You are killing our creative industries. ‘Downloading Costs Billions’, said the Sun. ‘MORE than seven million Brits use illegal downloading sites that cost the economy billions of pounds, Government advisors said today. Researchers found more than a million people using a download site in ONE day and estimated that in a year they would use £120 billion worth of material.’
That’s about a tenth of our GDP. No wonder the Daily Mail was worried too: ‘The network had 1.3 million users sharing files online at midday on a weekday. If each of those downloaded just one file per day, this would amount to 4.73 billion items being consumed for free every year.’
Now, I am always suspicious of anything on piracy from the music industry, because it has produced a lot of dodgy figures over the years. I also doubt that every download is lost revenue, since, for example, people who download more music also buy more music. I’d like more details.
So where do these notions of so many billions in lost revenue come from? I found the original report. It was written by some academics you can hire in a unit at UCL called CIBER, the Centre for Information Behaviour and the Evaluation of Research (which ‘seeks to inform by countering idle speculation and uninformed opinion with the facts’). The report was commissioned by a government body called SABIP, the Strategic Advisory Board for Intellectual Property Policy.
On the billions lost it says: ‘Estimates as to the overall lost revenues if we include all creative industries whose products can be copied digitally, or counterfeited, reach £10 billion (IP Rights, 2004), conservatively, as our figure is from 2004, and a loss of 4,000 jobs.’
What is the origin of this conservative figure? I hunted down the full CIBER documents, found the references section, and followed the web link, which led to a 2004 press release from a private legal firm called Rouse which specialises in intellectual property law. This press release was not about the £10 billion figure. It was, in fact, a one-page document which simply welcomed the government setting up an intellectual property theft strategy. In a short section headed ‘Background’, among five other points, it says: ‘Rights owners have estimated that last year alone counterfeiting and piracy cost the UK economy £10 billion and 4,000 jobs.’ So this authoritative government figure, from an academic study, in fact comes from an industry estimate, made as an aside, five years earlier, in a short press release from one law firm.
But what about all those other figures in the media coverage? Lots of it revolved around the figure of 4.73 billion items downloaded each year, worth £120 billion. This means each downloaded item – software, movie, mp3, ebook – is worth £25 on average. Now, before we go anywhere, this seems very high. I am not an economist, and I don’t know about their methods, but to me, an appropriate comparator for someone who downloads a film to watch it once might be the rental value, for example, not the sale value. I’d also like to suggest that sometimes, perhaps quite often, someone who downloads a £1,000 professional 3D animation software package to fiddle about with at home may not use it more than three times.
In any case, that’s £175 a week, or £9,100 a year, potentially not being spent by millions of people. Is this really lost revenue for the economy, as reported in the press? Plenty of those downloading will have been schoolkids, or students, who may not have £9,100 a year to spend. Even if they weren’t, that figure is still about a third of the average UK wage. Before tax. Oh, and the government’s figures were wrong: it was actually 473 million items, and £12 billion, so the value of each downloaded item was still £25, but it exaggerated the amount of money ‘lost’ by a factor of ten, in the original executive summary, and in the press release. These were changed quietly after the errors were pointed out by a BBC journalist, but I can find no public correction for the many people who were misled.
So I asked SABIP what steps they took to notify journalists of their error, which resulted in their absurdly huge claims being widely reported in news outlets around the world. They refused to answer my questions in emails; insisted on a phone call (always a warning sign); told me that they had taken steps, but wouldn’t say what; explained something about how they couldn’t be held responsible for lazy journalism; then, bizarrely, after ten minutes, tried to tell me retrospectively that the whole call was actually off the record, that I wasn’t allowed to use the information in my piece, but that they had answered my questions, and so they didn’t need to answer on the record, but I wasn’t allowed to use the answers, and I couldn’t say they hadn’t answered, I just couldn’t say what the answers were. Then the PR man from SABIP demanded that I acknowledge, in our phone call, formally, for reasons I still don’t fully understand, that he had been helpful.
I think it’s OK to be confused and disappointed by this. Like I said: as far as I’m concerned, everything from this industry is false, until proven otherwise.