Issues & Insights

Online Piracy Threatens to Derail Recovery

Howard Pyle

 

The lockdowns and social restrictions of the last year made life pretty unbearable for millions of Americans. Almost everyone across the nation was confined to their homes with minimal access to friends and family – if they had access at all. Needless to say, 2020 revealed few silver linings.

One of the few bright spots, though, was the continued rise of streaming services. Met with significantly heightened demand, online video and streaming services more than answered the call of duty. The “Tiger King” (Joe Exotic) became a household name as viewers’ eyes remained glued to their television screens and devices for new content.

According to a new report by the Motion Picture Association of America, subscriptions to online video services surpassed 1 billion globally for the first time ever. The report goes on to show that well over half of Americans reported their use of online video services significantly increased over the past year. The entertainment industry was able to adjust to the pandemic reality and create a vibrant marketplace amid global crisis.

However, this growth in market share and success does not come without its challenges. In fact, it has illustrated the existing challenge of piracy that has plagued the entertainment industry for years. Piracy and intellectual property (IP) theft disproportionately impact the entertainment industry because of its IP intensive nature. This piracy costs the industry revenue, deters new entrants to the marketplace, and – perhaps most importantly – costs the nation precious jobs at a time when the country can least afford to lose them.

According to data compiled by LegalJobs, the impact of piracy is quite grim for the economy. Online piracy results in the loss of 71,000 jobs in the United States. At a time when the nation is struggling to recover as many of the record 20.5 million jobs lost from the coronavirus lockdowns as possible, this is inexcusable. Further, the online TV and movie industry is set to lose more than $50 billion in revenue next year as a result of this theft. Existing data shows the number is already between $29 billion and $71 billion. This number soars to well over $200 billion if illegal sports streaming is taken into account.  This lost revenue also results in lost revenue to the government.

This is hardly a new problem. In fact, Congress passed the Digital Millennium Copyright Act (DMCA) in 1998 to combat online piracy in the new age of the internet. Yet, during the ensuing 20 years, revenues in the music industry have dropped overall from a high of $14.6 billion in 1999 to $9.8 billion in 2018. With the passage of time, there is no reason an industry as big as music itself should see plummeting revenues. That illustrates the widespread problem of online piracy.

Many Americans are unaware of the widespread economic impacts described above. Nearly 70% of online users surveyed answered that they “found nothing wrong” with digital piracy and more than one-third of Generation Z internet users report having illegally downloaded music. There is a perception that this activity only puts a small dent in the pocketbooks of some of the most affluent among us. Yet, all the while, our country is deprived of tens of billions of dollars in gross domestic product and tens of thousands of jobs.

The other big issue plaguing this space is that our nation’s legal framework is not prepared to deal with the technological developments that have taken place since DMCA was first passed over two decades ago. Lawmakers seem unable or unwilling to update the DMCA to reflect the present reality. Sen. Thom Tillis (R-N.C.) has introduced legislation that would attempt to right this wrong. Hopefully, it spurs other members of Congress to take a look at this long-neglected issue.

At a time where streaming services figure prominently in our lives and jobs are few and far between, it would be prudent for Congress to address an issue that impacts both of these realities. It is long past time for our law – and our lawmakers – to enter the technological age and adapt quickly before we lose more jobs and revenue in the interim.

Daniel Savickas is a policy analyst for the Taxpayers Protection Alliance.

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4 comments

  • I won’t condon piracy but when one is changed $45 or more for a DVD/Blu Ray movie that goes for under $10 at the Saturday matinee what do producers and manufactures expect? Having been in the computer industry and knowing the cost to produce a software package for consumers that cost hardly justifies the exorbitant price charged. Yes I know the price is what the market will bear but it is a double edged sword that cut both ways. You will always have piracy but frankly the producers and manufactures are not blameless for the piracy. They encourage it.

  • I suppose some corners of the market refuse to bear the present prices lol

    It’s stealing because we deserve your money. Even if we’re shoveling tripe at you, we worked hard to produce that awful garbage and demand your hard-earned fiat for having mistakenly consumed our trash product.

    Suck an egg.

  • What a joke of an article. True wealth and recovery comes from a strong manufacturing and natural resource base. Not entertainment.

  • Citing the one-sided DMCA admiringly tells me that the author considers the interests of the public of no importance compared to the (dare I say it? Yes, I dare…) greed of the big media companies.

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