Piracy and broken window falacy

[UtwigMU]

Often times I hear arguments how piracy is causing loss of billions but those believing those claims overlooked broken window fallacy.

Here is the parable:

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—"It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.


So if someone pirated music/movies/software, that money has not been spent on entertainment industry. But it has not been destroyed. It simple went elsewhere or didn't exist in the first place.


I'm a bit pissed since our government on the way out (they didn't pass confidence vote in August) secretly instructed ambassador to sign ACTA without consulting with anyone before.

[UtwigMU]

Also recently I ebayed single from a favourite band for ~70 USD / 55 EUR in a charitable auction (proceeds go to charity of band choice).

I did this to support the band and to thank them. If their music wasn't freely available on some blog and if I'd not be able to download their music, I wouldn't know them.

Also in past 5 years or so I listen a lot to trance, where all good DJs play live sets on streaming radio with download links posted aftwarwards.

Because I like trance I went to numerous parties of DJs I like where I spent few 100 euros on tickets, drinks and merchandise.

[Umfriend]

So if someone pirated music/movies/software, that money has not been spent on entertainment industry. But it has not been destroyed. It simple went elsewhere or didn't exist in the first place.

So? As you pirate music/movies/software you may spend your money elsewhere, that is true. However, had you paid for it the same money would not have been destroyed either. It would have been the music/movies/software industry that could have spent it elsewhere. That is the same as a thief taking your money: it is not destroyed, just not available to you anymore.

[Brian Ellis]

So what you are saying is that a poor, struggling but talented artist cannot receive his few cents of royalties because the would-be purchaser downloaded his work for free from a pirate site, while the downloader bought a bottle of beer or a pack of cigarettes?

I wrote a text book for engineers some time ago. It was pirated in India but, fortunately, was not exported from there, but I certainly would have preferred receiving royalties for the few thousand copies that were sold there. Worse, I have come across many cases where potential purchasers in Europe and North America had photocopies of all or part of the book, for which I never received a bent cent. Why should these guys profit from my knowledge and the time it took me to write it and buy their cigarettes when I couldn't afford to do so (even if I smoked)?

Saint Luke said the labourer is worthy of his hire; I say that I am, too, and so is the software author and the singer.

[UtwigMU]

For example in past 15 years here number of commercial cinemas dropped (several one-off cinemas closed but big multiplex opened), number of indie/reprise cinemas increased and number of commercial live act theatres (real live actors not movie theatres) increased.

So people go see a bit less Holywood movies and go see more live acts and indie movies.

Also here Smurfs in 2011 and Ice Age 3 in 2009 had more viewers than Flintstones and Jurassic Park in 1993 and 1994.

4 out of 5 most watched movies of all times (chart from 2009) in Slovenia except Titanic are from 2001 or newer when it was generally possible to download them while they were in cinema. And we are in the top 10 countries in the World by fiber per capita (ahead of UK, USA, NL and DE) and 23d by broadband per capita and have generally had great broadband since 1998.

Out of 150 most watched movies chart from 2009 84 were released after 2000 when broadband became generally available.

[UtwigMU]

I didn't say artists, writers, actors, composers shouldn't be paid. I think the opposite.

What I'm saying is that industry falsely inflates damages done by piracy as counting every download a lost sale (this is not the case) and that people wouldn't buy content if it was unavailable and that that money goes elsewhere.

Also downloaded content is not free as person downloading it needs to buy computer, install software, configure internet connection. Most people are unwilling to invest time or unable to do this. Those that are have invested time in learning and downloading. For those whose time is of high value, they prefer to pay if paid solution is same or better quality as downloaded. For instance I buy games on Steam because I don't like spending weekends reinstalling and testing cracks, risking viruses or preparing test clean machine for crack testing.

Furthermore, those who have adapted to new situation are reaping huge profits and generally things that cannot be substituted by digital download are in increase, while things that can are in decline. Some understand exposure generated by availability and bigger fan base.

For instance all Dutch trance DJs play live sets on ah.fm and they post download links for 1h set a few days latter. All the parties by Tiesto, Van Buuren, Ferry Corsten, Cosmic Gate were full and were huge success.




What mainly pisses me off is that government without full authority (on the way out about to be replaced by other parties) secretly signed ACTA without presenting and debating it publicly.

[KRSESQ]

It is a sad fact of business that you will inevitably lose a certain quantity of your product to theft. It doesn't seem to matter what your product is. In the case of online piracy, the response by the recording industry was to attempt to tightly control the international shipping lanes (to use an inexact metaphor) rather than simply send the navy after the pirates. The problem then becomes finding the pirates. But that's a job for law enforcement, NOT recording industry lawyers who see pirates behind every shrubbery.

By the way, I think we had the conversation about the glazier before (in a different context, of course).

[Umfriend]

What I'm saying is that industry falsely inflates damages done by piracy as counting every download a lost sale (this is not the case) and that people wouldn't buy content if it was unavailable and that that money goes elsewhere.

But that is a whole other point and one for which the glazier parabel is simply unfit. You do not need a parabel because that claim can be refuted easily:
1. The marginal cost of pirated copies (allowing for a few reasonable assumptions) is zero.
2. Legal copies cost are sold at a substantial higher cost.
3. Unless you claim that the price-elasticity of demand is zero, it is clear that demand will be less when marginal cost rises.
4. As a result, by definition, the number of pirated copies exceeds the lost sale.

This is very simple economics. For it to be false, the industry would have to explain why they do not demand a zillion dollars for a single cinema ticket.

[VJ]

I see it evolving to the point where we will just pay a subscription fee (e.g. monthly) to a record producer or movie studio or even TV producer, which then gives access to all content they provide. There may be different prices (e.g. allowing you earlier access to some things, or other channels - even cinemas: you show your subscription card and just pay for the cinema service), but then at that point it would not matter where you got the copy from. If you have the subscription that covers that work, you can own it.
It would of course completely mess up the end-sales points...