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back to article Study accuses media companies of cooking the books on piracy losses

A study by the London School of Economics and Political Science has found that media companies are overstating their losses to piracy, that policies to cut off internet users for copyright infringement don't work, and finds that those industry sectors that have embraced digital sharing are growing as a result. "Neither the …

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Alert

shock horror

music industry pulls figures on cost of piracy from the arse of a magic elephant.

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Re: shock horror

The rest of them (TV / Hollywood / software ... ) are just as bad.

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Re: shock horror

Would be funny if it wasn't for the fact that real people have been ruined by the ridiculous fines they've had to pay as a result of the industry inflating its damages.

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Holmes

icon

that is all

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Anonymous Coward

It's an idealogical war. So many things were "killing music" and yet the industry still exists.

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Anonymous Coward

A lyric from one of the songs by musical comedian Mitch Benn

"Home recording isn't killing music, musics dying of natural causes"

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Pirate

Indeed, I bought a record in '83 that had a small warning printed on the back sleeve: "home taping is killing music and it's illegal". Music seems alive and well to me 30 years later.

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Joke

@Xofer

All that proves is that the warnings worked very well, thankyouverymuch :-)

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Yawn

You can't kill the music.

You can kill the hangers on, the middle management, the bonuses for execs, the social media managers, the mailing list managers, the brand managers, half the promo team, need I go on?

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Happy

Re: Yawn

"You can kill the hangers on, the middle management, the bonuses for execs, the social media managers, the mailing list managers, the brand managers, half the promo team, "

Well that's a pretty good start.

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Re: Yawn

For some record companies those are important (and underpaid) people. What is needed is not a cull of the people, but of the big labels. It's the concentration of a small handful of big labels strangling creative content that is the biggest problem in music. These are the companies that tell musicians to take single digit percentages knowing in most cases they'll have to accept or see their music held from radio play as the labels carpet bomb the airways with their formulated tripe. What is needed is more labels like Nuclear Blast that are using social media, digital distribution and allowing their artists to do what they actually want, which is to create.

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Re: Yawn

"small handful of big labels strangling creative content "

You don't go far enough, the labels don't stand alone, they are part of bigger conglomerates that also own the radio stations, TV stations, internet and cable providers...

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Pirate

Gee, what a surprise

Not.

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Pirate

"A study by the London School of Economics and Political Science has found that media companies are overstating their losses to piracy, that policies to cut off internet users for copyright infringement don't work, and finds that those industry sectors that have embraced digital sharing are growing as a result."

The study was also able to establish that the sky is blue, water is wet, and Miley Cyrus is batshit crazy.

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Careful...

Now now, don't get carried away with the sarcasm and the evidence-based commenting or Orlowski will barge in and tell us how media companies are the best thing since sliced bread and all that sharing malarkey is the death; period.

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For some reason Film, Music and Game, companies equate every download with a lost sale, thats clearly not the case.

You do have assholes who just download it forever but then you get people who try it by pirating it and then get it or get it once its got to an affordable price (£60 games I'm looking at you...) you then have people who just download it and never watch half the crap they pirate because they are just addicted to the data and don't have time to watch or use half the shit they steal.

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Surprise, surprise!

> A study by the London School of Economics and Political Science has found that media companies are overstating their losses to piracy

No?!

SURELY YOU JEST!

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I'm right with you guys

Next, they'll be saying Hollywood engages in 'creative' accounting!

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Hollywood Boom

The music asshats should look at Hollywood. I realize the movies aren't the greatest, but they've really, really improved over the last few years.

Yes, yes, I know it is mostly recycling good stories with glitzy special effects, but they are at least somewhat entertaining and the resurgence of the industry proves it. If you make things people like they will pay for those things. If you aren't willing to cater to your customers you don't deserve to make scads of money.

I was always taught the customer is always wrong, but they have the money. If you want it, you better do what they want.

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Re: Hollywood Boom

The music asshats should look at Hollywood asshats.

There - fixed.

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Thumb Up

Re: Hollywood Boom

Fair enough!

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Anonymous Coward

No shit Sherlock

Of all the industries destined to meet the digital age head on, the music business was perhaps the most spectacularly temperamentally unsuited to take on the challenge, not least because the model they have been lovingly honing for 40 odd years long since stopped being about music at all and became almost entirely about marketing and packaging product. Musicians, engineers, hardware manufacturers and producers can all still be said to be creative, but the bit that is generally meant when talking about the industry, the executives, are creative pretty much only in respect of how they utilise accounting to avoid tax. By dithering about digital distribution for so long, they let "piracy" firmly establish itself without lawful alternative; their rather profitable "demise" is entirely of their own making. That the movie industry should watch the pile up and follow it happily is bewildering.

