Windows 10 was going to be a free update for most people running Windows 8.1 and 7 worldwide. In an effort to bring everyone into the fold, even pirated versions of the OS would be able to upgrade to a legit, licensed copy of Windows 10. This was a logical move for an OS that has been marketed as virtually free. However, it seems after a bit of legal backpedaling, it seems that pirates, along with some other consumers, will be left out in the cold. Some worry that these changes will cause a mess in licensing that will end up frustrating customers, and with pirates being left out, it seems that Microsoft is still focused on chasing after them in court.
Is Microsoft wasting their time and money chasing down pirates? Would their time be better spent making better products? Cybercrime is getting worse, and an unfortunate reality is that mistakes that company employees make have made it easier on hackers. Is digital piracy really as bad for the economy as organizations like the RIAA and the MPAA say it is? Are sites like Pirate Bay slowly killing these industries? Is it even worth the time, money, and effort to stop it?
Pirate Bay’s back again. Should industries even bother trying to shut it down in the first place?
The 58 Billion Dollar Loss
There are a multitude of figures regarding the total cost of digital piracy to the economy, the most recent figures being in excess of 58 billion dollars per year, and nearly 400,000 lost jobs. Some of the other estimates were even more dismal with the ICC (International Chamber of Commerce) claiming the losses are around 75 billion, and there’s a study linked to on The Recording Industry Association of America (RIAA) page dedicated to piracy that says the numbers are “between $200-250 billion in lost sales each year [and] have resulted in the loss of 750,000 jobs in the United States.”
There is a wide range of numbers which in and of itself is suspicious. Then there’s the fact that all the figures point to a loss in billions to the American economy, which any economist would tell you, shows a fundamental misunderstanding how the economy works. See, when a pirate downloads a song or album, the money that would have been used to purchase said music doesn’t just disappear. It goes toward some other good or service. Pirates take their money and buy food, or books, or a haircut instead of the music. The economy itself doesn’t lose anything. Take that a step further when the study linked to the RIAA’s page on piracy claims a (nonexistent) loss in tax revenue $291 million in an effort to sway politicians, it brings their whole argument into question.
The reason these numbers are so inconsistent is because they are impossible to track. According to the investigation done by the United States Government Accountability Office:
“[E]stimating the economic impact of IP infringements is extremely difficult, and assumptions must be used due to the absence of data.” […] “Despite significant efforts, it is difficult, if not impossible, to quantify the net effect of counterfeiting and piracy on the economy as a whole.”
There is ample evidence then, to suggest that the numbers that industry insiders like to claim are pure conjecture and supposition as well as some of their claims being economically unrealistic. Speaking of economically unrealistic, in the lawsuit against LimeWire, the RIAA requested damages to the tune of $75 trillion. That’s more than the entire world’s GDP combined; literally more money than exists in the world.
The numbers we do have say that the US leads the world in illegal downloads by far with 96.7million illegal downloads. But then you have the fact that there are 313.2 million of internet users in the US. For those playing along at home, that’s less than a third of people illegally downloading, in addition to the fact that in order for that to be true, every pirate would have needed to download 1 file for the entire year.
There is also the matter of the money, time and effort spent in deterring piracy. Digital Rights Management (DRM) has come in various forms over the years, each incarnation designed to let legit users in and keep pirates out. It’s a series of checks and balances that ensure that a copy of a game is legit or that a piece of music has been purchased by the user. The most elaborate of which is found on video games and PC programs. More often than not however, DRM is a roadblock for legit users, while pirates simply strip the DRM right out. Konrad Tomaszkiewicz, the project leader for the game “The Witcher 3” said in an interview, “DRM is the worst thing in the gaming industry. It’s limiting our rights to play games owned by us.” Paradox Interactive CEO Fredrik Wester says, “It can punish players who actually bought the game.”
The Good Stuff
On the bright side, there are plenty of studies that came to the conclusion that piracy doesn’t hurt music sales, and other studies assert that people who pirate movies are more likely to go to the movies and buy DVDs than non-pirates. Then there’s the projection that 1 billion smartphones will be sold in the coming year, and since we know 54% of people use their smartphones mainly for music the music industry doesn’t look like it’s in trouble.
We can’t pin down the negative impact to various industries due to piracy, but it doesn’t affect the US economy as a whole. The money is still being circulated, still providing people with jobs. Piracy does however have some clear positive impacts. In fact, pirates have 30% larger legit collections than non-pirates; also pirates are 10 times more likely to buy music. Then there’s the little known fact that Netflix uses pirate sites to find shows to license.
“Game of Thrones” owes its massive success to piracy
It seems that digital piracy isn’t the boogeyman that the industry makes it out to be. In fact, it seems like various industries rely on pirates for their profits, as they are the biggest spenders. There seems to be no justification to pursue/deter pirates, as their habits make them more likely to legitimately purchase licensed goods.
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