Challenging Counterfeit Counterfeiting Data

Julian Sanchez has an excellent post at the CATO website debunking claims in the U.S. on the financial impact of counterfeiting and piracy, which is being used to promote the dangerous Stop Online Piracy Act. The post focuses on the fake $250 billion per year claim that is frequently invoked by copyright lobby groups, noting that the number is not based on an actual study but rather a 1991 sidebar in Forbes that took a guess at the global market. In 2010, the U.S. Government Accountability Office examined the counterfeiting data claims and found that they could not be substantiated and last year the Social Sciences Research Council released a massive study on counterfeiting and piracy that thoroughly debunked the claims.

Given the return of fake counterfeit data, it is worth remembering that the same ploy has been used in Canada for many years. In 2007, I took a closer look at RCMP claims of $30 billion in losses in Canada, a number that was based on a single bullet point in a powerpoint presentation from an industry association that was a guess based on 3 to 4 percent of Canada’s two-way trade. The RCMP has since distanced itself from those claims, but the Canadian Chamber of Commerce revived the fake figure last year in its lobby effort for new IP-related border measures (its response to being called out involved pointing to more unsubstantied data). As Sanchez notes:

The movie and music recording industry have gotten away with using statistics that don’t stand up to the most minimal scrutiny, over and over, for years, to hoodwink both Congress and the general public. Wherever you come down on any particular piece of legislation, this is not how policy should get made in a democracy, and it’s high time they were shamed into cutting it out.


  1. Perhaps somebody should float some equally counterfeit counter claims…
    Piracy creates over $3 Trillion per year in trade, by lowering the “Microsoft/Adobe/etc” Taxes on businesses!

    Making up numbers is easy.

  2. Would this be allowed
    Would this kind of fake data be allowed in the pharmaceutical industry or be investigated?

  3. They don’t call it the ‘creative’ industries for nothing 😀

  4. Sorry … just had to share. 0_o

    Just maybe taking the user rights things to the extreme, but extremes seems to be what this conversation is all about.

  5. They lose money
    from piracy BUT that money just doesn’t disapear into thin air, its redistributed into other industries. So in fact piracy promotes equal growth in other industries. So we could say piracy pumps 30 billion into local economy every year.

  6. @end user “So we could say piracy pumps 30 billion into local economy every year.”

    I wouldn’t say that, some of the funds get sent offshore to those benefiting from piracy, such as ads on file sharing sites or VPN services etc.

    But, mostly as you say, the funds will be redistributed in the local economy in some other type of disposable income transaction. I suspect, as has been citied in studies, that it will be spent in the very same industries that are being affected by the infringement.

    All in all, it is pretty much of a wash and not worth the greater damage the currently proposed legislations will inflict on the general economy.

    Yes, getting your stuff ripped off sucks, it hurts your pride and might even affect your pocketbook. BUT, the current and proposed recourses will do more harm than good.

    Market forces are really the only way to meet this issue with appropriate, innovative products at fair prices along with decent customer service.

    Simple. Take care.

  7. Maybe the new religion in Sweden would help?

    The Church of Kopimism –

  8. ConcernedCanadian says:

    While were at it
    Even if the magic number was 17 quadrillion dollars; that money simply doesn’t exist in any way, shape or form. Every cent of disposable income that most people have is already being spent. The only thing that ‘could’ change would be the allocation of that disposable income. For example; people could share more music but less movies or vice-versa. The ‘for money’ piracy is another story and more of a gray area but I’m talking about music and movies here.

    Extreme legislation and/or litigation can only lead to a global lowering of sales as people would eventually steer clear of these particular form of entertainment. That was my reaction. The music industry intense litigation of the early 2000’s left a bad taste in my mouth about music as a whole nowadays, I mostly purchase music directly from the artist’s website and rarely purchase a CD anymore. The smell was too bad for my taste and I switched my interests. I go to the movies more often and purchase more DVDs/BlueRays, I use netflix alot since its availability in Canada and I joyfully purchased Louis CKs show from him. Mess with that with SOPA abuses and C32 and I will switch my interest again like going to more shows for example. That U2 show at the Hypodrome was awesome and gave me back that thrill…

    The amount of money I spend never really changes, I just allocate it differently.

    Ultimately, nothing will be gained and nothing will be lost but precious time and money to lawyers.

  9. Perhaps the real number is 1300%.

  10. Touche!
    @Degen “Perhaps the real number is 1300%” … a valid point.

    And here we find ourselves, between two lies. Oh, how marvelous our manipulations; how wonderful our avarice.

    And the world burns.

  11. not to take the rights holder side of this issue, but Dr. Geist and others seem to get upset about the exagerated numbers, but really what do the numbers even mean? Clearly the public doesn’t care if the number is a trillion, a million or several billions. The politicians don’t need numbers big or small to justify their poor decisions and inept laws. So the bottom line is who do inflated numbers serve and who cares. Obviously there is piracy and counterfeiting going on in Canada, so my question is does the size and scope of the numbers really mean anything and why get upset over them…just ignore them if you need too.

  12. Once again, the obvious …
    @Ars Technica “While copyright owners test the legal limits of website takedown processes and push legislation greatly expanding powers to limit file sharing on the open Internet, a company that helps corporations protect intellectual property argues there is a better way: create more user-friendly services for acquiring legitimate content.”

    Sure, it is possible to lobby, litigate and innovate all at the same time, but in cases like SOPA they can be very counter productive with each other.