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article imageThe Movie Industry That Cried Wolf: MPAA Admits Piracy Numbers Vastly Inflated

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By Chris Hogg     Jan 23, 2008 in Business
To sum this up in one word: Ridiculous. A 2005 study by the Motion Picture Association of America (MPAA) claimed 44 per cent of Hollywood's losses came from college students illegally downloading movies. But now, they say they made a mistake with the math.
Digital Journal, Op-Ed -- Hollywood loves to blame college students for the downward spiral of movie sales, which they attribute to illegal file sharing. They blame post-pubescent pupils for the financial gouge that has cut through the heart of the movie industry's profit margins, saying illegal downloading is the root of all digital evil. The only problem is, the numbers cited by the MPAA were wrong.
The Associated Press broke the news: Hollywood's 2005 study that claimed 44 per cent of the industry's domestic losses were a result of illegal downloading by college students was overstated.
Piracy news makes regular headlines, spilling ink like a gaping wound. However, the MPAA now admits there was "human error" in one of its key surveys that crucified college students for almost half of the industry's losses. Their revised number says it actually accounts for about 15 per cent of revenue loss, or $243 million.
The original report by LEK (opens in PDF) said "Piracy is the biggest threat to the U.S. motion picture industry" and "The survey results are the most comprehensive picture of film piracy to date." In the report, LEK said the U.S. movie industry lost $6.1 billion as a result of piracy worldwide. The reason: Males, aged 16 to 24.
The study was crucial to the MPAA: The group used the inflated figures, at least in part, to crowbar post-secondary institutions into cracking down on illegal file-sharing. They also pressured colleges everywhere to back legislation that currently sits before the U.S. House of Representatives that would force them to do something about illegal file sharing.
The piracy numbers, lowered by 29 per cent, account for millions of dollars blamed squarely on college students. And what does the industry say now? Oops!
The MPAA now argues the 15 per cent figure is still significant and is justification for a crackdown on college students. The only problem is: They cried wolf (unintentionally or not) and if the association is incapable of using a calculator properly, who is going to believe anything they have to say? The simple fact is, many people don't.
Mark Luker, vice president of campus IT group Educause, is one of those critics. He told the AP this study does not take in account a very crucial argument: 80 per cent of college students live off campus and aren't necessarily using institution networks to download pirated copies of Hollywood blockbusters. In Luker's opinion, the MPAA's claim that 15 per cent of industry losses can be attributed to college file-sharing is still inflated. He believes a more reasonable number is about 3 per cent. "Any solution on campus will have only a small impact on the industry itself," Luker said.
The movie industry so far is apologetic, issuing a statement that reads "We take this error very seriously and have taken strong and immediate action to both investigate the root cause of this problem as well as substantiate the accuracy of the latest report. Additionally, the MPAA will retain a third party to validate LEK’s updated numbers. We are confident that when the report is complete it will provide an accurate and reliable assessment of worldwide piracy.”
Critics are now blasting the MPAA for what they say is unfairly going after college students when in reality they are only a small part of the problem.
Kenneth Green, the director of The Campus Computing Project, told Inside Higher Ed, "If the reports are true that the new, corrected numbers are way below the initial and highly publicized earlier numbers, then the MPAA owes an apology to the campus community. The corrected MPAA numbers clearly confirm what many of us have said for a very long time: that P2P piracy is primarily a consumer broadband issue, not primarily a campus network issue, and that colleges and universities are more concerned and far more engaged in efforts to stem illegal P2P activity than are consumer broadband providers.”
And as ArsTechnica explains, human error does happen and it's nice the MPAA owned up to its mistake. The problem: It took two years, and the only reason nobody else noticed the math error is because the group refused to let anyone see their methodology.
As Ars reports: "Yes, college students need to rein in the file-sharing. We get it. Artists need to eat. But while the MPAA has been busy lecturing universities about the way they run their IT operations, perhaps the universities have something to say to the motion picture business about how it buys and releases its research. Back to school, MPAA."
The MPAA, however, is still talking on many deaf ears and the group continues to bark at college students. “The latest data confirms that college campuses are still faced with a significant problem," the MPAA said in its statement. "Although college students make up 3 per cent of the population, they are responsible for a disproportionate amount of stolen movie products in this country.”
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