Congress Should Demand MPAA Data on the Cost of Piracy

Yesterday, the Motion Picture Association of America admitted something that many of us had suspected all along – an MPAA-funded study showing that 44% of the industry’s losses came from illegal downloading of movies by college students using campus networks was overstated by a factor of 3. The MPAA now says that only 15% of its losses come from campus activity. Hollywood has been using that larger number to push for legislation, now pending in the House of Representatives, which would require colleges and universities to filter their networks for copyright infringement.

But why should we believe the 15% claim (and indeed, Mark Luker of EDUCAUSE says that a more accurate number would be 3%)? The 2006 study from which the numbers were derived was conducted by the consulting firm LEK, and purported to demonstrate that the industry losses from both hard goods piracy and downloading was $6.1 billion. The study, which purportedly cost the MPAA $3 million, was controversial from the start, and the organization has for two years steadfastly refused to provide the data and the methodology underlying the study, even after an influential member of Congress had requested them.

Nineteen months ago, at a Senate Judiciary Committee hearing on Hollywood’s proposal to close the analog hole (the outputs that allow you to capture analog content and digitize it), then-Committee Chair Arlen Specter (and other members of the Committee) expressed skepticism about Hollywood’s claims about losses resulting from the analog hole and asked MPAA President Dan Glickman to show him the data:

Chairman Specter. Mr. Glickman, lots of information about piracy from you and from the Department of Justice, but can you quantify any direct connection between piracy and the analog hole?

Mr. Glickman. We have just completed a major study called the LE case study which estimates that our companies lose about $6.1 billion a year in piracy, and as part of that--

Chairman Specter. OK. I mean from analog--I have only got 5 minutes.

Mr. Glickman. OK, $1 to $1.5 billion in what we call noncommercial copying of movies for family and friends. We believe a big part of that is due to the analog hole.

Chairman Specter. How do you arrive at the figure of $1.5 billion?

Mr. Glickman. The firm did worldwide and national piracy study focus groups. The methodology we considered to be quite good.

Chairman Specter. Well, let me ask you to supplement your answer with the specifics as to how you come to that conclusion.

Mr. Glickman. Sure, be glad to.

Chairman Specter. We would like to see the methodology because before we really tackle the problem, we want to know-- before we really look for a solution, we would like to have a specification of the problem.

Mr. Glickman. We will get you that, Senator.

Over a year and a half later, Senator Specter's request has been unfulfilled.

It is time for Congress to demand that the MPAA turn over the data and methodology from the LEK study. Hollywood can pay for all the studies it wants, but when it seeks to use those studies as “evidence” of the need for legislation to impose technology mandates on industry and on higher education institutions, the public has the right to see whether that “evidence” is at all valid. Until then, Congress should refuse to consider any legislative proposals based on this or other studies purporting to demonstrate the cost of piracy.

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