Ars Technica Finds No Basis for Oft-cited Costs of Piracy

There are three kinds of lies: lies, damned lies, and statistics. (Mark Twain)

Many people have questioned the validity of IP piracy statistics over the years. There is, in fact, a rather commonly-held belief that such figures are inflated by rights holders in order to justify crackdowns.

A story on Ars Technica seems to confirm that idea.

Writer Julian Sanchez puts on his detective hat in an attempt to track down two key statistics which are continually cited in relation to IP piracy:

  • 750,000 U.S. jobs lost
  • $250 billion lost from the U.S. economy

His conclusion? At best, the numbers are unsupportable. At worst, they are simply nonsense.

These statistics are brandished like a talisman each time Congress is asked to step up enforcement to protect the ever-beleaguered U.S. content industry. And both, as far as an extended investigation by Ars Technica has been able to determine, are utterly bogus…


Perhaps more importantly, both numbers are seemingly decades old, gaining a patina of currency and credibility by virtue of having been laundered through a relay race of respectable sources, even as their origin recedes into the mists.  That’s especially significant, because these numbers are always invoked as proof that the piracy problem is still dire—that everything we’ve done to step up international enforcement of intellectual property laws has been in vain. But of course, if you simply recycle the same numbers from 15 and 20 years ago… then it will necessarily seem as though no ground has been gained.

How Sanchez reached this conclusion makes for a compelling read. Hit the link for the full article.

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  1. BANE XXIII says:

    Why don’t the companies make their own R4 chip? and then sell it at competitive prices? give the game makers credit, or have it like itunes? You see a game you want? buy it download it to your game developer R4 chip. good to go. Am I alone on this?


    Bane XXIII

    Minneapolis Mn

  2. Spartan says:

    It is about time someone takes this ludicrous position to task in a public venue

    and expose it for the bullshit it is. Lets hope the mainstream media picks up on the story. 


    "Religion is an insult to human dignity. With or without it, you'd have good people doing good things and evil people doing bad things, but for good people to do bad things, it takes religion" - R. Dawkins

  3. axiomatic says:

    Think about this a different way people.

    Console games cost $60.

    PC games cost $50

    A potential game buyer has both a console and a PC capable of playing said game. Now stipulating that he is going to BUY the game no matter what, which one is he going to pick?

    I would pick the PC game every time. It’s cheaper and the PC game will get far more fixes and patches than the console game.

    Now lets add the piracy…. if I were going to pirate the game, my mind was made up from the begining and no amount of price reduction is going to stop me from pirating it. So where is the lost sale?


  4. DeepThorn says:

    If I remember right CDs used to cost $20…  Too many with only 8 songs on them (none that I remember with 20), and half of the songs on the CD were crap, and now you can just buy the good songs for $1 a pop. 

    If the music industry would have embraced the internet more, I believe that piracy of music would be very rare and unheard of, but since they embraced their lawyers instead, and stuck with old technology, they and getting it up the pooch a bit more.

    As for the gas and movie tickets, yes.  Since oil companies are making record profits, while raping people.  I am perfectly happy screwing them over or anyone that does business with them.  Movie ticket wise, it happens every day anyways, haha.

    Protesting is protesting, yes it is typically illegal, but you have to get their attention first, then make demands.  Not just let them rape you while you are already at high risk of losing your job where you are not making as much as you should be in the first place.

    If you just stood outside their business, they would ignore you and not care, and someone would do something stupid and break something or hurt someone anyways.  At least this is a non-violent way of protest, and though it is stealing, with crap like DRM and prices how they are, consumers need their voices heard.  Our government is not protecting the consumers, and the companies are paying them off to rape us even more. (Then we also have government agencies like the FTC that are not doing their job.)

  5. SeanB says:

    There is no evidence of this whatsoever. Many games sell for $9.99, and get pirated 10X the number of times they are sold. The sites giving links to pirated copies tend to have larger traffic bases than the websites selling the games.

    When pirate sites release a "cracked EXE" for a game that has a "trial version", the publishers sites often crash because the wave of pirates is larger than thier own customer base.

    If Gas prices were $10 a gallon, would you use that as a defense for Stealing Gas? If Movie tickets were $25 each, would you use that as a defense for breaking in the back door of the theater? Music is pirated at a far higher rate than video games, and they dont sell for $70. Theft is Theft, and you cannot justify it. Either you pay what the publisher and retailer are charging, or you dont use it. Games and Music are entertainment, and you have no right to evaluate your own price.

