# Calculating the real co\$t of pirasy

Hello this thread is designed to gather statistic regaurding the real cost of piracy. Iâ€™m assuming that most of us are power users so we represent the worst of piracy. I have many friends with DVD burners who are incapable of successfully running Nero to copy a DVD, despite my support. It is only possible to give rough estimates. I think I would buy 3 CD or DVDs and 1 game a month. I would buy them online, pre-owned, or through those CD/DVD clubs, as cheaply as I could. I figure \$80 a month. As far as software, I would use more Open Source and demos and purchase just what I need Windows and maybe 3 to 5 other worth while programs a year, like Dream Weaver. Iâ€™m thinking more expensive software but no more than \$250 to \$500 a year. OK, so it looks like I would be in an estimated \$1,335, actually that is to much for my budget I would have to cut the entertainment budget \$25 per month, maybe wait till games are older and buy 1 less CD a month. This would put me at \$1,000 to 1,200 a year combined Music, Movies, and Games/Software. However I have an extremely rough estimate of 1,000 CDs times \$10 a piece (prorated for quality), equals \$10,000 in pirated materials. That is my whole collection I estimate 200 CDs a year. The industries would claim \$25 times 200 CDs per year equaling \$5000 per year, but that is not realistic.

So how many people are this bad and how do we calculate the non users who only have like 10-50 burned CDs. Maybe it would be easier to calculate the total number of sold blank discs times \$10 minus sum percentage for lose (bad burns).

Maybe someone can take this further, Iâ€™m tired and Adult Swim is about to start.

I am not sure that this thread is appropriate for this forum.

The cost of piracy is really hard to calculate correctly. There are several factors.

1. People who would have bought the product but now pirate instead. This is a loss to the industry but it is a benefit to consumers. However, the overall effect would usually be negative.

2. People who wouldn’t have bought the product because the price is too high but pirate it. This doesn’t hurt the producers because these people would never have bought the product and also represents a benefit to consumers.

3. Piracy may actually increase sales because it is like a kind of advertising. This would be a benefit to the industry.

So force#1 causes losses to the industry. Force #2 has no effect on the producers. And force #3 is a benefit to the industry. So to really accurately calculate the cost of piracy you need to calculate forces #1, #2 and #3. If #3 outweights #1 then piracy would actually increase profits to the industry.

The estimates of the cost of piracy by the industry are deliberately inflated because they assume that everyone with a pirate copy of Photoshop, for instance, would have actually shelled out the \$500+ that it costs. So if there are 1,000 pirate copies of Photoshop, they assume this is a loss of \$500,000. But this is rubbish because how many of those 1,000 would actually have paid \$500 for Photoshop? Most likely very few, if any, because the people who use illegal copies of software tend to be people with limited incomes and with the time to go out there and look for the cracked versions of the programs. Thus, the industry’s \$500,000 estimate would be a gross exaggeration of the real cost.

As far as I know, no one has done a proper study of the real cost of piracy considering the effects I have written here and it would be very difficult to actually measure these effects. However, we do know that Hollywood opposed the VHS because it would facilitate piracy. And yet, after the VHS, Hollywood’s profits increased. If history is a guide, it appears that with every new technology, the profits of media companies have increased, not decreased.

Here is a revealing quote from Bill Gates on the issue:

http://news.com.com/2100-1023-212942.html

Gates shed some light on his own hard-nosed business philosophy. “Although about 3 million computers get sold every year in China, but people don’t pay for the software,” he said. “Someday they will, though. As long as they are going to steal it, we want them to steal ours. They’ll get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade.”

Nobody has ever calculated the real cost of piracy, and as soon as someone DOES, the **AA’s will silence them.

The riaa say people are not buying music just now because of piracy
My reason is because most music just now is crap…
The real cost as said before can never be counted because if you download say 10 cd,s who is to say that you would have bought them all if they were not availible online…

I also believe piracy can actually improve sales… Say for example I had a student placement guy working for me, on his own laptop he has AutoCAD with mechanical desktop installed - he does a few things, which he can’t do with the AutoCAD lite I have provided him with on the works PC’s. This work is then presented to senior management - lets just say hypothetically this company now owns 3 fully licensed copies of this program - this is a sale that would never have happened if the student had not picked up a copy of this program for Â£10 down the local market. I would also presume that when he goes out into industry, this will be a program he is used to using and will ask employers to buy it - all hypothetical of course…

Yes but he could have just used the one he got for Â£10 which works the other way thats why the real cost cant be calculated…

I am not condoning any forms of pircay but i will say this,

imho i believe that it all balances itself out in the end, John buys series one of whatever and gives 3 mates a copy they give it to 3 mates and so on and so forth and so eventually 10 people go and buy series 2, 3 and 4 and aload of others either do nothing or pirate it and start the cycle again.

Pirates will moan about the riaa/bpi mpaa etc and the riaa/bpi and mpaa will squeeze Johns tit until its purple, its life its a fact and something we just have to deal with.

