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Buzz Out Loud Lounge: Explanation of Lost Revenue from Piracy
Explanation of Lost Revenue from Piracy
by MedicineHead - 3/7/08 7:57 AMIt bugs me how often and how many people confuse the MPAA and RIAA's standpoint of "lost revenue" from piracy. The same confusion occurred on Buzz Out Loud 675.
The MPAA does say they consider any pirated movie to be a "lost sale". As Tom and Molly replied, many people then retort that those who pirate movies would likely have never paid to see the movie in the theater, so therefore no lost sale occurred. But that's a totally wrong way to look at it.
When one pirates a movie and watches it, one avoids the fee of a rental or movie ticket. Whether that person wanted to pay or not makes little difference, because the end result is the movie was watched for free, without the MPAA's permission. Because the MPAA wants every person who watches a movie to pay for the movie, then pirating would, in all cases, be a lost sale. To put it simply, if one doesn't pay, one shouldn't be able to watch the movie. That's the MPAA's standpoint, and I think it makes far more sense than looking into the motives of each pirate to determine whether they thought the quality of a movie was up to "buying" standards, rather than simply another torrent.
I like the car analogy better.
by R. Proffitt
- 3/7/08 8:11 AM
In reply to: Explanation of Lost Revenue from Piracy by MedicineHead
Try it with person who borrows the car instead of buying one...
Not needed, nor does it apply.
by MedicineHead - 3/7/08 8:31 AM In reply to: I like the car analogy better. by R. Proffitt
I don't think a car analogy is needed for explanation in this case. It seems pretty straightforward to me.
I found many can't grasp the first explanation.
by R. Proffitt - 3/7/08 9:02 AM
In reply to: Not needed, nor does it apply. by MedicineHead
Using the borrowed car analogy seems to drive it home. (pun intended.)
Seriously?!
by MedicineHead - 3/7/08 9:19 AM In reply to: I found many can't grasp the first explanation. by R. Proffitt
It's simple: if one doesn't pay, one doesn't watch the movie. If one wants to watch the movie, one must meet the demands set by the distributor, which is that one must have a ticket. That's it. No cars needed, no separate analogies. If somebody doesn't grasp that, they don't grasp commerce. They don't understand simple trade. I really don't think there are any adults out there who are pirating films that don't understand that concept.
Then it must be the lack of downside.
by R. Proffitt - 3/7/08 9:27 AM
In reply to: Seriously?! by MedicineHead
While you can maintain that no analogy is needed why is there a problem here?
Intellectual Property
by Nicholas Buenk - 3/7/08 4:09 PM In reply to: I like the car analogy better. by R. Proffitt
Can be copied for free without causing a loss to anyone.
It's as if everyone has a star trek replicator on them.... I can go to a car shop and steal their car today.
With a replicator I could go to a car shop, scan their car and make a copy of it, that's more accurate analogy.
And as you can see it's rather straining things to call an unauthorised copy, stealing.
The whole problem comes from that fact that the concept of intellectual property, is trying to bolt onto ideas, the constrains of real property, when they don't exist.
I don't agree with the concept of intellectual property, I don't see why someone should be entitled to make money every time an idea is copied when copying can be done at near no cost these days.
They should only be paid for their labour, their time, spent creating the idea, once that's done there is no other entitlement they have.
Yes, but
by navsimpson - 3/7/08 10:03 AM In reply to: Explanation of Lost Revenue from Piracy by MedicineHeadWhen the MPAA or RIAA say "look at all the money we are losing due to piracy", they take into account all the piracy that they can track and then claim that all of those pirated films represent lost revenue. They're not. If, for example, 1 million copies of 10,000 BC are downloaded through bitorrent, how many potential sales have those 1 million pirated copies erased? Even if one very optimistically claims that one-tenth of those downloads would have resulted in ticket sales in the absence of piracy, that's still only a tenth. Sure, in a theoretical sense, "if one doesn't pay, one shouldn't be able to watch the movie", but the MPAA and RIAA are using theoretical situations to enforce real-world consequences - which is another way of saying the the MPAA/RIAA are being willfully deceitful in their legal dealings.
