THE TRUE COST OF COPYRIGHT INDUSTRY PIRACY TO THE U.S. ECONOMY

October 19, 2007

Piracy has a harmful impact on U.S. produced copyright products and on the overall U.S. economy.  In 2005, piracy conservatively cost motion pictures, sound recordings, business software and entertainment software/vide collectively at least $25.6 billion in lost revenue.

Beyond the cost to the copyright industries, this lost revenue translates into lost production of legitimate copyright products, which in turn means lost wages and lost purchases of upstream products and services throughout the U.S. economy, says economist Stephen E. Siwek.

Because of piracy:

  • The U.S. economy loses $58 billion in total output annually; output includes revenue and related measures of gross economic performance.
  • The U.S. economy loses 373,375 jobs; of this amount, 123,814 jobs would have been added in the copyright industries or in downstream retail industries, while 249,561 jobs would have been added in other U.S. industries in support of the copyright industries.
  • American workers lose $16.3 billion in earnings annually; of this total, $7.2 billion would have been earned by workers in the copyright industries or in their downstream retail industries while $9.1 billion would have been earned by workers in other U.S. industries.
  • Federal, state and local governments lose at least $2.6 billion in tax revenues annually; of this amount, $1.8 billion represents lost personal income taxes while $0.8 billion is lost corporate income and production taxes.

As these numbers show, the true cost of copyright piracy cannot properly be measured by its impact on the U.S. producers of copyright-protected works alone, explains Siwek.  Piracy harms not only the owners of intellectual property but also U.S. consumers, workers and taxpayers.  As policymakers turn their attention to the competitiveness of the U.S. economy in the global marketplace, it is clear that the problem of copyright piracy should be afforded a prominent place on the policy agenda.

Source: Stephen E. Siwek, "The True Cost of Copyright Industry Piracy to the U.S. Economy," Institute for Policy Innovation, IPI Policy Report No. 189, October 3, 2007.

 

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