The Australian Federation Against Copyright Theft (AFACT) has brushed off criticism from internet advocates of a report it commissioned, which said that piracy costs the economy $1.4 billion a year.
The group representing Hollywood's biggest studios has moved to rebut claims by Electronic Frontiers Australia (EFA) member and lawyer Kim Heitman who attacked the figures announced in the study.
(670 image by Tomer Gabel, CC BY-SA 2.0)
Heitman said the research used to produce the "gargantuan figures" was flawed, pointing to what he saw as errors in lost sales assumptions and the use of gross revenue metrics. He also said it didn't take the free promotion into account that pirate downloads gave the industry.
In its defence, AFACT said that the firms which conducted the research, IPSOS and Oxford Economics, are two of the world's most respected in the field. AFACT also issued rebuttals to points cited by the EFA.
The anti-pirate organisation said the EFA's criticism of the research assumptions is unfounded, because the study "clearly explains" the methods behind its conclusions and does not equate all pirate downloads as lost sales.
It also said gross revenue was "only one of the metrics studied", and had been used alongside Gross Domestic Product, taxes and employment figures which it said are "standard measures for an economic impact report of this nature".
The EFA criticised the report for speculation that flow-on effects from piracy affected other industries, and for claiming that lost tax on profits assumes the entities pay Australian company tax on sales pro-rata, which it said was "not intuitive or evidenced".
"It also assumes that money not spent on movies is lost to the economy, instead of helping to create jobs in other sectors," the EFA said.
AFACT said the study is not speculative and is rather based on "input-output modelling" that uses "national statistical data". It said the model is "common practice and has been employed in a vast number of contexts both within Australia and internationally".
It rebutted other EFA claims:
EFA:"Peer-to-peer file sharing is merely the latest in a sequence of technologies since the 19th century, which have been claimed to be the ruin of the creative arts ... the copyright owners said the same thing about copies of sheet music, tape recorders, every iteration of personal recording system and indeed public radio. However, 'home piracy' acts not only as a loss to industry but also as a boon to distribution, bypassing censorship and limitations on sales by official outlets."
EFA:"With an assumption that 'downloads = losses' unproven, all conclusions estimating the size of the loss are equally unproven."
EFA:"The call-to-action of this report is obviously to crack down on piracy, shifting the cost of file-sharing from the industry to the taxpayer via increased law enforcement. No industry, let alone the foreign-dominated entertainment industry, deserves a free ride for its business model. If instead, the industry noted that the report says 55 per cent of downloads created a market for sales, much of which is unsatisfied due to current restrictive trade practices, then its future profitability would be in its own hands."
EFA:"Repeated studies have demonstrated that the entertainment industry vies for money and commitment of time with all other forms of entertainment. The internet, computer games and mobile telecommunication applications take 'eyeballs and dollars' away from DVD and CD sales, but also sports arenas, sales of board games and printed works … We presume that the release of this report is a precursor to a renewed campaign for tougher penalties against file sharing in Australia."