  6. SaderBiscut says:

    I increasingly suspect companies throw out the piracy factor to justify why they aren’t making money. Now, sometimes this could be because they just don’t make good games, sometimes they could be making awsome games and just getting unlucky.

    I think alot of people use piracy as a method to decide what games they want to actually buy or not. With games being $50-60 new, it makes exprimentation risky and possibly a very bad idea for people with limited funds. Now, there’s all kinds of other ways to get around this anti-piracy advocates will throw out, but it’s a simple and direct way to find out exactly what you are getting.

    Most of the pirates I know tend to buy games that are worth keeping and forget about games that aren’t, it dosen’t seem unreasonable.

  7. DeepThorn says:

    Agreed…  $60 it better be amazing as hell (once a decade), $55 not unless it is a great game like BioShock (only one or two of these a year), $50 maybe if it is good enough, $45 probably if it is good enough, $40 definitly if it is good enough, $35 for an okay game maybe, $30 definitely even for an okay game, $25 about any game that isnt half of a game.

    Those are my pricing points.  I say $50 is a happy middle point if they want to max out profits, but they will be greedy A-holes and will be going for $80.

  8. shady8x says:

    For those of you who are interested, originally the 750,000 jobs number was used to support Ronald Reagan’s IP bill back in 1986. Let me repeat this !!!!1986!!!!

    If you go through old news paper articles, the first mention is by Commerce Secretary Malcom Baldridge in 1986.

    The good news is that according to these numbers internet piracy does not in any way cost jobs(or the number would have gone up when internet piracy became popular many years after 1986)…

    This means that we should use this truthy number in the defense of piracy until someone takes the time to make an actual study and find the real numbers rather then pulling them out of their buttocks or rather from a time period when people still used the word buttocks…

  9. Override367 says:

    Whats even worse is when they believe each download of a pirated game is a lost sale. Lets forget broken downloads, bad torrents, redownloads. I spend every spare bit of disposable income that I have on games and yet I still pirated Spore and Mercenaries 2 for PC (I’m so glad I resisted the impulse to mercs, it doesn’t translate to PC well, and i lost interest in spore after a few hours!). I just downloaded a pirate copy of Oblivion last night because I can’t find my disc, so is that a lost sale?


    The thing is, in the current environment, if every game was free I wouldn’t play alot of them. I might download them and try them, but I doubt I’d play many of them. I wouldn’t play Spore anymore if it was free, if EA gave me a copy I’d sell it, yet by their numbers I am a "lost sale due to piracy". The same for Mass Effect PC, I pirated that to see if it was different than the console version I already own and it wasn’t, I would wager alot of the pirates of that game did the same. We already own it why re-buy it?

    Sure there’s alot of pc gamers who simply pirate absolutely everything, but most good PC games have online components or functionality that is crippled or nonexistant with piracy.

    They need to learn from Stardock and don’t even look at the pirates. Pirated copies are not lost sales, they are sales that never existed. If you look at them that way and ask "what can we do to make people want to buy our game?" you will do better. Don’t ask "How can we make this game more annoying for pirates?" because that leads you down a bad road that ultimately hurts you.

    Non invasive copy protection, developer blogs, talking to your community, tech support boards that require a registered copy (put in code on their forums and make an account), and most of all great gameplay.

    If you take a game that’s been out for 6 months and put it on PC unchanged, it will be pirated ALOT more than sold. If you take the time and effort to throw something like mod tools in (with the modding forums requiring a registered account, like with Oblivion), you will get sales. You make a community around your game, a community that clearly labels people who have a real copy of your game, and people will pay to be a part of it.

    As it is now many pc games have drm that at best inconveniences and at worst annoys your legitimate customers while people who pirate it had the game a week before launch with no DRM. Official forums are sparse or nonexistent, and mod tools are scoffed at because of the perception that customers won’t buy expansion packs.

  10. Xveers says:

    Seconded here. I download some games to see if I like them. If I don’t like them, they get deleted. Period. If I couldn’t borrow the game from someone else, or play it on their computer, I’d never bother buying it. Additionally, a lot of "demos" tend to both be rather restricted on what features are available, or they’re not actually representative of gameplay at all. Best demo method I saw was for Space Empires IV. You get the full game, but it’s hardwired to play for only 100 turns. Gives you a good taste of gameplay, but isn’t the full thing for free.

    This is what got me into the Space Empires series. The entire Mechwarrior series, as well. Right from Mechwarrior 2 all the way up to 4: Mercs. I have em all. About the only games I haven’t pre-tested like this would be Supreme Commander and probably Sins of a Solar Empire (I’m waiting for a specific mod to come out before getting it).

