Piracy Costs Industry Imaginary Money

by Irma Arkus

Overwhelming amount of articles have appeared today, purporting that billions of dollars are “lost” due to piracy of software and cultural materials.

The IT industry lost some estimated $9 billion last year.

While the articles tout “piracy” as the overwhelming cause, the majority of money pinpointed as a source of this “lost” revenue are major movements toward PC trade in developing countries such as China and India.

Ars Technica provides for some hard analysis of the figures, including pointing out the obvious inconsistencies: “The US showed the lowest level of PC software piracy at 20 percent, and was joined on the bottom end of the scale by Japan, New Zealand, and Luxembourg. Still, the BSA claims the US had the highest dollar losses at $9.1 billion due to its being the biggest software market.”

The reason? US consumers pay top dollar for the software.

The figures themselves are overwhelming because they are based solely on RETAIL prices of software and some really fuzzy accounting principles.

In one article, BSA translates the potential $9b revenue as a loss of $24b dollars in taxes. This of course, would only occur whence corporations actually do declare incomes and eliminate offshore tax havens. And even then, the sum of money still would not translate into a magical $24billion.

For one, the estimates imply that all software will be sold at retail prices.

Secondly, the jobs estimated to be lost by the piracy of software, exclude the estimated jobs created by the use of software.

Similarly, the movie industry moans about the lost revenue due to the downturn in ticket sales, but not only does the research keeps on confirming that distribution of films illegally also fuels the DVD sales, but the actual sales of DVDs are underreported as part of those revenues. [ArsTechnica]