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BSA's Latest Piracy Claims 'Shockingly Misleading,' Says Geist 277

An anonymous reader writes "This week the Business Software Alliance published a new study which purports to estimate the economic gain from a ten percent reduction in piracy of business software. For Canada, the BSA claims that the reduction would create over 6,000 new jobs and generate billions in GDP and tax revenue. But Michael Geist says the BSA claims are based on nothing more than the economic gains from a ten percent increase in proprietary software spending. The BSA now admits its estimate is based on the presumption that every dollar 'saved' by using unlicensed software would now be spent on proprietary software." Glyn Moody pointed out more flaws in the BSA's report.
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BSA's Latest Piracy Claims 'Shockingly Misleading,' Says Geist

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  • by h4rr4r ( 612664 ) on Friday September 17, 2010 @12:22PM (#33612040)

    For every 10% increase in broken window glass over 6,000 new jobs would be created and billions in GDP and tax revenue would be generated.

  • Econ 101 (Score:5, Insightful)

    by Lord Byron II ( 671689 ) on Friday September 17, 2010 @12:25PM (#33612064)

    There is a finite amount of money.

    Thus, if $1000 more is spent on software, $1000 less is spent elsewhere. Roughly speaking, 6000 new software jobs equals 6000 fewer other jobs.

    This is approximately a zero sum game.

    There are benefits to reducing piracy, but their argument doesn't hold water.

  • Not Shocking (Score:4, Insightful)

    by Sonny Yatsen ( 603655 ) * on Friday September 17, 2010 @12:25PM (#33612066) Journal

    How is it shocking? Every study released by industry groups on the effects of piracy, thus far, has been way off the mark in estimating the economic impact of piracy. This is about as unshocking as you can get. Did anyone really expect a trade advocacy group to not mislead you when they report on stuff like this?

  • Doubly misleading (Score:2, Insightful)

    by Anonymous Coward on Friday September 17, 2010 @12:27PM (#33612088)

    Nor does it account for the jobs created by the money *saved* by not paying for said software.

  • Zero sum (Score:5, Insightful)

    by flaming error ( 1041742 ) on Friday September 17, 2010 @12:28PM (#33612090) Journal

    "the reduction [of software piracy] would create over 6,000 new jobs and generate billions in GDP and tax revenue"

    That also assumes that any money not spent on proprietary software is being stashed under a mattress.

    The truth is more like the money would be diverted from other spending, and these "billions" of dollars would just be distributed differently, with no plausible increase in net GDP or tax revenue.

  • Re:Econ 101 (Score:4, Insightful)

    by spiffmastercow ( 1001386 ) on Friday September 17, 2010 @12:30PM (#33612124)
    But economics is not actually a zero sum game.. There's lots of imaginary money (stocks, bonds, loans, etc.) that pops into existence from time to time, and disappears just as quickly. Economics is like alchemy, in that it doesn't actually have to work, only make others think it works.
  • by Nadaka ( 224565 ) on Friday September 17, 2010 @12:33PM (#33612168)

    If you were to increase software sales by 10% for an equal reduction in piracy, you would be causing billions of dollars of HARM to the economy because those former pirates would experience no increase in value in the software they have and now have fewer resources to spend elsewhere.

    Piracy does cause some harm to the software/entertainment industry, but it does so by enriching the greater economy by creating a net gain in value when you consider the big picture.

    Their argument is fundamentally flawed in ways far beyond the fact that they are making up random numbers.

  • by Anonymous Coward on Friday September 17, 2010 @12:36PM (#33612198)
    I don't steal, I copy.
  • by MozeeToby ( 1163751 ) on Friday September 17, 2010 @12:38PM (#33612220)

    That's a bit of a false dichotomy, this isn't a glazier breaking the neighbors window (the vendors forcing the users to pay for something they don't need or want), it is the neighbor breaking into the glaziers and taking windows for his new house without paying (the users taking from the vendor without paying). And yes, I'm aware that nothing is 'broken' or 'stolen' in this case, but I've always had a problem with that argument; obviously the pirated software has value over the free alternatives, why else would the risk the legal consequences of using it illegally. It might not be technologically feasible for a content owner to force everyone to pay for their use, but it should be the right of the content owner to do so if they choose to.

