Corporations in the entertainment industry have always argued that online piracy—the act of viewing, sharing or distributing copyrighted content on the web—has been responsible for billions of dollars lost in revenue each year.
It makes sense then that these corporations are willing to take drastic measures to prevent online piracy, such as the recent push for bills like SOPA (Stop Online Piracy Act) and PIPA (Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act).
Despite this lobbying, online piracy is nowhere near as serious an issue as corporations in the entertainment industry make it out to be. In fact, it has recently been shown that the figures used to justify SOPA and PIPA have been blown out of proportion. Because they are based on faulty premises and research, these bills should not be passed, and the open sharing of files should continue on the Internet. A 2009 report by the International Federation of the Phonographic Industry claimed that 95% of music downloaded at that time was illegal, and an analysis by the Institute for Policy Innovation states that $12.5 billion is lost to music piracy each year.
Also, a study in 2005 by the Motion Picture Association of America (MPAA) found that college students illegally downloading movies were responsible for 44% of the industry’s domestic losses. With numbers like that, it is easy to see why private corporations would want to end online piracy. After all, if the studies were to be believed, billions are lost to piracy every year.
The validity of these studies, however, is questionable at best. Almost all studies conducted on piracy share something in common: they were sponsored by corporations in the entertainment industry. In a report by the Social Science Research Council, director Joe Karaganis commented on this very issue, and claimed that “despite its ubiquity, piracy has been fallow terrain for independent research.” And he’s right, for such a hot topic of discussion, there exists very little statistical information outside of the data provided by the entertainment industry.
In reality, the entertainment industry only stands to gain by putting out inflated numbers. Interestingly, the aforementioned study by the MPAA was later corrected, bringing the percentage of industry loss down from 44% to 15%. The MPAA apologized and blamed the mistake on an “isolated error.”
There is also evidence that contradicts the idea that every illegal download results in a lost sale. Four years ago, the Journal of Political Economy released a study on the relationship between illegal music downloads and the sale of music. They found that illegal music downloads had indeed affected sales… by a whopping 0.7%.
While this single study may not be a reflection of online piracy as a whole, it does show a disconnect between illegal downloads and lost sales.
In fact, there are some who believe that piracy actually helps sales. The Japanese Research Institute of Economy, Trade and Industry conducted their own study on the effect of online piracy in early 2011. Their study found that online piracy had no effect on DVD sales, though it did affect DVD rentals. Surprisingly, the study also found that uploaded YouTube clips of particular shows actually helped their DVD sales, despite being pirated content.
Furthermore, the German media website Telepolis uncovered a study by GfK Group that was suspiciously buried. According to an anonymous source in GfK Group, one of the largest market research companies in the world, an unpublished study found that those who actively engage in online piracy purchased more DVDs and made more visits to the theatre than the average consumer.
The discrepancies in the data beg the question of why different research groups produce different statistics. In answer to this question, we should look at the patterns between the conflicting reports. Studies sponsored by corporations in the entertainment industry show that piracy has a devastating effect on sales, while independent studies show that piracy has little to no effect, and may actually help sales.
Private corporations have the most to gain by putting out inaccurate information. What they do is use piracy as an excuse to create and pass laws that give them more control over content on the Internet. We have seen this in the past with laws like the Digital Millennium Copyright Act, and are seeing this again with bills like SOPA, Bill C-11, and ACTA.
When you get down to the brass tacks, piracy is still a form of theft because, after all, content that would otherwise have to be paid for is accessed for free. But all of these studies considered, piracy is nowhere near as bad as private corporations make it out to be, and in fact, may help the very people who view it as a threat.