    As Stardock said, there’s three groups: Those who pirate irregardless, those who pirate to test, and play, and those who don’t pirate in the first place. The first are never your customer, the second can be. Choose who you want to alienate.

    Best keep your wits about you. The gears of life are always spinning:  ignorance means eventually you’ll get caught in them.

  11. HurricaneJesus says:

    Not only does the number of downloaded copies not equal a lost sale, but someones ability to try a game could lead toa potential sale. I have pirated a couple PC games because I had no idea if they would run on my system. The ones that did, I bought, the ones that didn’t, I didn’t(or bought on the 360 instead). Every game should have a demo, especially PC games since there are so many different hardware configurations.


    Piracy is wrong when someone other than the game developers are profiting. It is one thing to share a file, but to then go out and make money off of someones elses work is wrong. If it wasn’t for file sharing I would have never been exposed the media that I have been, and would not have spent nearly as much as I have on media.


    I am also a firm believer that the amount a type of media is pirated is in direct relation to how popular the game is. Of course Halo is going to have tons of people pirate it, but it also has an insane number of people purchasing it. Similarly, shitty games do not generate huge piracy numbers. As consumers we have been getting fucked by the middleman companies charging insane prices. I don’t have the answer to the issues, but I do know that the current situation is nothing like it is portrayed by these companies.

  12. Geoff says:

    78%, with a +/- 5% margin of error.

    Tea and cake or death! Tea and cake or death! Little Red Cook-book! Little Red Cook-book!

  13. Geoff says:

    1 – Well my main point in that paragraph is that I’m skeptical of the figures execs site when they say how often a game is pirated, like Crytek’s 20-to-1 ratio for pirates vs legit owners.  As you stated in your response the larger share of pirating is almost untraceable.  If this is the case it only strengthens my argument that these figures exects spout all the time are unverifiable BS.  Also I’ll admit that I’m not really sure how torrents work.  From my understanding seeders are users that are online with the complete file downloaded who share the data with leeches.

    2 – First off, just for clarification, it was the ECA that did that or the ESA?  ‘Cause it seems weird that a consumer organization would perform actions that are normally done by a business organization.  Secondly I’ve got to totally disagree with you about the companies not viewing file sharers as the main threat.  Every time a developer or producer complains about piracy, such as Ubisoft with End War or Epic with Gears 2, they always use the term "torrent" to define it.  They don’t talk about people selling the game they complain about the file sharers.  When Crytek was complaining about the 20-to-1 ratio and blaiming that for the poor sales, they were again talking about torrents not illegal versions.


    Tea and cake or death! Tea and cake or death! Little Red Cook-book! Little Red Cook-book!

  14. DeepThorn says:

    My main computer is half dead and performs like Britney Spears.  So I really needed a new computer to do my freelance work on the side, and wanted to to put enough into it that I would need to upgrade for a few years.  Between NewEgg, Tiger Direct, and other like websites, it isnt that expensive, especially if you already have the monitor, mouse/keyboard, and speakers you are going to use.  That case isn’t cheap, but it has 4 fans preinstalled, and sturdy as can be. (And since my older computer sounds like a Chevy Nova running since the power supply fan is jacked up…  quietness is happily accepted.)

    I think I am going to build my buddy a computer as well…  He is tight on money, and it will be cheaper than him ordering one through dell for decent proformance.

  15. Twin-Skies says:

    Sounds like somebody’s dead serious about readying for Fallout 3 *thumbs up* Alas, I’m pretty broke at the moment, so the best I can handle is Order of Ecclesia


    An eye for an eye makes the whole world blind.

  16. DeepThorn says:

    Exactly, like the people who downloaded spore and have no intent to play it, but just downloaded it to make a statement against DRM, the pirates that wouldnt buy it anyways (some of which just enjoy playing around pirating and don’t play many games), and consumers that just want to see if it is worth getting when they feel it isnt, but want to try it out anyways to make sure because there either is no demo, or the demo sucks (like spore’s "demo").

    In other news, Hubble went out last week, wait that is old news…  Oh, my new computer is done being built!  Woo hoo…  8gb ram, quad core processor, xp 32 and vista 64, 2 x gforce 8800 sli bridged, and cooler master cosmos 1000 case…  she is quiet…  and wont be going online except for software registration and updates for a while.  She weighs 50lbs too, haha.