    ("We shall fight oppressors for your right to have babies, brother... er sister, sorry")

  • History repeats (Score:5, Insightful)

    by overshoot ( 39700 ) on Friday September 17, 2010 @12:40PM (#33612240)
    And for the next twenty years, we'll be seeing this study cited as fact in Government position papers, other MPAA/RIAA/BSA "studies," Congressional testimony, treaty discussions, etc.
  • by Xeno man ( 1614779 ) on Friday September 17, 2010 @12:40PM (#33612242)
    Working hard doesn't mean you have done anything of value. I can work much harder digging a hole in the ground but if no one wants the hole and there is no need for a hole there, I can't get all pissy and demand to be paid for all of my hard work.
  • by Anonymous Coward on Friday September 17, 2010 @12:44PM (#33612284)

    Working hard doesn't mean you have done anything of value. I can work much harder digging a hole in the ground but if no one wants the hole and there is no need for a hole there, I can't get all pissy and demand to be paid for all of my hard work.

    Opposite side of the coin is that if someone comes along and starts using your hole, you'd reasonably expect to get paid for it, just like anyone else workin' the street.

  • by ByOhTek ( 1181381 ) on Friday September 17, 2010 @12:48PM (#33612320) Journal

    No, but people using his/her software DOES indicate that something of value has been created, or they wouldn't use it.

    Pay the asking price or use something else, the creator isn't obligated to give you his/her product.

  • Re:Econ 101 (Score:3, Insightful)

    by ALeavitt ( 636946 ) <aleavitt@gmail. c o m> on Friday September 17, 2010 @12:48PM (#33612326)
    Ah yes, I, too, remember the day in Econ 101 when they covered Mercantilism. Fortunately, Capitalism is a whole different ballgame.
  • Re:Econ 101 (Score:4, Insightful)

    by spiffmastercow ( 1001386 ) on Friday September 17, 2010 @12:52PM (#33612388)
    Your problem here is you're thinking of economics as a science (and beyond that, a hard science). Economics doesn't have rules. At best, economics has patterns.
  • by Joce640k ( 829181 ) on Friday September 17, 2010 @12:53PM (#33612410) Homepage

    A lot of people who pirate (eg.) Microsoft Office will only use it once a month or so.

    Spending $600 so they can use Office a dozen times a year is probably worse for the economy than spending it on something else.

  • by m509272 ( 1286764 ) on Friday September 17, 2010 @01:05PM (#33612530)

    What's even more disturbing is that this along with anti-piracy of music and movies is being touted by many as a significant part of the cure to the poor US economy. We also have similar attempts by the broadband providers claiming net neutrality will cost jobs. Verizon has already stopped their Fios rollout in the US regardless of the net neutrality outcome. It's a total joke how every industry that wants some government concession or intervention uses "loss of jobs" as their primary tactic.

  • A devil's game (Score:5, Insightful)

    by xkr ( 786629 ) on Friday September 17, 2010 @01:06PM (#33612540)
    Economics is tricky. I worked closely with one of the two largest software companies in the world on the issue of piracy.
    • Most non-paying users of software would NOT purchase the product if a free version is unavailable.
    • Non-paying customers are getting free training and free market share development. Consider, if you will, comparison to the porn model. You give away 95% for free so that when and if someone decides (business: "needs") to upgrade to supported product they will chose yours over a competitors.
    • If you take away money from a business (charge for a previously free service) you are adding ZERO to the overall economy, because the business has to cut back somewhere else.
    • If ENOUGH people start paying, who weren't then the developer has more money to improve the product, which improves the productivity of ALL the users (paying or not) and that DOES add to the overall productivity and this improves the economy.

    Conclusion: YES, you want people to pay for software they use but (IMHO) measuring the economic impact is a devil's game. At best.

  • by Drakkenmensch ( 1255800 ) on Friday September 17, 2010 @01:08PM (#33612558)

    A business that is using a pirate version of Microsoft Word would very likely continue to use Microsoft Word no matter what, even if it cost something. Same goes for most things that are really useful in a business environment.

