Piracy's Other Price: Jobs

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The impact of software piracy and the illegal copying and distribution of other copyrighted works is hard to measure. The industry and watchdog groups regularly issue alarming statistics on the growing loss of billions in revenue caused by piracy.

Of course, it’s hard to know what the true revenue loss is because you can’t assume – by a long shot – that everyone who pirates a copy of a product would pay for it if they had no other choice.

But the fact remains, even a fraction of a billion is a big number and money is being lost. Now the Institute for Policy Innovation (IPI) has chimed in with another take on the cost of piracy, jobs. According to IPI’s new report, 373,375 Americans currently unemployed can thank motion picture, sound recording, video game and software pirates for the lack of job opportunities and the inability to share some $16.3 billion in earnings.

“Copyright piracy harms a broad segment of the U.S. economy that extends far beyond the U.S. companies that distribute copyright-protected
works,” said Stephen E. Siwek, author of the IPI report and principal with Economists, Inc. in a statement.

IPI said it made conservative estimates in its study that does not assume a one-to-one relationship between pirated and sold goods. The job loss figures break out to 123,814 that would have been added in the copyrighted goods-related or downstream retail industries, and 249,561 jobs in other U.S. industries — were it not for piracy.

IPI said its report, “The True Cost of Copyright Piracy to the U.S. Economy,” is the first to analyze the overall effect of copyright piracy on the overall economy.

On the online video front media companies are finding ways to fight piracy, such as lowering the price of content to consumers to zilch. NBC and News Corp., for example, have plans to launch Hulu.com later this month. The site will distribute NBC and Fox programming for free on advertiser-supported sites such as AOL, MSN, Yahoo and MySpace.

On a global basis, a report released earlier this year by the Business Software Alliance (BSA), had some bits of good news on the piracy front. The BSA said software piracy rates are falling in China and Russia which traditionally top the list of nations with the highest piracy rates.

According to the study, China’s piracy rate dropped four percentage points for the second consecutive year and has dropped 10 percentage points in the last three years, from 92 percent in 2003 to 82 percent in 2006. In Russia, the piracy rate decreased by seven percentage points since 2003, down from 87 percent in 2003 to 80 percent in 2006.

Overall, according to the study, global losses increased in 2006 by more than $5 billion (15 percent) over the previous year. Of the 102 countries covered in the study, piracy rates dropped moderately in 62 countries, while increasing in 13.

The study, though, indicates even low piracy rates can result in large losses. Of all the countries in the study, the U.S. has the lowest rate at 21 percent, but it also had the largest total losses at $7.3 billion. China was second in total losses with $5.4 billion.

This article was first published on InternetNews.com.