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Split of total estimated trade losses due to copyright piracy (Source: IIPA)

Per capita U.S. dollar loss due to copyright piracy (Source: DailyTech)

Estimated per capita loss against GDP (PPP) per capita (Source: DailyTech)
Canada is the world's largest piracy offender per capita

Last week, the International Intellectual Property Alliance (IIPA) submitted recommendations to the Bush administration in its “Special 301” review of copyright piracy and market access problems around the world. The IIPA report recommended that 16 countries be placed on a “Priority Watch List,” for piracy offenses. Canada, Mexico and Israel joined China and Russia as countries severely plagued by piracy.

“The annual Special 301 process continues to be the primary means for the U.S. copyright industries to advise U.S. government agencies about the principal impediments to adequate and effective protection in global markets,” noted Eric H. Smith of the IIPA. “Many of the key markets around the world that are infected with high levels of copyright piracy or deny effective market access to copyright industries.”

At first inspection of the figures released by the IIPA, the $2 billion estimated trade losses due to copyright piracy in China and Russia are more than double that of any other nation. Smith comments, “China and Russia are again this year the two countries that are of the greatest concern to the copyright industries, as they were in 2006. While there have been developments in both these key markets over the year, the bottom line is that piracy levels have not come down at all or only marginally, and some problems have grown worse.”

Upon further examination, however, we find that there is more to the Priority Watch List than just raw loss numbers. For example, China leads all nations in piracy with an estimated $2.2 billion lost due from piracy -- but China is also the world’s most populated nation. Could it be that China’s piracy problem is explained by its huge populace? After all, it would be easy to say that China is the world’s biggest consumer of rice because it has the most citizens. While China’s population has a strong role to play in the country’s rice consumption levels, it would be erroneous to attribute the statistic to just a single factor. There are usually several forces at play to explain statistics, as in the example presented with China and rice, culture can be one of them. One raw statistic alone, such as rice consumed or dollars lost, is meaningless without context.

Taking a deeper look into the IIPA’s figures to bring some weight and context behind its estimates show that the Priority Watch List numbers from the Special 301 report are imperfect. Aside the fact that dollar estimates are not an exact science, the IIPA’s lists do not include any figures for the motion picture industry’s losses, has incomplete data for entertainment software and books and features no data for the music industry in Canada. Out of the five categories of copyright piracy, the IIPA only has complete data for business software.

Plotted below is the IIPA’s estimated total business software trade losses due to copyright piracy during 2006 against population and gross domestic product (GDP) at purchasing power parity (PPP).


2006 Estimated Total Losses (U.S. dollars millions)*


Loss Per Capita (U.S. dollars)

GDP (PPP) Per Capita (U.S dollars)***




































Costa Rica










Saudi Arabia















Dominican Republic




















*International Intellectual Property Alliance
**Latest data available on Wikipedia and CIA Factbook
*** International Monetary Fund, World Economic Outlook Database, September 2006

The table is sorted according to dollars lost per capita, and it’s immediately apparent as to why the IIPA is so critical of Canada. Not only does Canada have the greatest loss per capita at $16.78, but its citizens also have the greatest purchasing power. While the IIPA may be concerned about its loss per capita from Canada, the report the coalition filed expressed frustration with Canadian legislation. The IIPA says that pirates have taken advantage of the gaps in Canadian law to become a “leading exporter” of camcorder bootleg movies and modchips for video game consoles.

On the other hand, China, the world leader in dollars lost from piracy, only manages $1.68 lost per person. Of course, incidents of piracy are likely to be spread very unevenly in a nation with huge disparity between urban and rural areas. The IIPA also points to China as a large exporter of pirated goods to Eastern and Western Europe.

The IIPA has spelled out exactly what it believes China must do, including taking deterrent “criminal” actions against pirates instead of fines, which the coalition believes are meaningless. “So far, it is clear that the Chinese government has not devoted sufficient resources to combat rapidly advancing Internet piracy and needs to further clarify underlying legal rules and enforcement procedures, as well as to expand the opportunity for U.S. copyright based industries to offer legitimate materials to the Chinese public,” the IIPA wrote to the Bush administration.

Russia, the other leader in piracy, stays near the top of the list with $14.80 lost. The U.S. government announced in November 2006 a joint program with Russia to fight piracy. The IIPA acknowledges the development, but continues its disparaging tone, saying, “Despite the repeated efforts of industry and the U.S. government to convince the Russian government to provide meaningful and deterrent enforcement of its copyright and other laws against optical disc factories and all types of piracy -- including some of the most open and notorious websites selling unauthorized materials in the world, such as -- little progress has been made over the years in convincing Russia to take the  enforcement actions that could reduce these high piracy levels.”