    With free options available like OpenOffice, even that assumption has to be put in question.

  • by MozeeToby ( 1163751 ) on Friday September 17, 2010 @01:11PM (#33612612)

    Alternatively again, I dig a whole for the express purpose of turning it into a swimming pool and charging people for its use. I finish the pool and sell admission to thousands of people but at night, after we're all closed up, hundreds climb over the fence and swim for free.

  • Which costs you nothing.

  • by interval1066 ( 668936 ) on Friday September 17, 2010 @01:30PM (#33612860) Homepage Journal

    Bad analogy;

    if someone comes along and starts using your hole, you'd reasonably expect to get paid for it...

    Better: I dig a hole. Some one comes along, pays me a fee for my hole, and then snaps their fingers and creates a similar hole. They then do this 1000 more times, creating holes all over the place. Soon everyone has a copy of my hole, I only dug one hole, but I demand a license from everyone who has a hole. I soon decide that anyone who has a hole now owes me money; regardless of whether or not their hole is exactly like mine. I sue anyone with a hole. Some suites I win, but most I lose. And its done nothing to curb copying of my hole. More people than ever have holes, and tell me to get lost with my efforts to collect on new holes. Even though I'm in the right, its still easier for people to just copy my hole that jump through my byzantine licensing schemes. Instead of creating a new way to make holes, or completely different hole-like paradigms (portable holes, holes to other dimensions, holes that contains delicious meals...) I concentrate my efforts on punishing people with old-style holes. I die alone and hole-less. Stretches the scenario but much closer to the real-world.

  • by TheWizardTim ( 599546 ) on Friday September 17, 2010 @01:38PM (#33612976) Journal

    You forget, part of the contract for building that swimming pool, is that after a set amount of time, the pool becomes community property and is opened free to everyone. You on the other hand put in a lock that by law, can never be removed. The pool is free to the public, but no one can get in. After several years, you forget about the pool, and no longer care about the ownership of the pool, but the lock is still on the gate.

  • by Anonymous Coward on Friday September 17, 2010 @01:39PM (#33612982)

    Comparing downloading and using a game or piece of software without payment, to Rosa Parks taking a stand for her civil rights is pretty big stretch. As a matter of fact, it is pretty disrespectful and smacks of complete ignorance and indifference. No wonder you posted as AC.

  • by ivoras ( 455934 ) <ivoras.fer@hr> on Friday September 17, 2010 @01:40PM (#33613012) Homepage

    Which costs you nothing.

    Of course it doesn't cost *nothing* but it costs very little - the water isn't free (people will splash out some water) and the chemicals to keep the water clean-ish isn't free (people will dirty the water). In fact, it costs exactly the same, per swimmer, as it does during the day and that is where the problem really is. In addition to that, if the word spreads you allow semi-illegal free night swimming, it is very reasonable that some of the people who would swim (and pay) during the day will choose to swim for free at night, bringing no income to you and only cost. And then on top of it all, if the number of night swimmers really increases, people might conclude that they are entitled to pool guards, working drink bars, etc., which would, even if possible, require hiring night staff which would probably cost more than day staff.

    Personally, I don't think this can be "solved" or, really, that there is anything there to "solve". It is human nature to want things for free. It is probably a property of every living thing. The only practical option is to have some kinds of artificial rules that would guard a balance between total anarchy and total capitalism. Thus, most people choose some brand of doublethink - "stealing is bad, but I'm still a good person if I don't steal too much."

  • Eureka! (Score:5, Insightful)

    by N0Man74 ( 1620447 ) on Friday September 17, 2010 @01:46PM (#33613094)

    I get it! It's so clear now!

    My new plan is to pirate $100,000 worth of software, movies, and games every year. The money I save I will put into a retirement account, and I'll be able to retire in style in no time!

    Now, I don't make $100,000 a year, and my current expenses are only a little less than my current income, but that's neither here nor there. The BSA has shown me that this logic is sound!

    A penny pirated, is a penny saved, is a penny earned, right?

