$200B Lost To Counterfeiting? Back It Up 283
An anonymous reader writes "Over the weekend, the NY Times ran a story about how the recession has impacted product counterfeiters. In it, the reporter regurgitates the oft-repeated claim that counterfeiting 'costs American businesses an estimated $200 billion a year.' Techdirt's Mike Masnick asks the Times reporter to back up that assertion, noting two recent reports (by the GAO and the OECD) that suggest the actual number is much lower, and quoting two reporters who have actually looked at the numbers and found (a) the real number is probably less than $5 billion, and (b) the $200 billion number can be traced back to a totally unsourced (read: made-up) magazine claim from two decades ago."
Big Business (Score:5, Insightful)
Gasp!
Can't really hurt many US jobs... (Score:5, Insightful)
Maybe newspaper articles should list references (Score:5, Insightful)
Maybe newspaper articles should cite their sources and have a list of references at the end like academic papers do. That way at least readers or other interested parties could independently verify the facts in the article.
Ever been to Brazil? (Score:2, Insightful)
It's the counterfeiting capital of the universe. Because of Brazil's 60% duty on imported goods, an a very unfavorable exchange rate, a pair of Nike sneakers made in Singapore for $5 in materials and $0.30 in slave labor costs about R$600, which is a month's wages (or more) for a lot of people there. So, there's a huge demand, and therefore supply, of counterfeit goods.
Old media sucks (Score:5, Insightful)
On one hand, they are trying to salvage old media, and on the other hand they are trying to kill efforts like Wikileaks.
It seems pretty obvious.
CNN can just say anything they want, even if it's completely inaccurate and has no sources to back it up. They can just say their source is secret, and nobody is even going to ask.
Wikileaks, OTOH, shows you the actual docs. That's why they are being persecuted as criminals.
Encyclopedia Britannica is written by an unknown number of employees under unknown circumstances, and they cite no sources clearly (In the best case, they just cite a bunch of sources that might or might not back up their claims, and there's no direct way to check them easily).
Wikipedia is edited by the general public, each edit can be easily identified and accredited to a single author, and all sources are directly linked to in most cases.
And yet, Encyclopedia Britannica is considered more credible than Wikipedia, even when it's been shown that it's far more inaccurate, not to mention outdated.
Old media has to die, but the almighty economic powers that run this world won't let it go without a fight.
Re:Maybe newspaper articles should list references (Score:5, Insightful)
I didn't say that the author needs to verify their source. They merely need to list them. They got that $200 billion figure from somewhere. Cite it.
Re:Old media sucks (Score:1, Insightful)
Wikipedia will not be credible unless/until the editors stop allowing/encouraging the obvious and rampant political bias in the articles.
*illions lost to piracy, counterfeit goods... (Score:5, Insightful)
Counterfeiting is Ok. (Score:4, Insightful)
without anything producing any goods for it.
Let me introduce a little friend I call Hayek. [wikipedia.org]
Re:Not surprising (Score:1, Insightful)
Re:Counterfeiting is Ok. (Score:4, Insightful)
It is not enough to recognize that 'social justice' is an empty phrase without determinable content. It has become a powerful incantation which serves to support deep-seated emotions that are threatening to destroy the Great Society. Unfortunately it is not true that if something cannot be achieved, it can do no harm to strive for it. Like chasing any mirage it is likely to produce results which one would have done much to avoid if one had foreseen them. Many desirable aims will be sacrificed in the vain hope of making possible what must forever elude our grasp.
-Friedrich Hayek
"Law, Legislation and Liberty"
Hayek: the unoriginal "too hard; don't try" philosopher.
Re:Old media sucks (Score:5, Insightful)
Just because you disagree with the facts doesn't make the facts political. It makes you wrong.
Re:Ever been to Brazil? (Score:4, Insightful)
This is largely not due to high import duties but due to corrupt customs officials. Fucking hell hole, I'm longing to get out of it.
