UK File-Sharers Download $19B Worth of Content Annually?

New govt-sponsored study says huge economic losses are being sustained due to “large-scale” illegal file-sharing, but contains several glaring flaws in its conclusions.

“Copycats? Digital Consumers in the Online Age” is a study recently conducted by the University College London’s (UCL) Centre for Information Behaviour and the Evaluation of Research (CIBER) for the Strategic Advisory Board for Intellectual Property Policy (SABIP). It claims that UK industries are suffering “staggering” losses due to illegal file-sharing, and that the problem will only worsen as broadband connection speeds increase.

The SABIP set up as a result of recommendations made in the Gowers Review of Intellectual Property that both called for the establishment of such a board to cover the full range of IP rights as well as to provide an annual IP strategic analysis.

From the report:

On one peer-to-peer network we found that at midday on a weekday there were 1.3 million users, sharing content. If each “peer” from this network (not the largest) downloaded one file per day the resulting number of downloads (music, film, television, e-books, software and games were all available) would be 473 million items per year. If the figure for each individual is closer to five or more items per day, the lowest estimate of downloaded material (remembering that the entire season of the Fox television series “24”, or the “complete” works of the rock group Led Zeppelin can be one file) is just under 2.4 billion files. And if the average value of each file is £5 — that is a rough low average of the price of a DVD or CD, rather than the higher prices of software or E-books — we have the online members of one file sharing network consuming approximately £12 billion ($19.37 billion USD) in content annually — for free. These figures are staggering.

However, it’s nonsensical to extrapolate a hefty figure like $19.37 billion USD in annual losses based on the fact that there happened to be 1.3 million file-sharers on a mysteriously UNNAMED single P2P network one day, and whom therefore are likely to have illegally downloaded 5 items every single day for an entire year on that same network. Even a high school teacher would give you a failing grade from making such a conclusion. It’s conjecture at best, outright lying at worst.

Shouldn’t the study’s authors have done a better job by trying to at least seek out a portion of the 1.3 million file-sharers it alleges were connected and ask them a few questions about their file-sharing habits?

How about disclosing what P2P network they’re referring to so that we can get an idea if the numbers even make sense?

Or what about the fact that the $19 billion USD it alleges the UK economy loses each year doesn’t just disappear, it simply gets spent on other goods and services. If they’re talking about UK-based file-sharers downloading UK-based copyrighted material illegally then logically most of that “lost” revenue will remain in the country and therefore be used to buy things from UK-based retailers or, as studies suggest, even more albums, movies, and video games.

At least they admit their conclusion is flawed, that there is no way to determine what percentage of the content being uploaded or downloaded was copyrighted material, but it then makes the study meaningless to and should prevent its use by UK politicians and copyright holders to press for increased legislation.

“We can state that between 44 and 79% of global Internet traffic is taken up with file sharing, the lower figure is for America, the higher for the region, ‘Eastern Europe’ — though we have found no way of measuring how much of this traffic is the up or downloading of unauthorised, unlicensed or illegal material,” it reads.

It also claims that “academic research suggests that those who ‘file share’ are at least 30% less likely to purchase music.”

Oh really? Study’s conducted in Norway and Canada suggest otherwise.

Consumer Culture in Times of Crisis,” conducted by the BI Norwegian School of Management, the largest business school in Norway, and the second largest in all of Europe, concluded that file-sharers actually buy 10 times as much music as they download for free. That’s 10 times as much compared to 30% less.

“The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study For Industry Canada,” a study commissioned by Industry Canada, a ministry of the Canadian federal government, found that for every album downloaded illegally legal CD purchases increased by 0.44, or by about half an album. Again, more music consumption not 30% less.

So CIBER’s claim that file-sharers are “30% less likely” is subject to debate.

“As SABIP’s report shows, illegal downloading robs our economy of millions of pounds every year and seriously damages business and innovation throughout the UK,” says David Lammy, Minister of State for Intellectual Property. “It is something that needs tackling, and we are serious about doing so.”

