For example, there recently was a very nice article on Ars Technica which highlighted how $250 billion lost to piracy come out of nowhere.

I suppose I should be outraged but I just didn’t except them to do better.

The part the bothers me is the video of the Washington state AG misrepresenting the economics of sharing as stealing and “if you can reduce software piracy by 10% you can create $41 billion is economic growth.” This is simply false. It assumes that the reduced piracy will = new sales. Here are a few of the reasons the logic is bad:

1. If someone file shares because they can’t afford the authorized copy “stopping” the piracy does not give them the money they do not have to buy an authorized copy.

2. If one file share a product that is no longer available like XP I am not likely to buy Vista if I can’t get the copy of XP.

The study, Microsoft’s press release quotes, claiming $8 billion in revenue loss in the US is not a counterfeiting or unauthorized sales study it is a study that calculates lost revenues by counting the number of unauthorized copies regardless of how they were acquired and assuming that each unauthorized copy equals a lost sale. Here is the exact methodology:

1. Determine how much PC packaged software was deployed in 2007.
2. Determine how much PC packaged software was paid for/legally acquired in 2007.
3. Subtract one from the other to get the amount of pirated software.
Then calculate the value of the pirated software.

Misusing statistics like this undermines the credibility of their campaign and turns the campaigning into mere scare tactics.

For one, their announcement highlights commercial piracy, which is a direct competitor to their legitimate copies on the market.

P2P piracy on the other hand does in most cases not take away from their profits because it helps keep out cheaper products from competitors as well as ensures that once the user needs a legitimate copy he or she will choose Microsoft products.

It’s a thin line to walk between scaring the consumers into paying for their products but not scaring them enough so that they look elsewhere and Microsoft is pretty good at it.