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The author of that funny video about how the copyright industries trumpet absurd numbers on piracy-related financial and job losses has written up an informative extended version of his talk in which he explains where he got the numbers for his calculations. It's worth checking out, mainly because it makes clear that there frequently are no reliable sources for the staggering, terrifying, and mostly imaginary numbers on piracy-related economic losses. And consequently, that there is no factual basis for many laws and proposals for laws that include restrictions on online freedoms in the name of enforcing copyright law - SOPA, PIPA, ACTA, the DMCA, and other acronyms.

Apart from the numbers talk, the following excerpts from the write-up are telling (emphasis added):

First, the Motion Picture Association’s claims of $58 billion in actual US economic losses and 373,000 lost jobs came from this press release (which can also be found on Scribd). These numbers originated at a think tank called the “Institute for Policy Innovation” – an organization that Businessweek once profiled in an article called "Op-Eds for Sale." In it, an IPI analyst freely admitted to taking payoffs from disgraced lobbyist Jack Abramoff in exchange for writing “op-ed pieces boosting the lobbyist’s clients.” The IPI’s president supported this behavior, saying it was neither wrong nor unethical, and dismissing those who apply “a naïve purity standard” to the business of writing op-eds. This doesn’t necessarily mean that MPAA lobbyists paid the IPI to conjure up these numbers. But whatever their genesis, they’re not easy figures to support.

(...)

To me, the most depressing number in the presentation is the $150,000 maximum fine that Congress designates for “willfully” pirating a single copy of a single song under the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999. This number is grotesquely divorced from the actual damages and harm caused by a single instance of piracy. As such, it represents a naked perversion of “The Law” — turning it from a source of justice into a bludgeon for a powerful and cynical lobby. The music industry has sued more than 30,000 US citizens under this law. Since the consequences of losing would be bankruptcy in almost all cases, the crushing majority of defendants settled without daring to challenge the industry. As a result, the maximum $150,000 per-song fine has never actually been imposed (although one student is currently fighting a verdict of over $20,000 per song, and a single mom was hit with an $80,000-per-song ruling, which was later reduced, but is still being debated in appeal).

How do organizations arrive at imaginary numbers for the damage caused by copyright infringement? Besides paying lobbyists to "calculate" numbers out of thin air, games of telephone and faulty interpretations of statistics seem popular methods as well. In a 2008 article called "750,000 lost jobs? The dodgy digits behind the war on piracy", Ars Technica tried to hunt down the source of the "750,000 lost jobs and $200 to $250 billion cost to the US economy" numbers that used to be (and sometimes still are) tossed about to justify ever-stricter interpretations of, additions to, and enforcement of copyright law. They found that the numbers were completely bogus.

This a very readable and informative article: it's slightly more dated than the "Copyright math" video, but it does an excellent job of clarifying exactly how lobbyists and the lawmakers who listen to them can arrive at mind-bogglingly stupid numbers. Here's a bunch of excerpts (emphasis added):

First, the estimate of 750,000 jobs lost. (Is that supposed to be per year? A cumulative total over some undefined span? Those who cite the figure seldom say.) Customs is most often given as the source for this, and indeed, you can find press releases from as recently as 2002 giving that figure as a U.S. Customs and Border Patrol estimate. Eureka! But when we contacted CBP to determine how they had arrived at that imposing figure, we were informed that it was, in essence, a goof. The figure, Customs assured us, came from somewhere else, and was mistakenly described as the agency's own. (...)

With Customs a dead end, we dove into press archives, hoping to find the earliest public mention of the elusive 750,000 jobs number. And we found it in—this is not a typo—1986. Yes, back in the days when "Papa Don't Preach" and "You Give Love a Bad Name" topped the charts, The Christian Science Monitor quoted then-Commerce Secretary Malcom Baldridge, trumpeting Ronald Reagan's own precursor to the recently passed PRO-IP bill. Baldridge estimated the number of jobs lost to the counterfeiting of U.S. goods at "anywhere from 130,000 to 750,000."

Where did that preposterously broad range come from? As with the number of licks needed to denude a Tootsie Pop, the world may never know. Ars submitted a Freedom of Information Act request to the Department of Commerce this summer, hoping to uncover the basis of Baldridge's claim—or any other Commerce Department estimates of job losses to piracy—but came up empty. So whatever marvelous proof the late secretary discovered was not to be found in the margins of any document in the government's vaults. But no matter: By 1987, that Brobdignagian statistical span had been reduced, as far as the press were concerned, to "as many as 750,000" jobs. Subsequent reportage dropped the qualifier. The 750,000 figure was still being bandied about this summer (note: in 2008) in support of the aforementioned PRO-IP bill.


And:

What, then, of that $200 to $250 billion range? Often, it's attributed to the Federal Bureau of Investigation, and indeed, the Bureau routinely cites those numbers. According to FBI spokesperson Catherine Milhoan, the figure "was derived through our coordination with industry, trade associations, rights holders, and other law enforcement agencies" at a 2002 anti-piracy confab. But neither the Bureau nor the National Intellectual Property Rights Coordination Center, which assembled the inter-agency powwow, could find any record of how that number was computed. (...) Several of the witnesses were conspicuously vague about their sources. (...) Finally, Charlotte Simmons-Gill of the International Trademark Association was kind enough to give a precise citation: the October 25, 1993 issue of Forbes.

Ars eagerly hunted down that issue and found a short article on counterfeiting, in which the reader is informed that "counterfeit merchandise" is "a $200 billion enterprise worldwide and growing faster than many of the industries it's preying on." No further source is given. (...) What is very clear, however, is that even assuming the figure is accurate, it is not an estimate of the cost to the U.S. economy of IP piracy. It's an estimate of the size of the entire global market in counterfeit goods.


And finally:

One final, slightly theoretical point deserves emphasis here. All the projections we've discussed, the rigorous and the suspect alike, calculate losses in sales or royalties to U.S. firms. This is often conflated with the net "cost to the U.S. economy." But those numbers—whatever they might be—are almost certainly not the same. When someone torrents a $12 album that they would have otherwise purchased, the record industry loses $12, to be sure. But that doesn't mean that $12 has magically vanished from the economy. On the contrary: someone has gotten the value of the album and still has $12 to spend somewhere else.

(...)

But enough theory and speculation; here is what we can say for certain: the two numbers that are invariably invoked whenever Congress considers the need for more stringent IP enforcement are, at best, highly dubious. They are phantoms. We have no good reason to think that either is remotely reliable.

Perhaps more importantly, both numbers are seemingly decades old, gaining a patina of currency and credibility by virtue of having been laundered through a relay race of respectable sources, even as their origin recedes into the mists. That's especially significant, because these numbers are always invoked as proof that the piracy problem is still dire—that everything we've done to step up international enforcement of intellectual property laws has been in vain. But of course, if you simply recycle the same numbers from 15 and 20 years ago—remember that IACC's 2005 publications still cite that 1995 congressional testimony, from which it seems safe to infer that they have no more recent source—then it will necessarily seem as though no ground has been gained.


Charming. One of the laws created under the shadow of such phantom numbers was the DMCA, which led (among other things) to the sort of automated enforcement that allows private companies to police and punish online creators at random and without having to prove in court that the individuals did anything wrong. There's a new one of those coming to the US in months, this RIAA-backed six-strikes plan, on which there is a truly deafening silence in nearly all mainstream media I've checked out.
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