When the music biz wails about wanting to break knuckles, the people handing them the hammer are of course politicians; a genuinely natural marriage of those who really don't get change in general and anything to do with computers in particular. They also share a contempt for their core constituencies; the music buying public for one, and the politicians natural fear of "the mob" driving their derision for the pesky electorate. If there's one thing politicians do know how to do though, it's wag their fingers a lot while "getting tough with..." and declaring the odd "war on xyz". It plays well with the press, which of course is exactly the intended target audience. And both love nothing better than an economy-expanding obedient cash cow.

There was a time when stuffing the worlds parliaments with lawyers, landed gentry, wealthy investment bankers and lobby fodder probably made sense, but its long, long gone, and if we don't want to end up as The Land Of Missed Opportunities we'd be wise to start picking parties and candidates whose skills and knowledge reflect the 21st century and a world we might want, rather than those unfit to manage even a rerun of the Industrial Revolution.

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Re: No shit Sherlock

That's what's so funny to me about the music business: Their shift from music to marketing. They strangled their own golden goose.

Even as recently as the early 90's the big names carried the smaller acts. The business approved and even supported that. The 'big names' always got their inspiration from artists the general public has never heard of. If the record companies didn't support those small acts then there would be little inspiration for future acts. They were afraid music would be 'stuck' for long periods of time like it had in the past if new and exciting artists didn't get to record and be heard. The music business was investing in its own future. And they stopped in exchange for a quick buck (I guess that's normal these days though).

Black Sabbath and Led Zeppelin covered the costs of musicians like Bonnie Raitt, Waylon Jennings and other acts that were the inspiration for acts like U2 and Metallica. It was a good investment. Where is the next batch of inspiration going to come from? Just recycle what's already been done and add some nice tits and ass? I'm a fan of tits and ass, but they don't make good music. It seems like the music business has done to itself what it always feared would happen if they didn't invest in small acts.

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Re: No shit Sherlock

EXACTLY! Funny thing is those smaller acts were the ones I looked forward to when I went to the Used CD stores growing up... They were exciting, new, challenging...their lyrics were provocative and always seemed to reverberate in my own life experience at the time...

Now...well...yeah... The only way you can kind of find anything worthwhile is by scouring the digital distribution sites and hoping for something free to pique your interest.

IT is truly a sad time in the world. There's no way that this can go on... I reckon we prepare for impact...

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Megaphone

Lies, damned lies . . .

There was a great interview over at Rock,Paper,Shotgun with some Ubisoft folks discussing their decision to stop using online DRM in future games. Well worth a read:

http://www.rockpapershotgun.com/2012/09/05/ubisoft-drm-piracy-interview/#

My favourite part is:

>> RPS: Do you think that’s why no publishers publish such data?

>> Burk: It’s hard to say. I think as Stephanie said it varies, from game to game, region to region, and so the example that you gave – like Stephanie said, we’ve seen internal and external data to show that it can reach that high. But that doesn’t necessarily mean that it is that high for all PC games, or that it is that high for all companies, or across all regions. I think that’s one reason why companies are not necessarily broadly publishing this, because we’re trying to get a handle on what it means for different games, different titles.

>> RPS: But do you understand how damaging it’s been to your argument to never actually say these numbers?

>> Perotti: Yes.

Essentially the whole thing is the interviewer being as courteous as possible while trying to ask them why they lie about their figures and about the effectiveness of DRM and a string of mealy-mouthed evasions from the Ubisoft team trying to avoid admitting that they simply made up figures that supported their case.

The follow-up question I wish they had asked was: "If you are still 'trying to get a handle on what it means' then how can you publishing such strong figures or use them to justify unpopular decisions?"

Media companies like to publish huge inflated figures like '90%' piracy and 1.37 beellion dollars but the simple truth is that they have no real figures or facts and engage instead in some rather creative 'worst case' what-if accounting.

The common assumption about piracy when giving these figures is that every instance of piracy (and how that is counted is another issue altogether) WOULD have been a purchase at the full RRP and indeed often goes beyond even that, claiming damages in other, related areas.

