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Entertainment industry group proclaims piracy costs US economy billions

23 August 2007 7:14 by Rich "vurbal" Fiscus | 23 comments

A new study from the Institute for Policy Innovation adds a new twist to music industry estimates on the cost of piracy, claiming piracy related costs to the economy of $12.5 Billion.

While past studies have focused on the assumption that each unauthorized download equates to a lost sale, this new study goes a step further and extrapolates losses to the entire US economy based on that assumption.

Along with the multibillion-dollar loss, piracy also is hindering job growth, according to the IPI. The US economy will lose 71,060 jobs due to piracy, with almost 38 percent of those (26,860) in the recording industry. That amounts to $2.7 billion in lost earnings. Piracy also hits Uncle Sam�as well as state and local governments�right in the pocketbook, with at least $422 million in lost tax revenues.

It essentially assumes that two of every three downloaded songs would have been purchased, were it not for file-sharing. This is a very high percentage and one not justified by our own knowledge of file-sharing trends. The study needs to make a firm argument for why this percentage is so high.

Given IPI's track record (which includes this gem from the aforementioned open-source study: "Open source will go the way of other IT industry fads that were once trumpeted as the way of the future, like Macintosh computers, business AI, 4GL programming languages and Y2K") and ideological bent, the results of this study are rather unsurprising.