  • Tag Line (Score:5, Insightful)

    by carrier lost ( 222597 ) on Friday September 17, 2010 @01:48PM (#33613110) Homepage

    "BSA. Because not enough people are using Open Source"

  • by severoon ( 536737 ) on Friday September 17, 2010 @01:48PM (#33613114) Journal

    What a great assumption. I'm sure if Adobe was able to charge for every copy of Photoshop that's used, every future graphic designer would pay out of their own pocket to get experience with it. They'd show up for their first day of work like they do now, fully prepared and knowledgeable, and the only difference would be Adobe's bottom line.

    Either that, or more and more graphic design houses would find themselves having to switch to the GIMP because it's all anyone seems to know. Hmm...which is it?

  • by mickwd ( 196449 ) on Friday September 17, 2010 @01:49PM (#33613128)

    Well the extra jobs claim is a nonsense, for starters.

    The very fact that the software was "pirated" means that the software is already specified, designed, written and tested - no extra technical jobs needed there.

    The very fact that the software was "pirated" means that the software was already widely known about - no extra jobs in sales and marketing needed there.

    The very fact that the software was "pirated" means that those users are prepared to do without paid support - no extra jobs in support and maintenance needed there.

    The very fact that the software was "pirated" means that the software is already distributed to those who are using it - no extra jobs in distribution needed there.

    So what would also those extra jobs be used for? Counting the extra money?

  • by daveime ( 1253762 ) on Friday September 17, 2010 @01:55PM (#33613196)

    He said "really useful", not "poor imitation".

    I've made enough +2 Insightfuls these week to afford a couple of -1 Trolls. Mods, do your worst.

  • by jedidiah ( 1196 ) on Friday September 17, 2010 @01:59PM (#33613242) Homepage

    > The reality is far more complicated than your over simplistic view or the over simplistic "Information wants to be free" view.

    No it isn't.

    "Counterfeiting" creative works is cheap and easy.

    This leads to the practice being pretty pervasive.

    Corporations and their shills then come along and make all sorts of bad assumptions based on the
    fact that the cost of product is effectively zero. Demand (especially for a luxury good) is very
    elastic and is inversely proportional to price. The corporations and their shills forget this and
    then go about applying a mathematical absurdity to market projections.

    "infinite demand" can't be related to anything finite in the real world.

    The moment you charge a single quarter for something, you dramatically alter the situation.

    The industry is full of itself based on a mathematical absurdity. They think they are more valuable than they are really worth.

  • by DarthVain ( 724186 ) on Friday September 17, 2010 @02:23PM (#33613488)

    Er. I am not sure how "Shocking" it is. Anytime the BSA or the RIAA or CRIA etc... use "statistics" to prove a point they usually aren't worth the paper they are printed on. They don't even make an attempt to be even remotely accurate or truthful. They just use it for "Shocking" talking points, that they feed their bought and paid for puppet politicians to repeat over and over again in the media so they people buy the hokum they are selling.

    I would be hard pressed to even think of organizations that I would trust less in their use of statistics and the "general use of numbers". In other words all they spout is BS, why would I ever consider anything that they spout not to be BS.

    This article would make more sense if they only put quotes around "Shockingly" in a smarmy sarcastic way, unless that was the intention anyway...

  • by Joce640k ( 829181 ) on Friday September 17, 2010 @02:29PM (#33613546) Homepage

    Even Microsoft admits they benefit from piracy [techdirt.com].

    Every time somebody pirates MS Office instead of installing Open Office is another person locked into their document formats, another person emailing MS Office documents to other people and another person who gets used to working with MS Office instead of the competition.

  • by Dalzhim ( 1588707 ) on Friday September 17, 2010 @02:32PM (#33613576)

    Well if the night swimmers become numerous enough to require a drink bar, then a few vending machines can probably cover up the costs these swimmers incur until the thing becomes big enough that you can keep your pool open 24/24. In the end everyone is winning. Your swimming pool wouldn't gain popularity as fast without the night swimmers.

    As far as pools are concerned, supposing people can swim for free at night, I don't think that'll prevent them from paying during the day as that's the time when it is the most interesting to cool yourself off.