Yeah but $200B 20 years ago is worth (Score:2, Insightful)
Re:$5,000,000,000 (Score:3, Insightful)
5 billion is a small number in the context of the national economy. In fact, it is so small as to be dwarfed by the margin of error when Considering economic trends.
Re:$5,000,000,000 (Score:5, Insightful)
Five billion dollars is still a lot of money.
But put the numbers in perspective.
US GDP $14,260,000,000,000 (2009 estimate, courtesy of the CIA [cia.gov])
$200 Billion equals 1.4% of the GDP
$5 Billion equals 0.035% of the GDP
One is a problem worthy of immediate attention. The other is a problem to worry about when nothing else is pressing.
Re:$5,000,000,000 (Score:2, Insightful)
Not only is $5,000,000,000 a relatively small number compared to GDP and the market as a whole, but you have to look at who is losing the money.
The counterfeit manufacturers only sell this product once. Once they sell it to a distributor (most likely someone in the US) the product becomes part of the economy.
Those counterfeit goods that are sold on the street (as in pictures article) were originally purchased from China (probably also true for the legit product) but the one making the money is the street vendor. That street vendor in turn probably uses this money to buy food, clothes, other retail goods, etc.
While it is very wrong to use a trademark without permission and there is no legal way to justify this type of counterfeiting, the economic arguments aren't necessarily so strong against it. That money is going to stay fairly locally to where that good was purchased, consumption is going to increase, and dollars spread more evenly. Instead of the mall/retailer getting a half decent margin and the trademark holder getting a decent margin, the street vendor gets a very good margin and the consumer gets a steep discount.
I'm not saying that counterfeit goods are good for the economy, I'm just saying that if you are going to throw out numbers (either high or low) without sources, support, or justification, it can lead to a lot of questions about what that number contains. Are 5/200 Billion dollars disappearing from the US economy? From the trademark holders? From local communities? From sales tax coffers?
Re:Ever been to Brazil? (Score:1, Insightful)
Of course it is due to high import duties. It creates the necessary market for conterfeiting. I mean I've been to Brazil and I've seen iPads selling for R$3900, which is equivalent to about US$2100. Well... they weren't selling, obviously, but were available for purchase. While we're talking about overpriced Apple products (I know, it's redundant, amirite?), an Iphone costs about US$1100 there. All my friends told me an iPad could be gotten for about US$850 downtown. When you have that kind of disparity and you're that close to Paraguay, it's pretty obvious that you're going to have a huge market not only for counterfeited but also for stolen goods. Clarifying: when you get rid of regulation and fiscalization, you have no way to know if you're supporting criminal activities with your purchase (see the perennial debate about the legalization of drugs). The smart unauthurized retailer knows that and will try to maximize its profits. So yes, a hellhole, but kept that way by insane, counterproductive taxation.
Re:*illions lost to piracy, counterfeit goods... (Score:2, Insightful)
Bad numbers (Score:4, Insightful)
Back in the days of cassettes and when VHS was king, I used to get all sorts of things from the local library. I'd often dub copies for myself and return the borrowed copy almost immediately. When we all transitioned to CDs, I kept up this practice. I was also known to download a fairly hefty amount of software from local BBS's, and later the internet. My reason for doing this? I simply could not afford to spend $12 on a tape I wasn't sure I'd even like, $15+ for a CD that might include one song I liked, or $20-$30 for a movie I'd watch once or twice then stick on a shelf. Buy a shirt, a hammer, or a TV, or a pizza that turns out to be crap? You can return it for a refund. Not so with music, movies, software, etc., even if it doesn't work right (in the case of lots of software and computer games). Nearly everyone has bought a CD they don't like, and they are all screwed.