The $1.37b figure above was published by AFACT in Australia about movie piracy and when investigated, included things like lost revenue to cinema operators, which itself tallied not just the ticket price but the average spend of a person going to a cinema.

The whole affair is like those wonderful US stories of people tripping over in a store and claiming millions of dollars in damages.

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Re: Lies, damned lies . . .

There's a great article from O'Reilly about similar things from 2006. Choice snippet:

And overall, as a book publisher who also makes many of our books available in electronic form, we rate the piracy problem as somewhere below shoplifting as a tax on our revenues. Consistent with my observation that obscurity is a greater danger than piracy, shoplifting of a single copy can lead to lost sales of many more. If a bookstore has only one copy of your book, or a music store one copy of your CD, a shoplifted copy essentially makes it disappear from the next potential buyer's field of possibility. Because the store's inventory control system says the product hasn't been sold, it may not be reordered for weeks or months, perhaps not at all.

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Anonymous Coward

Re: Lies, damned lies . . .

"Media companies like to publish huge inflated figures like '90%' piracy and 1.37 beellion dollars but the simple truth is that they have no real figures or facts and engage instead in some rather creative 'worst case' what-if accounting."

I think the media as a whole acts as a cut out for any criticism or investigation of the figures - its a one way process as there's never any opportunity for the buying (or not) public to put the companies and PR bigmouths on the spot over the numbers they spit out and the press certainly don't push the point on our behalf, not least as a lot of the music industry rags are little but an extended puff piece written by those who want a slice of the shiny glamour themselves. Very few who do criticise the industry statistics have anything like the equivalent opportunity to put their case, and if the industry stats are sketchy, those outside may as well be rolling dice to generate numbers as the MPAA etc certainly won't share.

These industries are not alone in making up fantasy figures to bolster fondly held arguments, but they are perhaps unique in that they seem to have nothing else.

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Where's Our Hero?

I'm waiting for The Great AO to come and debunk this for us.

In non-sarcastic news: Those statements were delightfully well written.

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Facepalm

The media industries would be liars?

Yeah right, and Earth is not flat either. I can't believe it :rolleyes:

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Wrong assumption

The industry's assumption is that every person illegally downloading a product would have bought that product if they hadn't illegally downloaded it. People download a lot of shit they never would have bought. If a man outside a grocery store gives me an apple, the store cannot claim that that is a definite loss on their part. Who's to say I would have bought an apple if I wasn't given one?

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Alien

Re: Wrong assumption

From what I've seen it falls into several areas. Some are a bit greyer than others but all as far as the law is concerned are wrong.

1. Files shared between friends. Not actually any different than any time since the 1970's where friends would swap tapes, then CDs.

2. Files downloaded for interest. "That band has an interesting name, I wonder what they sound like".

3. Files downloaded because you simply cannot find them any other way. Poe and Aimee Allen come to mind here, both had their music leaked AFTER the record company stitched them up and refused to release their music (Poe was famously unable to even perform her own music for 7 years after her label refused to re-release her albums despite a large fanbase requesting it).

4. Files downloaded that you already own. This tends to be the older generation who still has an extensive collection of vinyl, cassettes and CDs but in the case of vinyl and cassette no way to convert to mp3/flac.

5. Files downloaded to try. Done this one myself, downloaded an album from a friend, liked it so much I bought the CD 2 months later when it was released in the UK along with the limited edition CD singles.

6. Then you have the music downloaded because you can.

Interestingly most of the above have the potential to either increase sales (1, 2, 5), or were a result of a sale in the past (4). The clearest piracy case is 6, which would never have resulted in a sale. However this is also the group that is closest to the argument of piracy is theft as the nearest pre-digital case would be walking into a store and walking out without paying with a bag full of stolen CDs. Number 3 is my personal bugbear where the music industry is concerned. It's quite simply industry bullying of artists, taking their creative work and then preventing the artist from actually being able to sell what they've created. Often in the mistaken belief that if they promote a small heavy metal band it might mean less money available in the market for sales of their star hip-hop artist. At a certain level in larger labels they lose sight that the people who are interested in band A simply aren't interested in band B and by not promoting one it actually does not help the other.

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Re: Wrong assumption

"closest to the argument of piracy is theft as the nearest pre-digital case would be walking into a store and walking out without paying with a bag full of stolen CDs."

But it's not very close at all.

If you walk into HMV and take a CD.

- The record company still got paid.