Confusing Two Concepts
by Renegade Knight - 3/7/08 12:16 PM In reply to: Explanation of Lost Revenue from Piracy by MedicineHeadYou are confusing two concepts. The first one is that if you don't pay you should not be able to watch. Fair enough.
However the other concept is lost sales. It is fair to point out that not all people would pay for pirated materials, or more importantly that not all people who may have downloaded a file you should not have made available, resulted in a lost sale. Lost sales is an estimate of a real number that can't be known with certainty. Not a "highest potential number of sales including ones we would never had".
A simple anology to help. If I walk into the supermarket deli counter I can sample most all of the items behind the counter. I'm not going to like all of them and certainly would not buy all of them. Merely what I need and enjoy at the moment. Yes music is different but not much. I use Amazon's sample buttons in theier MP3 store to see if I like the other songs on a greatest hit album. If I like more than the ones I knew I may buy the entire album. If I don't...I'll buy the one song that I did like.
Now I'm hungry
by milkky - 3/7/08 1:13 PM In reply to: Confusing Two Concepts by Renegade KnightBut I liked your analogy anyway. Only thing that occurs to me is that we can probably assume that most of the time they are watching the whole movie--not just sampling. So it's not a lot of little tastes of different things, but actualy getting the whole meal. Not sure where to go from there to finish this off. I agree that it is misleading and self-serving for the RIAA to assume that every d/l was a lost sale--many people just wouldn't check it out at all if there was a cost but they will give it a try for free, which possibly could lead to future sales because they learn of a new actor or director or whatever that they now like. Maybe it is kind of like sampling if you go with the theory that, if you really like the d/l'd movie, then you'll buy it so you can have the higher quality version. Too much of a stretch?
Anologys only go so far.
by Renegade Knight - 3/7/08 2:21 PM In reply to: Now I'm hungry by milkkyI have found some good music by borrowing my friends collection. I didn't buy every CD they ever loaned me, but I did buy a few. Ditto with books.
If the American Book Makers Association said "every time you loan out a book we lose a sale!" they would be full of crap. Someone loans me a book that doesn't catch my interest they havne't lost a sale.
Piracy works the same though the ratios would be different. Not all pirated music is worth the effort it took to download it. But some will turn you onto new music.
There are four kinds of pirates when it comes to sales.
The ones who don't like the music. No lost sales there.
The ones who do like the music, and who later buy the music. No lost sales there...but a delay in the purchase.
The ones who do like the music and are perfectly happy to play thier pirated song but would never spend the money to buy it. No lost sale here either.
The ones who are happy to play their pirated music and because they have it in a handy form see no need to upgrade to legit. Here is your lost sale.
There are always nuances. Some lost sales may be in the form of the person who wouldn't buy what they are listing to but because they are listening to that, they are not listening to something that they would have bought. That's hard to quantify.
I love the Amazon MP3 Music Service. I can sample all kinds of music that way and see what's worth checking out. Not as good as napster was, but better than the headphones at the store.
The other day I was listing to a radio station and liked a song well enough to buy it. They failed to mention it and I know that the odds of me hearing it again are about zero. That's another lost sale, but not due to radio. Without the radio I'd never have known the song was out there. How would the RIAA account for that?
You're still missing my point!
by MedicineHead - 3/7/08 7:46 PM In reply to: Anologys only go so far. by Renegade KnightYou're all doing it again and again! These are not two separate issues. They are one and the same. If you want to watch a movie, you must pay for that movie. If you don't pay for the movie, you can't watch it. If you do watch the movie without paying for it, you've now gotten the goods of the sale without paying for the goods. Therefore, it's a lost sale.