So perhaps downloading, torrents, and p2p file transfers are rampant. I'm sure of it. But much of this is due to high prices and the flooding of the music/movie/software markets with utter crap. Were the opportunity to download for free not there, most of these unauthorized downloads would absolutely NOT translate into sales. I buy a few CDs a year to support my favorite few artists, as I have for the past 15+ years, which is what I can afford to buy. Yes, I download more than that, but if I couldn't, I still would not buy more. I did not buy movies before I could download them, and I never will - not enough re-use value. Software? I use linux and almost strictly free software now, and have no need for windows junk. A lot of people are like me, too.
Re:Can't really hurt many US jobs... (Score:5, Insightful)
That's one of the reasons countries trying to modernise their economies tend to put a focus on IP creation - it leads to a large influx of cash for a long, long time. Same goes for moving away from a primarily extraction-based economy.
Well, only so long as other countries respect it. Creation, after all, is expensive but not remunerative on its own; it is publishing that is (or at least can be) where the money is made. It's reasonable to let someone else invest the time and money in creation, and then to copy them cheaply and profitably. Convincing states to not do this is tough, especially if they don't have, and don't expect to have, much local creative effort that could be exploited elsewhere, justifying mutual respect for these rights.
Given that it seems unlikely that two countries would openly go to war over, say, DVD piracy, copyrights, patents, trademarks, etc. just don't seem like a stable, long term basis for an economy. It's just too imaginary. Extraction isn't too good either, but perhaps there's some other way.
Lik you do? (Score:3, Insightful)
You claim media should list their sources and that old media fails because it doesn't do so.
But you then are supposed to be new media, social media, and you don't list your sources either.
You make claims, with no way for me to verify them.
See how EASY it is to sounds like a know it all who claims to hold the one truth in his hands and expect everyone to believe you on your word alone?
I am willing to bet that the article you read that made these claims didn't list its sources either and that those sources were some highly biased research were someone found that the Britannica didn't say what he thought it should say and insisted that because Wikipedia listed the Muslin[sic] Obama was president one pico-second earlier, that is is more up-to-date, accuracy be damned.
SOURCES. Or you are just blowing air.
And what are facts anyway. Who knows what Obama believes in his own mind. He could be a scientologist! Claims he ain't a muslim are based on what? A mind probe? If he IS a spy, then he would hardly say so would he? A lot of facts can't be proven, we assume them to be true. For that matter I can't even verify he ain't Muslin, never met the guy and never met anyone who met him or anyone who met someone who met him. He could be a disney robot for all I know.
Facts, not nearly as common as people like to think.
Re:Big Business (Score:5, Insightful)
The idiotic claim made by big business is that every counterfeited product "would" have been purchased had it not been counterfeited.
The claim not only illustrates a complete lack of understanding of the basic supply/demand curve, but gives us yet another example of a deeply flawed business model which relies on legal threats and big government to plaster over it's shortcomings.
I for one see counterfeiters as a necessary force: Reminding us of the stupidity of major-brand retail prices, and their massive disconnect from underlying value.
Re:It is killing retail too (Score:1, Insightful)
You think you can succeed in show business while clothes shopping at Walmart?
Yes, just hide the label.
Re:Counterfeiting is Ok. (Score:5, Insightful)
Approximate population
Norway: 4,478,497
USA: 309,162,581
Whether your underlying point is right or wrong, I don't consider your comparison valid because of this little detail.
I would even venture as far as to say that your statement goes against your point. The fact that the US figures in your original post are so close to those of Norway even though the US has to govern almost 80x the population is actually more of a testament of an effectively scaling government. It's unlikely that the governmental system of someplace as small as Norway would meet the needs of such a large population.
Re:Counterfeiting is Ok. (Score:3, Insightful)
Also note that we have 3.7 million square miles of real estate and resources, and Norway has 125,000.
I think the inability to effectively use a nation's resource because that nation has too much stuff is a pathetic way of defending that particular argument. In fact I think it's self-defeating. It's like arguing that your company is broke because it has too many assets.
