Felix Salmon

Those weirdly persistent counterfeiting statistics

By Felix Salmon
December 6, 2009

Renee Richardson Gosline has done some research which, if it turns out to be true, could well show that the cost to established businesses of counterfeit luxury goods is actually negative:

In a working paper she just finished this fall, “The Real Value of Fakes,” Gosline interviewed hundreds of consumers who knowingly bought fake luxury apparel, many at “purse parties” where such goods are sold. Gosline found that within two years, 46 percent of these buyers subsequently purchased the authentic version of the same product — even though other people could not necessarily tell the difference.

I haven’t been able to find a copy of the paper (put it up on SSRN, Renee!) but this is an astonishing finding. It seems that fake luxury goods are pretty much the best form of advertising out there: people who buy them and live with them have a very high probability of being converted to the brand and then going out and buying the real thing. What’s more, every time they go out with their fake item, they’re publicly displaying the desirability of the brand.

This explains why smart companies like Dolce & Gabbana refuse to get involved in prosecuting counterfeiters. The more information that emerges on the scale of counterfeiting, the more it seems as though it’s small and helpful, rather than large and extremely damaging. And yet Bloomberg’s Meg Tirrell, reporting on Gosline’s research, still feels compelled to include garbage pseudostatistics:

Counterfeiting costs U.S. businesses as much as $250 billion a year, according to the Washington-based International AntiCounterfeiting Coalition.

No, it doesn’t. Not even close. And given that Gosline’s own research shows that counterfeiting might help US businesses more than it hurts them, one might think that Tirrell would treat the baseless numbers from the IACC with a bit more skepticism. But unfortunately they’ve been repeated so many times at this point that they seem to be lodged in the collective journalistic consciousness. Maybe Gosline can try to help a couple of her interviewers to join the anti-anti-counterfeiting crusade.

2 comments so far | RSS Comments RSS

Yes, it would be nice to see this paper.

Speaking of brands… Renee Richardson Gosline used to work for Leo Burnett and other snake oil salesmen. Leo Burnett, you know, the company that gave us the Marlboro Man?

But when MIT sells snake oil, it’s got cachet! A shame the “best and the brightest” are being used to generate soulless profits.

So… is she related to the Balloon project?


cf.: http://gawker.com/comment/16084422/

Who funds her “research”?

Here’s an interesting link. Puts her at a conference with Yochai Benkler who also has some things to say about information, social networks, etc.

http://www.convergenceculture.org/future sofentertainment/2008/speakers/index.htm l

She was also out at the Sunbelt Social Network Conference last year. Talking as if she had completed her study.

http://nersp.nerdc.ufl.edu/~ufruss/docum ents/Sunbelt%20XXVIII%20final.pdf

So why is just now getting pumped out from Bloomberg and the MIT News hacks?

Posted by Uncle_Billy | Report as abusive

“Counterfeiting costs U.S. businesses as much as $250 billion a year, according to the Washington-based International AntiCounterfeiting Coalition.”

Beyond the fact that numbers like this and the ones that the record industry claims they lose to piracy are completly inflated is that a) the “lost” money is in revenues, not profits, and b) most people who bought the knock-off or downloaded the song wouldn’t have bought the real thing in the first place. In the case of the luxury item, people buy the fake stuff because they can’t afford the authentic product. And lots of people download every song they see, just because they want to have every song they hear of. Extreme downloaders may not ever listen to 90% of the songs they steal, so they would never buy them. As a result, the impact on profits is negligible, if unfair.

Counterfeiting and piracy are not nice things to do, and should be discouraged, but on the list of things the government desperately needs to address, they’re not even in the top 100.

Posted by OnTheTimes | Report as abusive

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