Organisations exaggerate costs of piracy, says GOA

Posted by Emma Woollacott

Every year, piracy costs US industry as much as - well, it seems nobody knows how much after all. A report from the Government Accountability Office has concluded that it's near impossible to quantify.

Figures are bandied about all the time. But, says the GOA, they're often based on flawed calculations.

In its report, it cites an estimate from the Business Software Alliance that some $9 billion was lost through software piracy in 2008. Unfortunately, says the GOA, the figure was based on "assumptions that have raised concerns among experts we interviewed, including the assumption of a one-to-one rate of substitution and questions on how the results from the surveyed countries are extrapolated to non-surveyed countries."

Motion Picture Association of America (MPAA) figures for movie piracy also come in for criticism. The organisation claimed that US motion picture studios lost $6.1 billion to piracy in 2005. But, says the GOA, "It is difficult, based on the information provided in the study, to determine how the authors handled key assumptions such as substitution rates and extrapolation from the survey sample to the broader population."

Adding insult to injury, several widely-quoted but utterly unsubstantiated figures come from US government agencies. One FBI press release issued in 2002 claimed that US businesses of all types lose a combined $200-$250 billion to counterfeiting per year.

But, says the GOA, on closer questioning nobody at the FBI could say where the figure came from or how it was arrived at. The same applied to a 2002 Customs and Border Protection (CBP) estimate that was still being used by the organisation years later.