Re:Direct or Indirect? (Score:3, Insightful)
So you're telling us that counterfeiting produces informed consumers which means that those selling high-price-high-margins branded products loose money because people ... *gasp* ... know better!?
We should close price comparisson sites then: by the same argument they cause the loss of trillions of dollars by letting consumers find out where to buy equivalent products for the cheapest price.
Same thing for reviewing sites and magazines: if they didn't inform people, they might very well have gone and bought things like $3000 Denon digital cables instead of equaly good $5 Cat5 cables.
Re:Old media sucks (Score:5, Insightful)
Wikileaks, OTOH, shows you the actual docs. That's why they are being persecuted as criminals.
They're being persecuted like criminals because some of the documents in their possession are of questionable legality, not because they show the docs full stop.
Re:It is killing retail too (Score:4, Insightful)
Assuming the counterfeit dress makes any profit at all, the genuine one must be making at least 380 bucks of profit for a price of 400. That means your girlfriend and her suppliers are getting at least 95% profit margin.
In other words, cry me a river.
Frankly, if your entire business model depends on selling cheap items at insane markup because they're "genuine", you deserve to go out of business. How could you possibly avoid that, in an economic system that's entirely based on using competition to lower prices?
Re:It is killing retail too (Score:1, Insightful)
You're assuming the genuine one costs the same to produce as the fake. It might - but it equally might not.
Re:Can't really hurt many US jobs... (Score:3, Insightful)
At the risk of stating the obvious: if the counterfeiters divert enough revenue away from the genuine producer, the genuine producer won't be able to employ so many people and might even go out of business completely.
Re:Big Business (Score:4, Insightful)
If you don't want to pay brand-name prices, how about not fucking buying brand-name goods?
Re:Big Business (Score:4, Insightful)
If you don't want to pay brand-name prices, how about not fucking buying brand-name goods?
Way to state the obvious. I have one too "if you don't want to go bust, get a working business model". Well thats my contribution to the save the obvious foundation for the week. Wait here's an even better one "drinking water makes you less thirsty". I am on fire today.
Re:Big Business (Score:2, Insightful)
This is America, buddy. We don't give welfare to those lazy, smelly, dishonest poor people any more. Now the government gives welfare to the fine, upstanding, honest, hard working rich people and their corporations. They're entitled to it!
</snark>
Re:Maybe newspaper articles should list references (Score:3, Insightful)
As in x acres per day times 365 days per year divide by surface area of the earth and we found that those evil farmers in the Amazon region were denuding the entire planet (including the surface of the oceans) every year.
Working backwards, the surface area of the earth is 510 072 000 square kilometres (or 1.26041536 e11 acres), yielding a daily rate of 345319276 acres lost. Considering that the Rainforest Action network typically claimed that 50,000 acres were lost per day [google.com], your estimate is a gross exaggeration.
Now, current estimates of amazon deforestation are [wikipedia.org] on the order of 20,000 square kilometers, or 13540 acres per day. But RAN used a worldwide figure.
Re:Big Business (Score:2, Insightful)
> "The idiotic claim made by big business is that every counterfeited product "would" have been purchased had it not been counterfeited."
I'm sorry, in what way was that juvenile bullshit? The methodology of loss-calculations is deeply flawed.
Or maybe this was juvenile?
> "The claim not only illustrates a complete lack of understanding of the basic supply/demand curve, but gives us yet another example of a deeply flawed business model which relies on legal threats and big government to plaster over it's shortcomings."
There are loads of thinkers here who question the limits of intellectual property, and see both its dangers -- and often its absurdity.
Frankly, there is little that was said here that is immature in the least. What you are expressing, is a deep, unquestioning respect for laws which were bought and paid for by those who stand to profit from them. That the public commons (ie: your rights) were destroyed for the benefit of others, matters little to you.
You do not question law. You abdicate all criticism, free thought and frankly, your humanity. Like a good little lemming, you are part of the system -- a system which neither big business, nor the wealthy themselves adhere to. You are a lap dog. These laws were designed to limit your freedoms, your choices and maximize the profits of others. And yet you kneel, boy.
