Piracy (acquiring content online that you aren’t paying for–not drinking rum and chasing wenches) has been getting a lot of attention lately, since Congress threatened to pass two anti-piracy bills that would have changed the Internet as we know it.
The Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA) sought to address the widespread problem of people streaming music, movies, TV, and video games they didn’t pay for, thereby taking money out of the pockets of everyone involved in creating and distributing them. It’s both illegal and unfair. Neither bill passed, however, due to widespread outrage from the public. This is not because people think they should be able to get entire seasons of Breaking Bad for free, but because the bills would have effectively censored the Internet and allowed sites to be shut down for copyright infringement without due course, not to mention doing away with people’s ability to put hilarious captions on celebrity photos and post them online.
SOPA and PIPA may be dead, but legislators, under pressure from movie and record companies, continue to look for ways to come between you and the free content you’ve come to enjoy. So how badly is the entertainment industry really hurt by piracy, and what does it cost our economy as a whole?
Facts and Figures
It’s difficult to find consistent numbers on piracy, probably due to the complexity of the problem. One statistical source claims that 95% of music downloaded online is illegal, as is two-thirds of available Torrents. Pornography and movies make up the vast majority of pirated material (around 35% for each), with TV shows in third place at 14.5%. Interestingly, books about Photoshop and sex manuals make up the majority of the top 10 pirated books.
According to the Motion Picture Association, the source used in Congress, piracy costs the U.S. economy $58 billion annually, including 373,000 jobs. Some estimates are even higher, with claims in the hundreds of billions. Is it really possible that your illicit episodes of The Simpsons and that LMFAO song you got from your buddy are affecting the country to that extent?
Or Maybe Not…
Many analysts outside the entertainment industry think not. The MPA figures don’t stand up to scrutiny—in fact, some of the numbers were traced back to worldwide counterfeiting data from the 1980s and 90s. One expert says, “effects of piracy within the United States are mainly redistributions within the economy for other purposes and that they should not be considered as a loss to the overall economy.”
Experts also point out that the figures the MPA came up with inappropriately and misleadingly used “multiplier” effects, doubling or tripling the figures based on so-called losses downstream, such as… florists. Yes, they included florists. When you take out multipliers like florists and remove the cost of piracy outside the U.S. (which wouldn’t have been affected by SOPA or PIPA), the true cost is closer to $446 million per year. It’s a lot of money, but as Washington Post blogger Brad Plumer points out, that’s roughly equal to the worldwide gross revenue of Alvin and the Chipmunks: The Squeakquel.
Piracy and Job Loss
After the failure of SOPA and PIPA, Senator Harry Reid tweeted, “Counterfeiting & piracy cost 1000s of #jobs yearly. Americans rightfully expect to be fairly compensated 4 their work.”
What he doesn’t say is how much it would have cost taxpayers to enforce SOPA or PIPA—a whopping $47 million over five years, which is money that could be spent creating jobs instead. The regulations would cost the private sector heavily, as well, essentially taking money out of the pockets of one industry to put in back into those of another.
The Plus Side of Piracy
Piracy is wrong, there’s no question about that. However, people like O’Reilly Media chief executive, Tim O’Reilly think piracy has a plus side. Though people are downloading O’Reilly books they aren’t paying for, he acknowledges that those people wouldn’t have purchased them, anyway. In a blog post, he writes, “The losses due to piracy are far outweighed by the benefits of the free flow of information, which makes the world richer, and develops new markets for legitimate content.”
Meanwhile, many media companies are wising up and offering content free on their own websites. Instead of having to illegally access The Daily Show, for example, you can watch it on Comedy Central’s website, which exposes you to their other shows, not to mention paid advertising. If the entertainment industry starts making some of their most popular offerings available for free, they take the power out of the hands of pirates, and reap the benefits of a willing audience.
