Well, knock me down with a feather! Vested interests in the content provision sector have been caught out wildly over-egging the pudding. It seems that their claims of countless billions of bucks being lost to piracy and copyright infringement are just so much poppycock. And that's official - the US Government Accountability Office says so. Martyn Warwick reports.
The remit of the Government Accountability Office (or the GAO as it is more usually called) is to provide to the US Congress "timely information that is objective, fact-based, non-partisan, non-ideological, fair and balanced".
It has done just this with it's latest report catchily entitled, "Intellectual Property: Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods." Sounds as dull as ditchwater doesn't it? But despite the dry academic style the report blows wide open the unobjective, unbalanced and highly partizan claims being made by content provider lobbying bodies such as the Business Software Alliance (BSA) and the Motion Picture Association of America (MPAA).
The GAO report was commissioned by the Congress as a countervailing measure to help rebalance the obvious political bent of a bill that rejoiced in the title of "The Prioritising Resources and Organization for Intellectual Property Act of 2008".
The leading initials of of the legislation spell PRO-IP Act - exactly what the Bill was - and is another example of the recent penchant for American legislators to package in the title of a bill an in-your-face, don't-mess-with-me precis of what it's about - even if it pushes the use of English well-beyond breaking point.
Probably the most notorious example to date is the "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 - otherwise known as the USA PATRIOT act.
What the Patriot Act actually did was to massively increase the powers of various law enforcement agencies to access private telephone and e-mail communications as well as health, finanance, and other records and drove an entire wagon train through the restrictions on foreign intelligence gathering within the US that had been law since earlier, less illiberal, times.
The new GAO report is all the more devastating because, right off the bat and with no beating around the bush, it admits that intellectual property rights are a good thing. "The importance of patents and other mechanisms to enable inventors to capture some of the benefits of their innovations has long been recognized in the United States as a tool to encourage innovation", it says.
The GAO also acknowledges that piracy, unauthourised downloading and copyright theft have a negative impact on companies but then rejects outright the veracity of the figures that vested interests have adduced to support their argument that the sky is falling and fortunes are being lost.
These vested interests are powerful and their lobbying to have the policing and prosecution of intellectual property right infringements made a major plank in US political platforms is remorseless. Nonetheless, they will have been taken aback by the GAO's bald assertion that, "Three widely cited U.S. government estimates of economic losses resulting from counterfeiting cannot be substantiated."
The report says that the industry, media, and government publications parroting an FBI "estimate" that US corporations lose US$200-$250 billion per annum to piracy are guilty of not checking sources because the FBI paper (issued as far back as 2002 and therefore totally out of date in any event) doesn't have any source data to back it up. In other words.
the FBI report is a scare story without credibility because it cannot be corroborated.
Secondly, the GAO says a 2002 figures in a press release by the US Customs and Border Protection Agency stating that US businesses will lose $200 million and 750,00 jobs a year to counterfeiting and piracy "has been discredited" and agencies were told as long ago as March 2009 to stop using the data. However, pro-content industry lobbyists still refer to them as established fact and so does the US Department of Homeland Security.
Thirdly, the Motor and Equipment Manufacturers Association says an estimate that the nation's spare parts sector has lost $3 billion to counterfeit goods originates from a report by the Federal Trade Commission (FTC), but FTC officials admit that no such report exists and is, in fact, a myth.
In other words the three main sources quoted by the lobbyists to support their financial loss contentions are either out-of-date rubbish or simply don't exist.
The GAO is also strongly critical of the BSA and MPAA for suggesting, without any empirical evidence to back up the assertion, that there is a set and provable link between piracy and "lost" sales of content such as CDs and DVDs.
The truth of the matter is that music and movie industries are in denial. They are struggling to come to terms with the fact that ante-deluvian copyright laws (that do little for the writers, musicians and lyricists who actually create original content but do keep studios in the style to which they have become very much accustomed and to which they believe they are inherently entitled) have had their day and are irrelevant in the age of the Internet. A new business model is needed. It will come and it will mean that studios and record companies will have to rein-in their greed and learn to live in the real world. Unsurprisingly they don't want to do that but they don't help their case by gilding the lily in such a blatant way.
The use of spurious, fake, imagined, fictional and/or unsubstantiated and out-of-date reports and statistics to back up a dubious argument so riddled with holes as to be laughable is no way to attract popular sympathy for a deeply unpopular cause.
And, bye-the-bye, isn't it ironic that a hundred years or so ago the nascent US movie industry fled New York and set up in California not because of the weather but to escape the attentions of the police who were chasing them with the intent to fine them and close them down for non-payment of patent fees due to the Edison company?
Yup, Thomas Edison reckoned he owned all the rights to the entire cinematic process and that no-one could make any film without paying him for the privilege. Much good it did him.
So, once again poachers have turned themselves into gamekeepers. And now they are the establishment they are determined to hang on an archaic business model of the sort they once reviled, fought against and defeated.
They are going to have to learn to listen to the demands of consumers who are sick of being taken for an expensive ride and they are going to have to restructure their entire approach to media production and distribution.
If they won't or can't do so voluntarily it will be imposed up them by the very nature of the world wide web itself. Block up one means of so-called "illicit" distribution and another 10 will spring up to take its place. That's the way the Internet works. Why don't they get it?
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