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  • Featured, News - Written by on Thursday, March 17, 2011 16:21 - 9 Comments

    Aussie piracy report a “farce”, says Pirate Party

    The Australian Pirate Party has attacked a study commissioned by the Australian Content Industry Group (ACIG) and put together by research group Sphere Analysis, calling it “a farce”.

    In a speech held in late February, Attorney-General Robert McClelland called for new directions on copyright laws, as he claimed online piracy was posing threats to the content industry and to the Australian economy. To support the speech, he cited two studies: one commissioned by the Australian Association Against Copyright Theft, “The economic consequences of movie piracy”, and a second, “The Impact of Internet Piracy on the Australian Economy” commissioned by the ACIG — a group heretofore unheard of.

    Pirate Party spokesperson Brendan Molloy today said the ACIG’s report was based on an European study, released by a group called TERA, which compared five countries – France, Germany, Italy, Spain and the UK – and their use of the internet to estimate retail loss. He said the ACIG’s report – which claimed piracy cost $900 million to the Australian economy – was not to be trusted as it used average figures from foreign countries proportioned to the Australian population. “We think it’s a farce, it’s a complete fallacy,” he said. “The maths behind it is terrible.”

    Both studies — by AFACT and the ACIG — purport to show that piracy is costing the Australian content industry millions of dollars and had an impact on a larger scale to the Australian economy. AFACT claimed movie piracy was responsible for a yearly loss of $1.37 billion; while the ACIG reported that in 2010 movie piracy cost $900 million and over 8,300 jobs to the Australian economy.

    The difference is that while AFACT is a well-known institution, little was known about the ACIG till McClelland’s speech. The association doesn’t seem to have a website or an available phone number, but its members are listed on the study conducted by Sphere Analysis.

    They include the Australasian Performing Right Association Limited (APRA), the Australasian Mechanical Copyright Owners Society (AMCOS), the Australian Publishers Association (APA), the Australian Recording Industry Association (ARIA), Copyright Agency Limited (CAL), the Business Software Alliance (BSA), the Interactive Games and Entertainment Association (IGEA), Microsoft and Music Industry Piracy Investigations Pty Ltd (MIPI).

    Molloy said the party became aware of the study only when an article published by Melbourne newspaper The Age mentioned it. He said the party contacted the journalist concerned and asked him if he had read the report and where it was available. According to Molloy, the journalist denied reading the report and that’s when the Pirate Party started to look for it. “So we were working with [BitTorrent media site] TorrentFreak to get as much information as possible on Sphere Analysis,” he said. “We also called the Attorney-General’s Department to ask them if they had read the report and we essentially got stonewalled by them.”

    Molloy said the party had to send a Freedom of Information request, but eventually the report was leaked and the link to it was diffused through Twitter. “The major issue we found with the report was that – like many other reports – it equates every download as a lost sale,” he said, adding that “It’s interesting too we found out that Sphere Analysis Group is a real estate consultancy, it’s come out fairly recently in an iiNet story.”

    Speaking today, Sphere Analysis Group Emilio Ferrer said the report was commissioned around Christmas time last year when general manager of Music Industry Piracy Investigations, Sabiene Heindl, got in contact with him. He said Sphere Analysis is very close to Paris-based consultancy firm TERA which — Ferrer said — had conducted a “very comprehensive” study across five countries in Europe about their use of the Internet and how that impacted on retail loss.

    Ferrer said Sphere extrapolated the results from those countries, using Australian data to obtain local figures and projections. “The five countries used in the study were in our view pretty comparable to Australia, in terms of the size of the economy, the structure of the content industry, and the rate of growth at which internet utilisation is occurring,” he said, adding that the sample of European countries offered a better mirror than larger nations such the US. “The US has a very very large population, and if you actually look at the market in the US for every industry is very different to Australia.”

    Ferrer said the actual problem with internet piracy was educating citizens against it. “We don’t see it as stealing,” he said. “I’m almost confident that 99 per cent of people that find downloading a file illegally in the Internet acceptable, would not find it acceptable to break into my house and steal a DVD from my collection, they would find it totally morally wrong.”

    Replying to the Pirate Party criticism on the methodology and the results of the study, Ferrer said that by comparing Australia to foreign countries, the report provided a range and a base line to estimate retail loss and the impact of piracy on the Australian economy. “With more people having access to faster speed over the Internet, the problem is going to grow,” he said. “And I understand there are people out there that when they see a report that says the activity they are undertaking should be regulated I understand they get upset.”

    Furthermore Ferrer denied that the report assumed that every download equates to a retail loss. Instead, he said he would like to question the Pirate Party about what it thought of the economic impact of piracy. “I would put it to them, what do you think is the economic impact of this illegal activity?” he asked, adding piracy was causing an economic transfer from “desirable” activities – like the availability of more content – to illegal practice.

    “With Internet piracy, the losers are the artists, the software developers and the people that make movies, and who are the winners? Well the winners are the people that run websites out there that allow illegal activities. And how do they make a living? Often advertising things like pornography and gambling.”