You can't seriously claim that enjoying the goods of a transaction without paying isn't therefore a lost transaction. Tangible goods aren't necessary for a sale to be called a "sale". It's a trade of something of value for something else of value. If only one side takes the object of value from the other side, and nothing is returned, it's a lost sale (for the sake of this argument, gifts aren't being considered here).
Cars, homes, whatever analogies you want to come up with aren't needed. The answer for the question "Why do pirates pirate?" is because they can, that's all. There is no moral ground on which they're standing. They just want stuff for free. Likewise, the MPAA and RIAA want their stuff to be sold, not viewed/heard for free. It's within the RIAA's and MPAA's rights to require a purchase to be made to have their goods viewed/heard. If those requirements aren't met, it's a lost sale.
The argument that pirates would never buy a product, so therefore it's not a lost sale (and somehow okay, it would seem, considering the way people defend that point so often) makes little sense. So what? Who cares if they never would have bought the product? If they never intended to buy it, they should have never intended to listen to/view it, either. The requirements were clear: pay the RIAA/MPAA to enjoy their products. The motive of each pirate is absolutely, positively, totally unimportant to the issue, because it's not the motives that are in question, but the actions of the individuals.
The reason there is confusion would appear to me because people don't want to admit the RIAA and MPAA have a legal right to require people pay whatever amount the RIAA and MPAA set to be able to listen, to or view, the assorted products offered by the two companies. Yes, the two companies have done some illegal things, and I don't defend them. But in this case, they have the moral and legal grounds to require a payment in trade for their goods, and then consider all those who don't follow the rules to be a source of lost revenue.
You're missing something
by Nicholas Buenk - 3/7/08 8:06 PM In reply to: You're still missing my point! by MedicineHeadWe are essentially just talking about bits, data moving around. There is no cost to distribution these days pretty much. So what sense is there in treating it as a trade where neither side has to give up anything, trade and commerce is the exchange of property. How can you exchange property that can be duplicated at no cost an infinite number of times? It makes no sense it treat it as a trade.
However, directors, writers, actors, still need to be paid for their time and labour. So you can't compare a movie to property, but you still need to have some flow of revenue....
Seems to me it would make sense to treat it like broadcast radio, what's in the air is just in the air for everyone to receive without restrictions, you make revenue on it from advertising.
Sorry, you are missing the point.
by Renegade Knight - 3/7/08 8:59 PM In reply to: You're still missing my point! by MedicineHeadA lost sale is exactly that. A sale that you could have had but something prevented it. It's as simple as that and it's nothing more than that. That's by definition. It's not always easy to measure.
If piracy stopped tomorrow. Something less than 100% of the former pirates would actually purchase what they used to pirate. Sales lost to piracy are not 100% of piracy. That's a simple fact.
This is completely different from the ethic of "if you don't buy it you should not watch it". If you dont' have the fair use right to watch/listen, that's theft. It may or may not be a lost sale.
There is no argument here that says piracy is ok. Only that lost sales transactions are less than the total pirated transactions. Now if you are saying that all pirated transactions should be punished by forcing the purchase that's another thing. It's punitive but it's not lost sales.
Let's stick with movies then...
by Aeirlys - 3/8/08 8:38 AM In reply to: You're still missing my point! by MedicineHeadThe motives are important in determining lost sales. I have a Netflix account and am totally addicted to the streaming feature. There are a ton of movies that I've watched solely because they were available immediately for free (sort of, I know it's a sunk cost because I've bought the subscription, but it feels like free). I would never have ordered them delivered to my house because I'm not interested enough to add them to my queue and wait and send them back when I'm done. All of that time is time I could otherwise use to obtain a movie I'm more interested in.
So now I've watched a movie that I otherwise would not have, had I been required to invest effort or money in the process of obtaining it. That means, had I pirated the movie, I would not have been a lost sale. I would have broken the law - that's not the dispute, but in practical economics you can't equate every incidence of piracy with a lost sale.
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