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, McClelland cited two studies: "The economic consequences of movie piracy", which was commissioned by the Australian Federation Against Copyright Theft, and "The impact of internet piracy on the Australian economy", commissioned by the ACIG — a group previously unheard of.
Pirate Party spokesperson Brendan Molloy today said the ACIG's report was based on a 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," Molloy said. "The maths behind it is terrible."
Both studies purport to show that piracy is costing the Australian content industry millions of dollars and has 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 8300 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 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. "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 he 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 as the US.
"The US has a very, very large population, and if you actually look at the market in the US for every industry it is very different to Australia."
The countries picked as a reference do have an effect, according to Ferrer, as there is a variation in lost revenues for European countries. If Australia is equated to a small European nation, a figure of $200 million per annum revenue loss can be extrapolated, while if it's equated to a large nation like Spain, the figure would be more like $2 billion.
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."
Ferrer also 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."
AFACT said it 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.