makes the figure even more absurd. By their own estimate, those adults in question would have on average purchased an additional 200 DVDs each year if only they were still on dial-up.

First thing I have to say is that even if the $58B was an accurate number, it's still a false premise. Just because $58B wasn't spent on movies does not mean it's lost output, lost tax revenues. That $58B would have been spent in other parts of the economy instead. Second, a download cannot be counted as a lost sale because someone who downloaded the film wouldn't be guaranteed to have bought the film if downloading it wasn't an option. Thirdly, do they really expect someone -- anyone -- to believe that if downloading didn't exist each "pirating" adult would purchase 2 DVDs every 3 days?

Clearly the MPAA views the unauthorized copying of their films a problem, and that’s fine; however releasing completely bogus information will only hurt their credibility (assuming any remains). There are many examples throughout history where technological advances have disrupted existing business models. I'll explore that further in a post next week.