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The MPAA and The Rest of The Content Industry Are Prepping For a New Assualt Using Old Numbers...

by on17 January 2013 3569 times
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Although the war for a free and open internet has fallen out of the front page news there are still rumblings about it going on in the background as the MPAA, RIAA BSA and other organizations gear up for another round of attacks on the internet as we know it. We expect to see Chris Dodd come back to “the hill” and catch up with his old buddies that are still in active service with the US government. His goal this time will be to get bills like SOPA and PIPA reborn and pushed through in back room deals instead of trying to get things done openly and honestly. What we find interesting is that the MPAA, RIAA and BSA have been using the same old arguments and logic for almost 10 years to no avail, what arguments are they going to us this time, or will they simply make promises to get what they want…

Although any speculation about what promises will be made behind closed doors is irresponsible we do want to dive in and talk about some of the logic they try to use on the public and in the open. One that always makes us laugh is the numbers they throw around when they try to show how much piracy impacts them financially. While there is no doubt that there is a financial impact the numbers that are used are often a better work of fiction and comedy than Douglas Adams’ Hitchhiker’s Guide to the Galaxy. Of course the question is; where do they get these numbers from?

To start off with the MPAA, RIAA and other copyright holders use a little misleading math to get larger figures and show how hurt they are (yet somehow they manage to make a massive profit every year). The first thing they do is try to find out exactly how many times a particular title is downloaded. This is an estimate that they gather through looking at torrent swarms and also through the use of Honey Pot servers. Now the copyright industry knows this is a small percentage of what is going on out there so they inflate the number a little bit. Here is an example of what we mean;

If they sample 25% of internet traffic and find that 2 Million titles are downloaded they use this as an average for the remaining 75% that means they multiple the average by 4 to get 100% of the internet downloads for that title in this case 8 million.

After they have their imaginary figure for the number of times a title was downloaded they make another leap of logic (well fantasy) and assume that every download is a lost sale. We all know this is not true, but they get away with it by trying to liken digital files to physical objects. If you steal 8 million physical items those are items you cannot sell and they have a fixed replacement cost that impacts a business. In digital terms there is an infinite number of times that a file can be replicated without cost (again unless it is stamped on physical media). So the replication of that file has a zero value attached to it in reality. The item still have value for its artistic content (or the amount of effort put into coding/recording it), but that is infinitesimal in real dollars; we are getting off topic here though. Now we all know that to buy a DVD or Blu-ray or even rent a movie through a streaming service costs money.
To buy a Blu-ray costs more than a DVD or to stream a movie and of course the copyright holders will apply the highest dollar amount to that number we generated above.

So now let’s see what we have so far; 8 Million downloads of a title at a cost of $25 (for a Blu-ray) is $200 Million. At least that is what the MPAA would tell you about a movie that might be a hot item for file sharing. Sounds pretty bad for one title doesn’t it? The problem is that not all of those 8 Million would have gone to see the movie or bought the Blu-ray so you cannot call all 8 million lost sales. One conservative estimate is that about 30% of people that download a movie would actually pay to see it in the first place. So that $200 Million is reduced quite a bit ($60 Million). Now we have another figure that will come as a surprise to many (although not everyone); roughly another 30% will actually pay to see a movie AFTER they download it. The original download was to see if the movie is worth it in the first place and then they go and see it in the theaters or buy the film for all of the extras.

Now it 30% are “lost sales” and 30% actually pay for the title, where is the lost revenue on a digital file? To put it bluntly there is very little in actual lost revenue. It is there, but it is not the billions that the industry claims. This is the big lie that the content industry tries to push to the masses and lawmakers while skirting the issue of consumer rights, privacy and also the increasing control that the content industry wants to put on their titles.

Now as the consumer wakes up to the big lie, the content industry has moved to try and push this as a national security issue as well as being one that will cost US jobs (never mind that much production and manufacturing takes place overseas). That is the push that will happen in Washington this year in order to gain more control over what you do on the internet as well as the free and open sharing of culture on the internet. We will also see a renewed attack on file sharing sites (legal or otherwise) in an effort to send a warning to anyone that might try to offer competition to their failing business model.

In short 2013 will be an ugly year for privacy and rights on the internet (net neutrality) the powers that want to control this are going to use any means to get what they want, after all if you are dealing with a group of people that can come up with the logic and numbers we showed you above they are not working with a full deck anyway. Good luck and stay safe…

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Last modified on 17 January 2013
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