Freakonomics & Online Piracy

No one really knows how much online piracy costs the various industries claiming injury (motion picture industry, gaming industry, recording industry, etc.). As Kal Raustiala and Chris Sprigman of Freakonomics write:

Unlike stealing a car, copying a song doesn’t necessarily inflict a tangible loss on another. Estimating that loss requires counterfactual assumptions about what the world would have been like if the piracy had never happened — and, no surprise, those most affected tend to assume the worst.

SOPA and PIPA were overreactions by industries that themselves can’t figure out how much piracy is costing them so they just through out a really big, scary number and claim thousands of jobs lost and everyone climbs on board.

Make no mistake. These industries are under attack but not by online pirates. Traditional business models that in the past produced healthy profits and plenty of money to spread around are about to be disrupted by the likes of Apple,, YouTube, Facebook, NetFlix etc. What else is a poor struggling industry to do but buy legislation they think will put more money in the coffers. We all know that they’re misguided and operating under false, unprovable assumptions but our purchased, I mean elected officials just aren’t smart enough to understand the reality. Or they just don’t care.


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