[LINK] $60 million music piracy operation

[James Pearce]

Richard,

I forget the exact figures you came up with, but they seemed as reasonable
as any. It is hard to put a figure on any black market activity, but the
figure is reasonable *if* you assume the music would otherwise have been
bought through legitimate channels at reasonably full price, hence the
description of the figure as "potential". Of course this would never happen.
As for the downloads, these guys had invested in four networked workstations
and a high speed internet connection, and it ran over several months (I
think at least 9), so the data could easily have been accessed.

The supply and demand argument is a good one for p2p bringing down the cost
of CDs.

It is becoming a more common belief that the vast majority of people who
download music in this way do so either: a) to listen to some music before
buying it, or b) because they can't get the music they want in the stores.
I've heard that 97 percent of the music industry's catalogue is no longer
available in record stores.

Of course there are some people who download stupid amounts of music for the
sole purpose of getting it for free, but realistically these are a small
proportion.

James


----- Original Message -----
From: "Dean Povey" <povey at wedgetail.com>
To: "Chirgwin, Richard" <Richard.Chirgwin at informa.com.au>
Cc: <link at anu.edu.au>
Sent: Monday, April 28, 2003 11:20 AM
Subject: Re: [LINK] $60 million music piracy operation


>
> On Mon, 28 Apr 2003 10:52:23 +1000, "Chirgwin, Richard" wrote:
> >James - I go with TL on this one. $60 million of "what" is the question.
> >It's the old "street value" question. If they're saying "these three
people
> >took orders worth $60 million" then the question begged is "why give
money
> >to these guys but not buy the stuff legit?"
>
> Right. This spouting of "X millions of dollars lost due to MP3 downloads"
> by the recording industry does not take into account the simple economic
> effect of price on supply and demand.  It assumes that the people who
> downloaded hundreds of songs for free, would have forked out money for
them
> if they had not been able to download them.
>
> A similar, and even more incredulous lie is told when the recording
> industry tells you that "piracy adds $X to the cost of the CD".  Again,
the
> simple economic fact is that competition generally works to decrease
costs.
> In theory, piracy (and P2P/Internet downloads in particular) should work
> to keep the price of a CD down, by greatly decreasing the scarcity of the
> resource.
>
> If anyone is aware of some real analysis that economists have done on the
> effect of piracy/P2P on price, then I'd be delighted to know.  If I'm
right
> about the economic effects above, and someone has bothered to validate it,
> then it might make debunking this sort of vapid claim much easier.
>
> Cheers.
> Dean.
>
>
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