- HMV is out real money that they paid for that CD.

If you download the CD contents only "maybe money" is involved.

- Everyone still has the same amount of money that they had before. No one lost anything.

- If you had not downloaded it, maybe you might have bought the CD. Maybe not.

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Rol
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Re: Wrong assumption

I'd like to add to your excellent arguments, that of culture.

Music, film, books and TV are cornerstones of our culture, they are something to talk about, they help guide the thought processes of millions and without access to them you are socially disadvantaged.

I grew up in a poor neighbourhood at a time where piracy was nothing other than a bearded one legged bloke with a patch over one eye, no video recorders, no cassette tapes. It would be many years later before we got to see on terrestrial TV what everyone else had consumed and raged about, but by then it was all over, it wasn't current , it was ancient history.

Existing in a second-hand, dated world has an impact on your social mobility, it helps to keep you in a cultural underclass that only money can buy you out of.

I am glad to be living in an age where even the poorest get to join in, where children from struggling families can participate in the school yard hullabaloo surrounding the latest release, because uncle Bob torrented it.

Long ago it was recognised knowledge and culture were of such importance that libraries and museums would be free and that to limit access based on income would be unthinkable. I suggest in this fast paced world denying access to current cultural events because you are poor is just as barbaric and ultimately counter productive to social cohesion, as once disenfranchised, you are unlikely to strive to rejoin the club that had no regard for your potential, only your economic worth.

and as Alien8n points out, the media companies have yet to prove they are losing money, while the world enjoys universal access to what is in effect, our culture.

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Yag
Facepalm

And bears are catholics. Or something like that...

One day... one day... I'll enact my cunning plan :

- Record something. Anything. Hell, who cares. It's all about the business model.

- Setup a website advertising this record as "the one time offer of a lifetime", priced at 1 meeelion dollars.

- "Finding" a pirated torrent of the thing.

- Claiming the whole earth GDP as "profit lost to piracy".

Worse is... Jean Michel Jarre actually beat me to a similar stunt : http://en.wikipedia.org/wiki/Music_for_Supermarkets

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Re: And bears are catholics. Or something like that...

Difference there is while the original pressing is obviously a rare and unique piece JMJ himself did grant universal permission for anyone who can get hold of a copy of the original to make a copy (albeit at only as good as "taped off the radio" quality). You have to admit, clever marketing to an extent. The real question is does the album state that resales of the original should include an "original artist tax" to enable JMJ to profit each time it sell?

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The problem has been and will tend to always be a case of the consumer wanting what they want, when they want it and HOW they want it.

If movie studios offer its releases on your cable tv box as a pay per view, you would sit at home in your undies with your beer and cigarette to watch your movie, If you wanted to make a night of it , take the GF out for dinner and a flick. This would offer the product as a service, rather than the antiquated control mechanism of the music industry where a record was a promo tool for live shows, rather than the end product. This has just became more clearer since the conveyor belt of singers on the X Factor who say " this is my LAST chance" , yes maybe the last chance this year, or your last chance on ITV before you flick over to " the voice" the truth is that artists or any kind; take a product they create, be it acting, music or art and sell it to a music company in the belief that they have no other distribution media other than those avenues.

A musician should gig in pubs and bars, yet you hear judges on these music shows say " no ... too much of a cabaret act, or bar singer" but these people WORK ... so whats demeaning in that work. Legendary artists such as the Beatles, or Led Zeplin were not found on Opportunity Knocks , however if they were an artist of today , they would fail believing they had no chance outside the " industry" so is it piracy that is killing the art ... no , its the industry that's loosing control, the art still remains, the artist can still work, can still publicize their craft, they just have to use a little bit of creativity , or just plane go back to hard work gigging. which brings us back to the original statement.. give people what they want, when they want and HOW they want it.

Release a tv show at the same time so people don't pirate it; as they don't want to wait 6 months, give people the option on how they wish to consume that media , rather than through a corporate approved whoremonger outlet (aka cinema). The future is easy to see, it may not be free... but it isn't through its current channels. and finally

Look at the Apple way of business to steal everyone's ideas, change it then sue them for IP, rather than make things that are new. THAT is what the MPAA RIAA type folks are doing , they sue to protect the revenue as they arn't producing marketable products

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Meh

...you don't say?

The only thought this inspired was "duh!".

The truly shocking part of this is that it took everybody THIS long to start figuring these basics....

Oh well.

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