Piracy Losses

If you’re not living in a cave somewhere, you’ve heard the news, music, film, and publishing industries all complaining about piracy. Basically, pretty much anything that gets physically manufactured these days starts out as a digital file, and that digital file passes through the hands of dozens or hundreds or thousands of people on the way to manufacturing. All it takes is one person to say “this would be an awesome torrent,” and bam – it’s out there for free.

I was talking to someone earlier today about Brendon Burchard’s latest thing, The Charge, and how I’d really like to pick up the new version of his High Performance Academy product. This particular someone said “It’s too bad you’re so anti-piracy, because I’ve already got the updated DVDs.

Fuck, it’s not even out yet. You couldn’t buy it if you tried. But the pirates already have it, because turning bits into discs takes time, and during that time at least one of the people who had access to the bits decided “this would be an awesome torrent.”

And dammit, that really is too bad I’m not into piracy. It makes my life needlessly difficult. If I were just a fucking thief, I could have Burchard’s HPA and the latest Photoshop CS6 and probably even see the new Avengers movie. But no, I have to be all honest and shit; so I only get Brendon’s presale videos (which I must admit are still awesome), and I have to beat my head against shitty products like Paint.NET and GIMP, and wait around until Avengers gets onto Microsoft’s Zune service so I can watch it on my XBox.

Discipline is doing the right thing even when it is inconvenient.

And speaking of the right thing, let’s talk about the completely fucking wrong thing, namely the way these industries lie their arses off about how much money piracy is costing them.

Basically, they make this shit up.

Let’s back up for a moment and talk about “opportunity cost.” This is a basic economic concept that the cost of a thing is what you give up to get it, and you don’t just give up the price of it – you also give up your alternatives to it. And the actual price of someone pirating something is zero. This is what a lot of pirates get on about when they say piracy isn’t stealing; you had it, they took it, you still have it. Nothing has been taken away from you. What you were selling is still right there, in your hands, and you’re still selling it. You have lost no actual property.

But these industries quite rightly note that while they have not lost property, they have lost a sale – they have suffered an opportunity loss equal to what you would have paid for whatever you pirated.

And then they make up some bullshit number and say that’s what they lost.

This is where they jump the shark. They don’t know what you would have paid. There are a lot of people out there who honestly mean it when they say they believe something ought to be free, and therefore they will never pay for it no matter what.

Of course, that is generally also bullshit, because people will frequently pull out their wallet and pay “too much” for something even while bitching that it isn’t worth the money. They do it all the time at the movie theatre; they stand there and say “What the fuck, man, $16 for a ticket and $8 for popcorn and $6 for a Coke, I could own the fucking Blu-Ray for this – it’s a total fucking ripoff.” But they still swipe their card and pay. They will swear all up and down that it is not worth it to pay $30 just to see a fucking movie, and they’ll bitch about it all over the internet, but when the summer blockbusters start hitting screens they are right there in the Goddamn line paying $30 to see it and another $30 for their date who doesn’t even want to see the fucking thing.

Or the other way round, if it’s some retarded shit their date wanted to see. Like Transformers 2. God, what a fucking turd of a movie. Yes, you heard me, my wife wanted to see that shit and I didn’t give a crap. Neither did our girlfriend, who went with us.

Then my wife gave us hell for thinking it was stupid, because the Transformers are some massive influence on her life or something, which disturbed me almost as much as it would disturb me a couple years later when the girlfriend had a fit about how Twilight was such a profound influence on her life and it was abusive of me to not like it.

Yep. Abusive. That’s the word she used. Apparently, disagreement on the quality of entertainment is some form of abuse I did not know about. You can probably read all about it somewhere like “The Lunatic Women’s Forum of Complete Horseshit.”

But I digress.

See, basically, when you could go see the movie in the theatre for $14 per person… the industry believes that when you download a pirate copy of that movie, they just lost $14 for every single person in your household. Because it’s not just YOU with that pirated movie, it’s everyone in your house. And since you could conceivably invite some friends over to watch it, too, they don’t stop there; each person in your house actually represents more than one person, because there is a certain percentage chance they would invite friends over to watch it, multiplied by the average number of friends that would come over, added to the one person that member of the household actually is, and then finally multiplied by the number of times that person would watch the movie.

Now, all of this stuff is based on real research by the industry. It’s not all pulled straight out of their arse. But it is based on entirely the wrong shit, because – and this is critical – the industry gets to write off these losses on their taxes. So they want to inflate the amount as much as possible. So they begin with how many people typically go to a theatre together, and nobody likes to go to the theatre alone, so their figures come out somewhere like two and a quarter people. Then they multiply that by the number of times people typically watch a DVD that they own, which comes out a little over half a dozen.

Except people do not go to an actual theatre as often as they watch DVDs. They’re taking two numbers from entirely different places and pretending they are somehow related. And what they come out with is that one pirate copy of the movie is about fifteen viewings on the average, which they multiply by the $14 ticket price at the theatre and say they just lost over $200 because you downloaded the movie.

But an opportunity cost is not the cost of the alternative you imagined, but the cost of the alternative that was actually available.

What they actually lost is probably $6, which is what you would have paid to watch the movie on a Pay-Per-View channel. And while it’s possible you might have then let someone else watch your pirated movie, it is just as possible that you didn’t even want to watch this stupid movie and only downloaded it so you could help seed some overly-popular torrent for a ratio boost. (I wasn’t always this honest. I know how shit works.)

That basically means 97% of those piracy losses are just straight out made the fuck up. They aren’t real. The industry just manufactured a number based on stupid ideas that are not even remotely true so they can take a huge tax deduction. But unless they want to be sued into bankruptcy by the IRS, they have to behave in every way as though this figure is real, which means strutting around like retards insisting that pirates are killing their business.

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