Despite Israel’s relatively low $98.4 million loss, its smaller population results in a per capita loss of $13.86. The IIPA’s main concern, however, appears to be the Israeli government’s inaction and indifference to U.S. copyright laws. Specifically, the IIPA is dissatisfied with a bill that “would discriminate against foreign producers of sound recordings specifically, and potentially violate Israel’s bilateral obligations to the United States.”

Mexico places fourth on the list of loss per capita at $9.25 and an overall third in terms of overall losses at over $1 billion, but even then, the country’s ranking may be under rated. Going back to the IIPA’s 2005 report, Mexico posted the highest numbers for movie piracy at $483 million—nearly double that of China. The 2006 IIPA report does not include any information about motion pictures, underscoring the potentially incomplete nature of the coalition’s statistics.

Nevertheless, the IIPA has gathered its stats and focused its attentions on the black markets and reigning governments of Argentina, Canada, Chile, China, Costa Rica, the Dominican Republic, Egypt, India, Israel, Mexico, Russia, Saudi Arabia, Thailand, Turkey, Ukraine and Venezuela.

“The unwillingness of the countries identified in our submission to curb high rates of piracy – in most countries, through more effective and deterrent enforcement – saps the U.S. economy of the high-paying jobs and strong growth rates that make this sector critical to the health of the U.S. economy,” said Smith.

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By masher2 on 2/20/2007 4:07:56 PM , Rating: 2
> "since the people wouldn't have been able to buy their stuff anyway. Thus it's not stealing."

By that logic, if I steal a Ferrai I wouldn't have otherwise been able to buy, it's not stealing.

You might want to rethink that one. :/

> "No loss = not stealing..."

If I spend a night in a hotel, then skip out without paying the bill, I've stolen services....even if I never intended to pay in the first place.

Similarly, if I steal your car and then bring it back...I've still stolen it. Even if you never noticed it was gone.

By Oregonian2 on 2/20/2007 6:24:48 PM , Rating: 2
Similarly, if I steal your car and then bring it back...I've still stolen it. Even if you never noticed it was gone.

I don't mean to make a point, but you made me think of something that makes me smile. Given your idea above, I guess that means that my bank steals all of my money every time they're forced to reboot their computers. Think about it. :-)

By modestninja on 2/23/2007 1:25:36 AM , Rating: 2
These analogies you bring up are stupid... If you steal a Ferrai (I assume you mean a Ferrari) whoever you stole it from is out the cost of producing or buying the car, so that is completely different than some person who otherwise could afford a CD pirating it. Even you would have to admit that this analogy is a weak one when applied to piracy...

>"Similarly, if I steal your car and then bring it back...I've still stolen it. Even if you never noticed it was gone."

Again, you steal my car it depreciates in value because you have added wear and tear to it, so I have lost something even though I may not know it. Again bad analogy, since as far as I know, a person who otherwise would not purchase a piece of software pirating it, doesn't accrue any additional cost for the company producing it. They also don't lose any potential market since the person wouldn't have purchased it anyway... The only case I could think of a loss incurred by someone who otherwise wouldn't have purchased a product pirating it, is if part of the product's appeal is it's exclusivity... Very few copyrighted works derive value from this. In a lot of cases, it's the opposite. The market penetration caused by people who otherwise wouldn't use a product expands the producer's overall market by increased exposure.

Again, like others I'm not justifying piracy of copyrighted materials, I'm just trying to show you that your analogies are missing the mark.

Maybe I'll get to your 'night in hotel' analogy later. Not everyone on DT has all day everyday to post... Some of use have lives. ;)

By DocDraken on 2/25/2007 7:18:46 AM , Rating: 2
By that logic, if I steal a Ferrai I wouldn't have otherwise been able to buy, it's not stealing.

Bad analogy. If you steal a car and bring it back, it'll still have been missing for a period and will have a reduced value because of wear and tear. At no time when software is pirated is anyone missing anything. It's apples and oranges. You can't compare the two.

If I spend a night in a hotel, then skip out without paying the bill, I've stolen services....even if I never intended to pay in the first place.

Again, bad analogy. If you skip out on the bill in a hotel, you've physically occupied space that could have had a paying customer. You've also incurred the hotel expenses with water, electricity, towels and linen use. It's rediculous to compare this to pirating software where no loss is incurred.

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