I have zero respect for you.
Additionally, it must be noted that your post, reads exactly like said man-boy in Mom's basement.
Re:It is killing retail too (Score:3, Insightful)
That's not true. A custom tailored dress/suit can cost thousands, but will fit much better than a $400 dress/suit, let alone a 99$ JC/Penney special.
"Custom tailored" means someone doing alterations so that it fits you. You pay extra for that because of that person doing the work. Counterfeits are going to be off-the-rack copies of off-the-rack originals, and while there may or may not be a difference in the materials most of the savings are in the name. They're often made in the same factory with the same materials, so the only difference is not having the markup.
Re:Usually not with fakes (Score:1, Insightful)
Re:Counterfeiting is Ok. (Score:3, Insightful)
U.S. military installations in Norway: 9
Norwegian military installation in the U.S.: 0
One reason the U.S. does not spend as much on social welfare is that we spend a lot more on our military. This benefits the social welfare states of Western Europe, including Norway.
Re:Big Business (Score:3, Insightful)
Reminding us of the stupidity of major-brand retail prices, and their massive disconnect from underlying value.
While I agree that most "brand name" products are overpriced based on their utility, you must remember that there is also a great deal of money spent to let people know that the product even exists. I am not sure of the numbers, but a surprisingly large percentage of a product's budget is allocated for marketing. And when you look at how things are sold to a mass market, it starts to make sense.
Why, for example, do we know that there even is a new "Toy Story" movie? Not because of word of mouth. We are aware of it because Pixar and their parent spent millions of dollars on advertising. Similarly, why do we know about that new Sony TV or Nikon camera? Because Sony and Nikon spent millions to buy space in the heads of as many people as they could. And when more and more people associate a brand with quality, the brand becomes the product.
Counterfeiters benefit from this because an inferior product with a respected brand name will sell faster and at a higher price. Its that simple. (Remember, counterfeiters do not have to honor warranties or take service calls.)
If a tourist in Times Square sees a hole-in-the-wall store selling knock-off cameras (I work near there and there are many of these shops), they will be much more likely to spend big bucks if they see the Nikon brand in the window than some unrecognizable brand they know nothing about. As a result, these stores sell knock-offs with Nikon branding at what appear to be very attractive discount prices and people snap them up. By the time they realize that they have been taken advantage of, its normally too late to do anything about it. And on the web this problem is a million times worse.
Now I know that a one-to-one ratio is way off - every negotiation starts off with inflated demands/claims - but counterfeiters are good for no one but themselves. They hurt legit companies by selling (in the vast majority of cases) inferior products that undercut the value of the real branded product by undermining the relationship between brand and quality. And to some degree they decrease sales (putting aside how much the numbers are pumped). But mostly they hurt the people who buy their crap by providing an inferior product at an inflated price.
And if you question the assumption that counterfeit products are generally inferior, perhaps you should ask the simple question: Why don't they trade on their own name? Why can't the Times Square stores tell people that they are selling Nikon-like cameras that are "just as good"?
Re:Maybe newspaper articles should list references (Score:5, Insightful)
So, based on the 216,000 acres per day in the April, 1990 Vegetarian Times article your search turned up, my estimate was off by a factor of 4. As in, Vegeterian Times was claiming the denuding of the Earth by your figures every 4 years instead of every year.
Surface area of earth: 510 072 000 sq km
Veg Times estimate of acreage lost per day: 216000 acress
Veg Times estimate converted to square kilometers: 874 sq km
Yearly loss, assuming 365.24 days/year: 309605 sq kilometers
Years it would take to denude 510,072,000 sq km of rainforest at that rate: 1650 years.
Your estimate: 4 years.
square Kilometers get read as square miles, hourly estimates based on 8 hour work days get scaled up again using 24 hour work days. All rainforests are read as just the Amazon.