Source: Ars Technica

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DoomLight (Newbie) 23 August 2007 8:10
FIRST! and boohoo the economy alone doesn't flourish on entertainment. sheesh [ + quote]
ikari (Newbie) 23 August 2007 8:59
I am curious how they came up with 71,000 jobs were not created because of this. I am sure that they recording industry would need to hire 20,000 people to make the CDs they would be selling. If they did hire, wouldn't it be out of the country worker? That way they could make more of a profit. Oh and congrats Doomlight for being the first one to post. *rolls eyes [ + quote]
lavery (Newbie) 23 August 2007 10:56
very true ikari i second that [ + quote]
duckNrun (Member) 23 August 2007 11:26
hey let's not forget those poor corn farmers.... LMAO still over that comment! And as for the jobs... surely most of the pressing of the media is done via machinery and NOT people sitting and burning the stuff. The inserts are rolling off a cumpertized assemblyline, only a few people are standing at plastic mold machines pumping out thousands of cases a day, automation is most certainly putting the discs INSIDE the cases, and another part of the machine is shrinkwrapping them and dropping them in cases. I used to work as an over the road truck driver and been inside many manufacturing plants. I can attest that MOST of the work was being done by machines and people did very little in the production process. They feed machines the materials, they MAYBE punched out the molds from the surrounding material, they loaded boxes full of product onto pallets and my truck. But hey, make the govt think they are losing out on tax payer's money and it just helps their case when they go pulling the strings to their favorite in their pocket lawmaker be they a REPUBLICAN OR DEMOCRAT. Added: I almost forgot-- well done DoomLight for being first, here's your cookie lol [ + quote] This message has been edited since posting. Last time this message was edited on 23 August 2007 11:28
Unfocused (Junior Member) 23 August 2007 12:48
@duckNrun I saw the special on Discovery on how CD's were made. There wasn't a single person in the plant. Maybe we should start a collection for the corn farmers... [ + quote] This message has been edited since posting. Last time this message was edited on 23 August 2007 12:55
Unfocused (Junior Member) 23 August 2007 12:53
Thinking further, if all these studies were not done, would the cost of compiling these statistics equal that of the lost revenue? Or, do all these researchers equal the number of lost jobs? It does seem like a lot of these reports are coming out from several different companies. Also, did I miss a post somewhere? I didn't know that we were having a competition to see who can get first post. Where do I keep score at? [ + quote]
numscull (Newbie) 23 August 2007 13:19
No, the headline should read, "BECAUSE OF THE MONEY SAVED BY THE MUSIC SHARING CONSUMERS, BILLIONS OF DOLLARS ARE FREE TO BE SPENT ON GOODS. THUS CREATING THOUSANDS OF REAL JOBS." [ + quote]
godzirra (Newbie) 23 August 2007 13:20
What a crock. If I don't spend my dollars on music, I will spend them on something else. Either way, my money is contributing to the economy! What the entertainment companies should do is lower their prices rather than whine about profit loss. And if they still can't turn a profit, let them go out of business - then something better will come along to replace them. That's the beauty of capitalism, folks. [ + quote] This message has been edited since posting. Last time this message was edited on 23 August 2007 13:25
tucker001 (Member) 23 August 2007 14:05
wuteva [ + quote]
ericblood (Newbie) 23 August 2007 14:47
No wait a minute here. If we are making all these downloads. And I guess some are burning cd's. Does the internet companys and the ones that makes the blank cd's or dvd's not make profit and make jobs??? and who cares if it saves the american public a little money so be it. You can't even fill your gas tank up anymore the extra money you have to buy a cd is now in the gas tank. So screw them if it saves me money to download music and burn then I will. [ + quote]
Epoxyburn (Inactive) 23 August 2007 15:14
I would love to read the break down of this report, because those numbers are hella inflated. Like that Judge that atttempted to take his dry cleaner for millions for ruining one pair of pants, you just know those are funny number. I feel bad that $422 million of taxes go missing....that should be going to a crooked ass war in Iraq! OR Lindsey's coke addiction,rehab, and next overdose. [ + quote] This message has been edited since posting. Last time this message was edited on 23 August 2007 15:22
duckNrun (Member) 23 August 2007 16:44
*Originally posted by numscull:* No, the headline should read, "BECAUSE OF THE MONEY SAVED BY THE MUSIC SHARING CONSUMERS, BILLIONS OF DOLLARS ARE FREE TO BE SPENT ON GOODS. THUS CREATING THOUSANDS OF REAL JOBS." Excellent point [ + quote]
spydah (Junior Member) 23 August 2007 16:56
Excellent point numscull!! There really isnt nothing to be said because no matter what they wont base all their losses on lacks like this: lack of quality lack of good product lack of good marketing lack of good artist lack of good labels lack of common knowledge meaning consumers will spend money else were because of the list above the number 1 lack is of good price who wants to spend 12$ - 24$ on some crappy cd's that only has 3 songs which 2 maybe at a descent quality. Furthermore this is why you lack PROFITS!!!!!! [ + quote] This message has been edited since posting. Last time this message was edited on 23 August 2007 16:59
sssharp (Junior Member) 23 August 2007 17:15
I must be in the 33% bracket of people who would not buy the music. My music collection is very small. The car is the only time music is heard by me and the radio does a decent job when I listen to ESPN. This organization cries more than a 1 year old in a dirty diaper. [ + quote]
spydah (Junior Member) 24 August 2007 4:25