    Besides, why would swimming not be allowed at night? Some of the night swimmers maybe are night shift workers who just don't have any pool to go to otherwise. They're badly served customers and it's your own fault for not charging them a fee.

  • by greenbird ( 859670 ) on Friday September 17, 2010 @02:36PM (#33613628)

    Wow, the lengths you sick people will go through to justify your thievery. Listen up, douchebag:

    Wow, the lengths you sick people will go through to justify anti-capitalistic protectionist laws that stomp on and oppress the rights and freedoms of everyone else because you can't figure out how to get paid what you want for doing what you want do. Listen up, douchebag: Just because you have this outrageous sense of entitlement that people should pay you the exactly the way you want to get paid for doing exactly what you want to do doesn't mean there should be laws stifling innovation and restricting what everyone else can do simple so you can get paid what you want when you want. If you can't make a living doing what you want to do learn how that fryer works. Just because you work on something doesn't mean you should get paid for and expect society to bend to your will. You are a pathetic human being. I bet you'd be screaming bloody murder if they passed a law saying you had to pay half of what you make to whoever made your computer because you used it to produce the software your trying to sell. You'd be out of there faster than it takes for you to get the fry basket out when the beeper goes off.

    If you can't figure out how to make a living doing want you want to do I'd suggest doing something else. Don't expect society to shape itself around you just because you feel you deserve to get paid for something. It's funny the number of opensource companies that can make money off something that people are free do download and use for free. Oh and I write software for a living so don't even try pulling out that card.

  • Are they lawyers? (Score:3, Insightful)

    by nedlohs ( 1335013 ) on Friday September 17, 2010 @03:09PM (#33613964)

    Or people who wanted to be lawyers, but were too dumb to get into law school?

    Seriously, you'd have to be really stupid to be able to write such a report and not have heard of opportunity cost. Yes if $X worth of software was bought instead of pirated the software makers would have an extra $X, but someone else (the now not pirating company, or more likely their workers or suppliers) would have $X less.

    So any economic benefit depends on the relative multipliers of the software companies and those sombody elses. I put my money on the sofware makers having a much lower multiplier for the local economy.

    Or of course they aren't stupid, but are intentionally lying.

    And that's ignoring any issue with the whole "people who pirate would buy it rather than not having it at all if we reduced piracy" assumption.

  • Re:Econ 101 (Score:1, Insightful)

    by Anonymous Coward on Friday September 17, 2010 @03:43PM (#33614300)

    You have a rather unorthodox definition of science. You also don't seem to understand the relationship between logical sciences (like mathematics and economics) and reality. I'd suggest reading Blanshard and Hoppe for in depth analysis wrt math and econ, respectively.

  • by Caerdwyn ( 829058 ) on Friday September 17, 2010 @03:46PM (#33614364) Journal

    Software pirates (commercial and noncommercial alike) certainly need to be caught and punished. However, when people like the BSA prove themselves to be liars, there aren't any "good guys" in the picture. When the enforcers are as much scumbags as the pirates are scumbags, there is no credibility. It's like being in New Orleans - deal with a mugger or deal with one of the corrupt cops. Hell of a choice.

    It should be sufficient to be able to say "Software is not a pirate's property for him to take or use, but they're doing it anyway" and prosecute on that basis. An argument of "I wouldn't have bought it anyway" should be wholly irrelevant. But resorting to histrionics like this just plays into the hands of the pirates and stirs up anger against the people who should have been the ones on the moral high ground, and makes the enforcers rightfully more despised than the pirates.

  • by SleazyRidr ( 1563649 ) on Friday September 17, 2010 @05:34PM (#33615530)

    I love it when people start with a simple analogy and then extend upon that idea, then tell you that you can use the idea in the original scenario.

    All I need to do is put a drink machine next to my software, and then I'll be able to double my profits!

  • by Technomancer ( 51963 ) on Friday September 17, 2010 @06:22PM (#33615930)

    It is really hard to argue that selling additional copies of software will create more jobs. Maybe little with packing of software boxes and tech support. Otherwise all extra copies of software sold are pure profit. All it achieves is to transfer money from software users to software companies shaderholders.

Fear is the greatest salesman. -- Robert Klein