I really agree with the “they wouldn’t have bought it anyway”. Using the photoshop example above, really who can afford to pay that much for image edit software besides big companies. I’m not saying it’s right, but that’s really expensive. I can think of a lot of things I’d rather spend 500 bucks on.

Also, the industry never calculates the profit they make from piracy. There lots of honest users that use piracy as a way to preview something before they buy it. Whether is be films, music, or games I truly believe there are lots of users who would not have bought something unless they downloaded and previewed it first. I’m not saying everyone that downloads will buy something, but it is a contributing factor.

Also the price of music is rediculous as well. I haven’t bought a cd in over 2 years. I’ve heard that an artist only gets about .05-.06cents profit for each cd sold. I can think of much better ways to support the artists I love. For example concerts. I will gladly pay 40 bucks to go see a concert for a favorite artist. I just recently went to see the sounds of the underground tour. It had bands like Opeth, Lamb Of God, From Autumn To Ashes etc. I spent \$75 on 3 shirts. And I did it to support the artist rather than buying their cd. I would rather donate that .05-.06cents directly to the artist than let the rest of my 17 or whatever dollars go to the RIAA.

So I truly don’t think the cost of piracy can be accuratly measured. But I do know the **AA are liars about their loses. Wasn’t there a report not too long ago that said CD sales had seen an increase in the past year? Go figure.

I too am a big fan of the “I wouldn’t have bought it” theory. I haven’t got \$500 for Photoshop. If I did have \$500, my wife would NEVER let me spend it on Photoshop. So they haven’t lost any money to me if I choose to use Photoshop without buying it. On the contrary, they get increased circulation for free. Net benefit to Adobe.

On the other hand, I do know a lot of people who WOULD spend the \$50 on a game but download it instead, and that’s just really bad for the industry. I’d say that the gaming industry takes a BIG hit from Piracy.

I think the %age of users who take the time to mod their consoles to play pirated games is slim. Probably less than 10%. Once again, these are the people who wouldn’t ever buy the console in the first place and only got it because they could pirate all the games for it. And this in fact is harmful to console manufacturers because they sell the consoles at a loss hoping and expecting to make money back on games. I guess if they made money on hardware sales by selling above cost, then it would be a different story, games might even be cheaper. But the majority of households won’t want to shell out \$500 for the console itself and no games and accessories.

The percentage of modded Ps2’s is REALLY low, relatively speaking. You guess 10% but I will tell you right now it’s less than 1%.

You can’t really calclate the cost of file sharing. The main variables were identified very well by V-exed earlier in this thread. Add to those product availability, disposable income level, intended use, and other factors that influence file sharing and you soon see that any calculation is based on a set of assumptions that no one really understands. It’s a classic case of each side of an argument using a set of assumptions that reinforce only its side of the argument.

The only thing I would take issue with is the example cited earlier where a student buys a copied program. As soon as you leave the “fair use” umbrella that surrounds this issue and go into a “commerce” arena where you are selling duplicated software, you leave any defense for your actions behind. No one should should be able to sell the fruits of another’s work for personal gain in my opinion.

I don’t think that anyone is arguing that illegally sold copies of programs are good in any way. I think that’s universally just bad and wrong… and so does everyone except the people doing it.

I would also say the the guy down the local market selling software or movies is not average joe copying a movie from blockbuster, or making a copy of a cd for his girlfriend. When I lived in Edinburgh, there was a market on the edge of town, a lot of the guys selling stuff were ex-drug dealers - a huge newspaper report said that they could make the same money as selling drugs, but if they got caught they got there equipment confiscated and a couple of Â£1000 fine (which they would nip straight down to www.silicon-group.co.uk and replace all equipment on their way home from court) - for drugs they would go down for 25 years.

Yes they now sell them and cigs out of plastic bags instead of the market stalls so if they get caught they only have a few and they have a better chance of getting rid of them at the first sign of trouble…
they also use mobile phones to talk or order more
Im not saying edinburgh but central belt in scotland
They are making around Â£20,000 on a good weekend this is just crazy and no wonder the riaa etc are cracking down on pirates…

Iâ€™m assuming that most of us are power users so we represent the worst of piracy

Don’t assume :a

Agree - the real pirates should be targeted - not some 15 years old who is downloading/uploading songs on some peer to peer service - for songs they would never have bought in the first place as they have no money - but they are an easy option, and the press report a sucess in anti piracy measures cos the parents pay a fine to get the kids off. Not some guy from Pilton who has a gang of mates who know where the trading standards officers live!!

The problem is that the MPAA/RIAA don’t have the ability, any more than Scotland Yard or the NYPD, to crack down on the guys in Soho/Chinatown/Edinburgh’s Dodgy End who are selling on the streetcorner.

So instead they target 12 year olds.

It says all and more.
Nota Bene:

1. Piracy can be genuinely calculated only by those, who practice it.
2. Rules of the Forum are unambiguous.
3. Such “topic” indirectly leads to collecting information on the practice of users/members.