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Where leaping to conclusions is my primary form of forward motion.
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Tuesday, May 17, 2005
IP Theft and the Trade Deficit
The Glittering Eye has collected some useful information on Chinese piracy and the scope of its impact on our economy. There’s a good collection of reference articles and press releases – “US May Bring WTO Case”, “Hollywood Loses $900 Million to Pirates”, and Forbes - and the author does a good job outlining the available options for correcting the problem.
Or part of the problem. As with almost every single story on piracy, the articles listed above use wholly inappropriate, even ludicrous, numbers for the value of piracy. Whether the numbers come from former US Trade Rep Bob “Patent ‘til you drop” Zoellick or the self-serving lawyers over at MPAA/RIAA, they all share one common trait — they take a universal 1–to-1 ratio between pirate copies and lost sales. This act of starting from a false premise and proceeding logically leads to absurd conclusions like this – “ U.S. music, movie and software industry groups estimate they lose between $2.5 billion to $3.8 billion annually in China through sales of illegal copies of their products.”
$3.8 billion my lilly-white ass!! Have you ever been to China – where they still hand-carry their raw sewage in buckets? Have you seen Chinese peasants riding 20–year-old bicycles down modern, but empty, thoroughfares? Sure, there is lots of economic growth in China (I do some business there), but growth from a zero base has to go a long, long way before spending a month’s pay for a movie looks like a good idea. If you think for a minute that the typical Chinese wage supports paying $15 USD for a CD, $20 USD for a DVD, or $299 USD for a copy of Windows XP then I have some great business investments I’d like to show you.
If the vast majority of Chinese didn’t have pirated copies they wouldn’t have any. They don’t just hop in a Beemer, run down to Chairman MaoMart and buy one. No, they wouldn’t have a copy. None. Zero. Zilch. Nada. And that’s the real economic impact of the vast majority of pirated copies – zero.
I don’t know if the actual ratio is one lost sale for 100 copies or 1,000, but the bottom line is that, while there is clearly an economic impact to the theft of American soft products in China, it is nowhere near the dollar value the industries and flag-waving bureaucrats like to pretend. The premise that a pirate copy in Asia has a direct corollary to a lost sale (the music industry in Germany went so far as to assume a 1–to-1 ratio between the number of blank CDs sold and lost sales) is as realistic as assuming that every television viewer of a sports broadcast is a lost ticket sale (Oh, wait – the NFL makes exactly that assumption.) And the companies complaining the loudest *know* that. Why else would they be falling all over themselves to get their products into Chinese markets? If all those markets meant were losses you can be sure they would be running in the other direction.
Instead, US companies are dying to get into the Chinese market. And that – along with the knowledge that piracy is nowhere near the economic threat they like to proclaim – is why the US won’t do anything significant about China’s piracy problem.
BTW, the next time anyone starts talking about losses to piracy, China or otherwise, ask them a simple question – “What’s your estimated ratio of pirated copies to lost sales?” If they give you an answer that is anywhere close to 1–to-1 just laugh and walk away, because they’ve obviously taken you for an idiot. (Via EEJD)
Terry Frazier at 8:56 PM
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Friday, May 13, 2005
Are You A Denied Person?
I received an interesting, informative, and anonymous comment today regarding the Official Denied Persons List athttp://www.bxa.doc.gov/dpl/Default.shtm
Back in October I bought a new copy of PGP and grew annoyed when I paid my money, got my confirmation, and all it included was a "purchase review". Today someone posted an explanation and clarification that made me feel a little better about the situation:
Terry this isn't a re-instatement of the law, it is the current law. The "review" is a machine review. Your name is run against the "denied persons" list - which you can find here (btw i don't see your name on it)http://www.bxa.doc.gov/dpl/Default.shtm
Its not a list of terrorists or naughty boys and girls but a list of those who've violated export control laws and are 'denied' as part of their punishment under law.
When you click to download the software a GEO IP check is performed (determines geographically where you are by your IP) to make sure you aren't in the IP space of one of the embargoed countries - Iran, Iraq, Cuba, Libya, N. Korea. Sudan & Syria. If your IP is anonymous or from a satellite ISP - you'll also be denied I think. Those IPS fall into "A1" and "A2" IP space.
This IP check of course doesn't and couldn't account for someone in say a Syrian embassy in a european country.
I checked the site. It's part of the Dept. of Commerce. And the post seems written by someone who knows the subject. This past Tuesday I received the following e-mail:
Dear Terry Frazier,
PGP Corporation has just released completely new versions of its award-winning desktop products -- PGP Desktop Professional 9.0 (formerly PGP Workgroup Desktop 8.x) and PGP Desktop Home 9.0 (formerly PGP Personal Desktop 8.x). These new versions are the most significant PGP product upgrades ever offered. [...]
I suppose there is some connection between the new product release and someone showing up on my site. Maybe a little "blog trolling" to try and address any negative feelings? In any case, I appreciate the comment and the explanation.
Terry Frazier at 10:00 PM
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Tuesday, May 10, 2005
Senator Johnny Isakson on Bankruptcy
Below is the response I received from Senator Isakson's office. Mr. Isakson was not nearly so loquacious as Mr Chambliss. But then, Mr. Chambliss is a lawyer (aka paid by the word), Mr. Isakson a real estate salesman (paid by developers.)I sent the same letter to both. It covered both the Bankruptcy Bill and the Real ID Act. Mr. Chambliss chose to respond to the Real ID Act only. Mr Isakson to the Bankruptcy Bill only.
At least neither Senator sent me the form letter that the Republicans were sending around after they passed the Bankruptcy Bill. A friend in Texas got exactly the same letter from both his senators. Sad. If I get a response from my Congressman (none so far) I'll post it, as well. In fact, if you've gotten letters from any of your elected representatives send me copies and I'll post them. Would be interesting to see the collection of generalized, non-committal, "trust me" letters.Dear Mr. Frazier:Thank you for contacting my office regarding the Bankruptcy Abuse Prevention Act. I appreciate your thoughts on this subject and the opportunity to respond to you.
On March 10 th the Senate overwhelmingly passed the Bankruptcy Abuse Prevention Act.I voted in favor of this bill because there has become a disturbing trend of abuse in using bankruptcy provisions. Bankruptcy laws were put in place to assist individuals who have reached insolvency, not to serve as a crutch for those who purpose to avoid their obligations. Reform of our Bankruptcy code was necessary to address those issues of abuse.
Thank you again for your ideas and input on this issue. If I may ever be of assistance, please do not hesitate to contact me.
Sincerely,
Senator Johnny Isakson
Terry Frazier at 3:19 PM
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