Considering that the report involved NO MONITORING of ACTUAL COPYRIGHTED MATERIAL DOWNLOADED ILLEGALLY I’m surprised that Lammy can suggest that the problem is so serious being that he doesn’t even know what the problem is, only that people seem to be getting stuff for free and industry’s like the music biz are making less and less money each year. I’m no economist, but the problem with the music biz is two words – digital single. Why buy an album for $20 bucks when you can buy a “hit” for 99 cents?

What the UK govt reeally needs to be serious about is “tackling” or reforming is the UK’s copyright laws so that they conform to the realities of the digital age. Copyright laws were written largely in an analog world where piracy and copyright infringement were motivated by profits and greed. File-sharing has neither of these trappings, and is done solely to share entertainment and educational content with others.

The discrepancy was pointed out a few days ago by Harvard prof Charles Nesson who wrote that the real problem in all of this is the tension between “our antiquated copyright laws and the social reality of ‘digital natives,’” those that have grown up immersed in a digital world. Nesson has even recently argued that downloading music without permission of copyright holder qualifies for “fair use” exemption from copyright laws.

“We can’t expect 12 year olds to become copyright lawyers before they can switch on a computer, but we can educate people on enforcement and work towards getting the right people caught and punished-wherever they live,” adds Lammy.

But, who are the “right people” to punish? Is it those that share one song or movie or two? Noncommercial piracy, downloading content for personal use, is far different than piracy for the sake of selling copyrighted material to others for profit. There needs to be a distinction when it comes to enforcement.

Either way, the numbers of this piracy study don’t add up, and it makes one wonder if the report has been hijacked by anti-piracy groups as was the Conference Board of Canada of recently when it published a study suggesting that Canada was in dire need of copyright laws similar to those in the US.

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STORY UPDATE:

The BBC apparently invited members of the public to comment on this SABIP-commisioned report and its fantastical “$19 billion dollars lost” headlines. It asked for comments on “how we should tackle illegal downloading” and the responses are surely not what it had hoped for.

Here’s an excerpt of a few of my favorites:

So if I buy a CD by some popular group, and later find out that they didn’t play on it but used session musicians – have I been ripped off?

– [TellingBone], Stockport

What propaganda, that is NOT lost revenue as 90% of those downloading would not purchase it anyway? Also what about the other side of the coin? Many artists and peices of software have actually had a boost in sales due to being more ‘out there’. Take “photoshop” or “3d studio”, neither would be as big industry standard apps if for years kids had not got pirate copies to hone their skills (and learn to love them). What absolute rubbish, I am not saying piracy is right, but get the facts right.

– Dan Bedlem, United Kingdom

Until they:
(1) make DVDs region-free,
(2) allow me to copy their product to replace what I have bought if it gets damaged
(3) stop charging rip-off prices,
they’ll get no sympathy from me.

– chris pannell, orlando usa

Look lets get this all into perspective, I have yet to see any film, record label or software house to collapse due to internet downloads. This BILLIONs costings is BULL, of course if you look at what it would cost to purchase all those downloads then yes fine, maybe. However the likelyhood of all those downloaders paying for that media anyway if they had no alternative, is pretty slim if at all.

Perhaps they are confused with MP expense costs 🙂

– Angus, UK

A large part of the music & film business was run by talentless people living off the back of artists, using shyster lawyers to draw up one-sided arbitrary contracts, and freezing out artists who refused to bow to their inequities, so I have NO sympathy for the sharks who fed off the public.

The whole rotten system essentially started falling apart with pirate radio stations, the Beeb was as guilty as any media in saying that pirates would kill off the music industry, but still it survives.

– Peter Marton, Middlesbrough, United Kingdom

The last CD I bought I bought online from a dealer who was able to post CDs from Hong Kong cheaper than I could buy them in the UK (online or from a store).

The music industry’s reaction to the increase in sales their legal products? Sue them.

Yes, they’ve really got the interests of the public and artists at heart.

– Kwacka, Limassol

…and my favorite:

As stated several times, the money is not lost – it is just not spent on CD’s, DVD’s & Cinema tickets.

The “illegal” downloading can not be stopped, it has been around for as long as the internet has existed and will continue long after the record labels and movies companies dissapear.

In regards to ISP’s, why should they take any action if a user downloads MP3’s, the clue is in the name, Internet Service Provider. Should a car dealer be responsible for a driver speeding? I don’t think so.

– Richard, Portstewart