    A spokesperson for AFACT said the organisation was not involved in the Australian Content Industry Group and had no further comment to make about the group or its study. However, the organisation is known to have links to Music Industry Piracy Investigations, one of the groups behind the ACIG report.

    Image credit: Penny Mathews, royalty free

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    1. Justin
      Posted 17/03/2011 at 5:55 pm | Permalink |

      When will people learn that any finding published on this is made from interest groups pulling numbers from questionable sources and then extrapolating on that. They are never accurate. I am not going to cry “Look at their profits!”and claim piracy isnt hurting them. It could be, but not like they want us to believe.
      For instance: Where have they ever cited the fact that several studies found that ‘pirates’ BUY more music, movies and games than non-pirates? They get a sale and lose a sale at the same time? Hrm….
      Every time they equate a ‘pirated’ copy as a lost sale. Not always the case. Most often not the case.
      Also, I love how they always cry poor for the artists, and creators. Following the money trail on some things has shown that the creator gets at best 10% of the money. Sometimes publishers take a $20 product and price it at $40 and then cry foul when it doesnt sell (Video Game: mount and blade – Originally priced for $20. Sold heaps. Picked and and repriced to $40. Sold alot less, publisher who picked it up cried foul.)

    2. Gemma
      Posted 17/03/2011 at 8:00 pm | Permalink |

      Wow – for once they used a substitution rate of 10%, that it for every 10 illegal downloads, 1 lost sale. Seems pretty reasonable to me. You know what I find really annoying, that The Pirate Party would even get any airplay on this issue. It’s not rocket science to work out that everybody downloading music and stuff is going to end up in people buying less. How is it a story that The Pirate Party are trying to undermine a study? That would be the PP made up of two guys in Australia, who as far as I can see have no economic credentials at all! A joke! Even if you don’t believe the copyright industries’ numbers – really, would you believe a thing that the PP say?

      • Posted 17/03/2011 at 10:26 pm | Permalink |

        Why would we believe a study commissioned by an organisation like AFACT – (set up specifically as a lobby group of copyright holders) – who have a vested interest in making the “problem” seem as big as they possibly can make it seem?

        I don’t know who is right – but it goes both ways.

    3. Jasmcd
      Posted 17/03/2011 at 9:04 pm | Permalink |

      Why is it that when all media distribution channels can be removed and consumers can easily buy directly from the studios that the same price is being charged? There is no cost for media, cases, shipping or wastage and still it costs 25 to 30 to download a movie legitimately.

      The market is speaking and there are two ways to respond. Try to increase the policing and penalties for copyright infringement and spend millions in development of new forms of DRM – or alternatively offer the product at a cost which is reasonably proportionate to the costs of production and release.

      • SteveB
        Posted 18/03/2011 at 10:09 am | Permalink |


        I was thinking about this the other night. We have downloaded copies of movies as well as the legit store bought versions.

        We also buy legit copies of movies after downloading it and finding we liked it!

        With our legit copies, however, we very rarely buy at full retail prices. Alot of our blurays have been bought from the 2/3 for $50 bin at JB for example.

        1 download != 1 lost sale

    4. Posted 18/03/2011 at 9:33 am | Permalink |

      I question the validity of the study, becase everybody knows we are bigger pirates than the europeans!

    5. chris
      Posted 18/03/2011 at 10:14 am | Permalink |

      I think it’s great that the Pirate Party are investigating the absolute shoddiness of this report. It’s just a shame none of the mainstream media will pick up this part of the story in the same way that they did for the report.

      Those of us in the industry may see the Pirate Party response but you can bet your average joe in the suburbs whose downloading torrents wont…

    6. Posted 18/03/2011 at 10:58 am | Permalink |

      I get a little sick of this argument – the content intermediaries (among other things) like to complain that piracy hurts the economy … as if the money just evaporates if it’s not spent on their content. People will do other things with the money they don’t spend on that DVD, so it’s almost certainly no net loss to the economy – just perhaps a net loss to their small portion of it.
      While I don’t necessarily support piracy, I believe that the content industries are trying to protect a business model (one where the intermediary made the profit) that is no longer appropriate (increasingly the consumer can get content direct from the producer, a trend that will continue; or the consumer will become a more active participant in the production). When it was difficult and expensive to distribute (e.g.) music, record companies were necessary … they are rapidly becoming redundant, and so is every middleman who deals with easily digitisable content.

    7. Chase
      Posted 18/03/2011 at 5:49 pm | Permalink |

      AFACT Or Fiction. Everything about this site screams a ponzi scheme. These organizations are truly not interested in putting a stop to piracy and there cry’s that this amount of people are deeply effected by online piracy is just a sales pitch to big money companies to invest more.

      AFACT they have been around since 2004 and the torrent world keeps growing so what have they done besides take a paycheck and kickbacks making it seem like there on the case.

      AFACT people reaching out to them have been ignored because there uninterested in hearing actual ways to combat online piracy.

      Fiction all there surveys and all there sob stories about how many people have lost work and there concerned for this people.

      AFACT you can fool some of the people some time but you can’t fool all of the people all of the time.

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