  17. SeanB says:

    1) Your ignorance about torrents make this paragraph difficult to summarize or refute. The numbers have nothing to do with seeders. In addition, while popular, torrents only represent a small amount of the piracy on the internet. Newsgroups, FTP’s, and other distribution methods make up a much larger share, and are almost untraceble.

    2) Your paragraph ends with "An instance where a person makes multiple copies and sells them is something that can be proven as a loss of sale …." and your absolutely right. Many times this is exactly what was used to create a publishers idea of thier lost sales. I doubt there’s a single company out there watching the file sharers saying "WOW, That’s all money i’ve lost!". When the ECA did thier crackdown in 2004, it was to the people selling games, not sharing them.

  18. Geoff says:

    I’ve always been very skeptical of the pirating numbers given by production and developer companies.  Whenever they cite how many times their game has been pirated and how much money they’ve "lost", I always have the same two questions:

    1 – How do you know your game has been pirated 20 times for every one copy sold or whathaveyou?  From what I understand torrents list the amount of users online who are sending parts of the file to you but does anyone honestly think that this is a definitive way to figure out how many times the game has been pirated?  Also do people really believe that a torrent is going to have 100,000+ seeds?  Hell in order for the Crytek CEO to be proven correct with his assumption the Cyrsis torrent must have well-over a million seeds as last I checked Crysis sold 1.5 million copies.

    2 – How can you confirm that each pirate, had they been prevented from pirating the game, would have bought the title?  Simply put, you can’t.  There is no way anyone can prove that each pirated copy equals a lost sale for the company.  Now I’m sure there are some pirates who would have bought the game but there are also some that I sure would have never laid down a red cent for the title.  As a result the estimated "loss" in sales is highly inflated because there is no concrete evidence to really support either argument, it ends up becoming a gray area where believing in either extreme (each game torrented = sale loss/no sale loss at all) is to be naive.  An instance where a person makes multiple copies and sells them is something that can be proven as a loss of sale since the pirate is making the money rather than the developer.  But when you get into the realm of file sharing things become rather different.

    Overall I found the article to be pretty good.  He makes a good point that, in terms of the overall economy, you can’t say that X amount of money has been lost by a pirate because, for all you know, the pirate used the money to stimulate a different aspect of the economy.


    Tea and cake or death! Tea and cake or death! Little Red Cook-book! Little Red Cook-book!

  19. DeepThorn says:

    You are telling me…  Not all, but some, religions (cough, scientology), girls about their virginity/age, and games with their promises…  Oh yeah, and EA about the fact that they are no longer an evil empire, hahaha…


  20. Zero Beat says:

    An easy way to combat this would be to have anyone using these statistics in a lawsuit jailed for making false statements to the court.

    If they can’t bother to provide accurate information – and trust me, piracy informaton that is ten years old is not accurate – then they shouldn’t be allowed to win any judgements.

  21. Geoff says:

    Actually there’s some truth in that statement.  Many people have this misconception that each pirated copy of a game equals a loss in sales.  This is false, lazy logic.  The only way someone could actually believe that load of crap is if you assume that each and every pirate would have bought the game if they were unable to pirate it.  There is no way, I repeat, NO WAY one can prove that every pirated copy of a game equals the loss of a sale.

    Now as I said there’s some truth in that statement.  You can make a very valid argument that some of those pirates would have bought the game had they not been able to torrent it.  But in terms of the extent of "loss of sales" that execs often cite, well, it’s BS. 


    Tea and cake or death! Tea and cake or death! Little Red Cook-book! Little Red Cook-book!

  22. ZippyDSMlee says:

    I would stipulate that it dose damage them but at a rate thats unprofitable to counter, and illicit distribution for profit dose take money out of the market.

    Its a mix of issues that degrade profit by 1-10% depending on region and circumstance, in the end they are spending more money on countering non profit distribution than what they lose from it.

    I is fuzzy brained mew =^^=
    (in need of a bad overhaul)

  23. Zerodash says:

    The ability to easily get a product (that cost money to create) for free has no effect on the ability of the producer to make back its money?  Fail.

  24. E. Zachary Knight says:

    The fact those numbers have been circulating for 20 years and have been cited by several major organizations such as the FBI, it makes it so much easier to use them.

    A lie told a million times is more believable than a truth told only once.

    E. Zachary Knight
    Oklahoma City Chapter of the ECA
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    E. Zachary Knight
    Divine Knight Gaming
    Oklahoma Game Development
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    My Patreon

  25. Vake Xeacons says:

     Unfortunately, I’m pretty sure the industry leaders are aware of the lack of veracity of these numbers, but continue to ignore them in favor of justifying their DRMs.

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