Blog:Pirates of the Beancounters
From Bolton Interweb
Molly Coddle, Business Correspondent, 17th March 2010
According to an industry-commissioned report, piracy in the form of illegal file-sharing will cost Europe 1.2 million jobs and 240 billion Euros by 2015 the BBC reports. UK job losses are estimated at a quarter of a million. The report is backed by industry and the TUC along with calls for action. I don't condone illegal file sharing and would not do it, not least because of the security holes it would punch into my computer. But this report is scaremongering nonsense, and like so many scaremongering reports designed to wind up the naive, it wrecks its own credibility in the process. The estimated losses for 2008 were 1.4 billion Euros. It is a hell of a leap to 240 billion, even if you believe the 1.4 billion, which is highly debateable.
The figures assume that firstly, the pirates would, if denied free access, go out and pay for the media they are downloading. Most of them wouldn't, not least because they don't have 1.4 billion sloshing around going spare to spend on such purchases. Let alone 240 billion. Secondly, it assumes that the 240 billion not going to be spent on buying the illegally downloaded files is being put under the mattress and not being used to buy other consumer products and services, or invested in other businesses. The reality is that there is not 240 billion extra Euros that the creative industries would benefit from, and pirates use their cash to buy food, cars, electrical goods (like computers and audio equipment). If they were to switch their spend to buying videos and music then the goods and services they currently spend their money on would lose 240 billion Euros and 250,000 UK jobs. But the pirates won't do that in any significant amount because videos and music are, generally, discretionary spends. They would just stop illegal filesharing and continue to spend their cash on food, heating and power, rent and mortgages, clothes and all the other higher priorities and non-discretionary spends.
Here's a quick example. Let's say that over the last year Billy downloaded music that would, if he paid for it, cost him £200. The record industry claims they lost £200 and as a result of Billy and 100 of his mates doing the same thing, someone is out of a job. Billy and his mates spend their £200 at gigs, on legit downloads, food and drink. Now let's assume there is some way of stopping Billy and his mates doing the illegal downloads. Billy and his mates don't get a £200 each pay rise to cover them now buying that £200 worth of music legitimately, and they are not about to stop buying food. So if they still want that music they downloaded illegally it is going to come from the money they spend currently on gigs and legit downloads. No extra cash for the record industry so that poor unemployed record company executive doesn't get his job back. Less people will listen to the music, negating the promotional aspects of illegal downloading. But it would also push people towards legitimate and free downloads, new and independent artistes willing to give their music away to get a fan base to attend gigs.
Why do people illegally download files? Because it is free. And there is evidence that downloading is in effect a marketing tool. Statistics show that illegal filesharers spend about 75% more than those who don't fileshare on legitimate purchases of music and film. Many musicians want their music downloaded and make their real money out of live gigs. Illegal downloads are often of poor quality and if you like it you go buy a decent quality download. If you never get to listen to it then you aren't going to buy.
So where is this industry losing money? The traditional record, in LP or CD, is on the wane. Downloads are the way ahead, and picking your tracks not buying the lot and ending up with dross. The last Michael Buble CD I bought had 2 decent tracks and the rest was frankly poor. Never again. So the record companies are not selling rubbish in the same quantities as previously. Jobs have doubtless been lost in the physical production of CDs. A lot of artistes are bypassing "the industry" and going direct to their fans - self-publishing. The middle-men are being cut out. The big players in the media market simply do not like the fact that their influence is being undermined in the interests of the consumer. Parliament is about to pass laws to "toughen up" penalties for illegal filesharers and downloaders. But all that will happen is that people will mask their computer's IP address and become untraceable. Nothing will actually change.
I like eBooks. The UK eBook market is stitched up and, unbelievably, eBooks are often more expensive than buying the old-fashioned paper versions. Like music before it we should be seeing a 50-75% cut in the price of books. So illegal eBook downloads are on the rise and will continue to rise until the booksellers and publishers make eBook prices reasonable to reflect there being no printing costs. There are thousands of eBooks available that are out of copyright, so I download these old classics quite legally. I buy discounted eBooks from the USA where competition and prices are reasonable. I am quite certain that my eBook buying habits are losing British publishers all the revenue they once got from me. Tough, change or die.
So it is a complete nonsense, a big fat lie, and the TUC should be ashamed for falling for it and the BBC should be ashamed for not analysing it properly. Take 240 billion Euros out of the general economy and put it into creative arts, that is what the report is really saying, scaring people into thinking all those jobs will be lost if we don't. There is only one pot of money. If you switch the money to creative media industries the actual result will be a similar number of jobs lost in those industries where the money is being spent now. Come up with an argument that holds economic water if you're going down that route, otherwise keep plugging away on the moral and legal issues that are far more valid. Like the climate change brigade, over-egging the pudding destroys the foundations of the entire debate. On the other hand, bias reporting by vested interest news media might overwhelm those who see the scam and point it out so, from their perspective, worth a punt. What they should be doing is embracing the Internet and the downloading culture enthusiastically.
© Evrose, 2010
