We do note that such studies are conducted almost entirely in high-income countries and
that the price/income ratios in most parts of the world dictate very different outcomes. The
65% physical-substitution rate and the 20% download rate simply make no sense in reference
to Brazil or India, where purchasing power is far lower. The MPAA’s 2005 movie piracy study
is said to have explored substitution effects in the countries it surveyed—suggesting a potential
wealth of data on price and income effects—but the MPAA has not released its findings or
shared them privately (with us or, more surprisingly, with either the OECD or the GAO, both
of which conducted their studies in the context of new enforcement initiatives). Other data
points on this question remain scarce. One recent study of the relationship between file sharing
and movie ticket sales in Hungary, a country with per capita GDP well below US and Western
European levels, finds no measurable relationship between the two (Balázs and Lakatos 2010).
When John Gantz, research director at the IDC, was asked about the impact of high Western
software prices on piracy in developing countries, he suggested that possibly only one in ten
unauthorized copies represented a lost sale. Absent clearer data, we would call this a plausible
guess—and one that would have dramatically reduced the $29 billion loss that the BSA claimed
in 2003. As Gantz observed, “I would have preferred to call it [the $29 billion] the retail value
of pirated software” (Lohr 2004). In 2010, Gantz got his wish when the IDC started referring
to these numbers as “the commercial value of unlicensed software” (BSA/IDC 2010b). This
seemingly minor shift is, in fact, quite consequential: it salvages the one-to-one correspondence
We do note that such studies are conducted almost entirely in high-income countries andthat the price/income ratios in most parts of the world dictate very different outcomes. The65% physical-substitution rate and the 20% download rate simply make no sense in referenceto Brazil or India, where purchasing power is far lower. The MPAA’s 2005 movie piracy studyis said to have explored substitution effects in the countries it surveyed—suggesting a potentialwealth of data on price and income effects—but the MPAA has not released its findings orshared them privately (with us or, more surprisingly, with either the OECD or the GAO, bothof which conducted their studies in the context of new enforcement initiatives). Other datapoints on this question remain scarce. One recent study of the relationship between file sharingand movie ticket sales in Hungary, a country with per capita GDP well below US and WesternEuropean levels, finds no measurable relationship between the two (Balázs and Lakatos 2010).When John Gantz, research director at the IDC, was asked about the impact of high Westernsoftware prices on piracy in developing countries, he suggested that possibly only one in tenunauthorized copies represented a lost sale. Absent clearer data, we would call this a plausibleguess—and one that would have dramatically reduced the $29 billion loss that the BSA claimedin 2003. As Gantz observed, “I would have preferred to call it [the $29 billion] the retail valueof pirated software” (Lohr 2004). In 2010, Gantz got his wish when the IDC started referringto these numbers as “the commercial value of unlicensed software” (BSA/IDC 2010b). Thisseemingly minor shift is, in fact, quite consequential: it salvages the one-to-one correspondence
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