*Originally posted by sssharp:* I must be in the 33% bracket of people who would not buy the music. My music collection is very small. The car is the only time music is heard by me and the radio does a decent job when I listen to ESPN. This organization cries more than a 1 year old in a dirty diaper. I agree with you because i use XM 90% of the time besides my ipod. So this is another reason why they need to get off the omg we losing so much money. Its so many other forms of media that we all use other then buy crappy cds. How can you base your profit lose on pirates when consumers have more then just a topical cd player anymore. Things have evolved into a whole other thing so they are truly falsifying numbers to get a reaction. [ + quote]
SProdigy (Member) 24 August 2007 7:42
*Quote:* It essentially assumes that two of every three downloaded songs would have been purchased, were it not for file-sharing. Well that's the problem. Assume no one would buy anything and you lose ZERO DOLLARS. So, they should guess why those 2 out of 3 they assume would buy, did not buy. My guess is crappy quality and/or expensive price tag. [ + quote]
emugamer (Junior Member) 24 August 2007 8:11
*Originally posted by Epoxyburn:* OR Lindsey's coke addiction,rehab, and next overdose. let Lindsay croak.... Kudos to those who brought out the point about spending your money elsewhere anyway. I've been a true believer of that for the whole time the RIAA has been whining about the US economy. My family budget is extremely tight right now. I have to watch every penny. And everything extra goes toward my gas tank. If the music industry was wiped out, artists would find other ways to get their music to the masses, creating more innovative techniques and more jobs to support those techniques. What's disturbing is probably more than half the Senators who read this study are morons and will believe every number. These people sleep with money in their pillows. Here's an idea.....stop producing tons of CD's. Less CD's means less operating cost of your press factories. Less printing of the media art. Less junk mail from Columbiahouse and BMG filling our landfills. Go the way of the download. Do us all a favor and croak....save the environment......or ADAPT YOU DINOSAURS!!!! [ + quote] This message has been edited since posting. Last time this message was edited on 24 August 2007 8:14
duke8888 (Junior Member) 24 August 2007 10:09
I do not believe we loss over 71000 jobs but entertainment is big business back in the past pre internet. The music companies made money hand over fist and now they were so use to the large amounts they made in the past and thats what they are doing living in the past. Loopk at a computer back in the 70's they cost close to $5,000.00 and now you can get them for a few hundred bucks. Music industry wake up and get in the game. You are still making lots of money but your cut is a little smaller you greedy bastards. [ + quote]
jacksmate (Newbie) 24 August 2007 17:55
*Originally posted by duckNrun:* hey let's not forget those poor corn farmers.... LMAO still over that comment! And as for the jobs... surely most of the pressing of the media is done via machinery and NOT people sitting and burning the stuff. The inserts are rolling off a cumpertized assemblyline, only a few people are standing at plastic mold machines pumping out thousands of cases a day, automation is most certainly putting the discs INSIDE the cases, and another part of the machine is shrinkwrapping them and dropping them in cases. I used to work as an over the road truck driver and been inside many manufacturing plants. I can attest that MOST of the work was being done by machines and people did very little in the production process. They feed machines the materials, they MAYBE punched out the molds from the surrounding material, they loaded boxes full of product onto pallets and my truck. But hey, make the govt think they are losing out on tax payer's money and it just helps their case when they go pulling the strings to their favorite in their pocket lawmaker be they a REPUBLICAN OR DEMOCRAT. Added: I almost forgot-- well done DoomLight for being first, here's your cookie lol after watching how its made on tv... AGREE WITH ALL YA Said..Just more control, and Japan is winning its war late.. The japanese companies own 80% of this stuff from the machines they sold here to get by copyrights.. .now they want what the old recording industry wanted... absolute control... they have the senate in their pockets and large enough number of congress.. too many judges get feed too much bs and they just are not technically compitent to handle it.. I agree with one suggestion... a court that knows about technology and the plantifs should be paying up front for legal fees for both sides.. the RIAA would stop its bashing if it had to pay up front.. DoomLight - so bright.. quality post... [ + quote]
dipper (Newbie) 24 August 2007 18:13
Whats Needed is study to find out how much it would cost manufactures of blanks cd/dvds and associated burning software and cd/dvd burners and associated job losses in that industry ...if piracy was totally stamped out....not to mention ipod sales and other mp3 mp4 player sales. It seems to me some industries want it both ways ...buy our players/burners and blanks...just dont copy our material!! ..i know they have a legitimate use as well ..but hey so does bit torrent and p2p. just a thought Dipper [ + quote]
BIGBAD (Newbie) 24 August 2007 22:50
Youve got to laugh at the end of the day human nature dictates if you are going to get something for nothing youll grab it myself included.The Multinationals give us all this technology from PCs to PODS its all designed for downloading burning sharing then they moan and are surprised when we use it [ + quote]
jimnesie (Newbie) 27 August 2007 6:45
*Originally posted by ikari:* I am curious how they came up with 71,000 jobs were not created because of this. I am sure that they recording industry would need to hire 20,000 people to make the CDs they would be selling. If they did hire, wouldn't it be out of the country worker? That way they could make more of a profit. Oh and congrats Doomlight for being the first one to post. *rolls eyes [ + quote]
borhan9 (AfterDawn Addict) 31 August 2007 14:09
To me if they want to have the economy flourish stop marking up prices so high that they are so inflated that the software companies profit margins are astronomical. [ + quote]