The Effect of Piracy

Argument: Like previous studies concerning disruptive technologies, we may find that pirating of movies, books, and games through the internet may not have an adverse affect of the profits of the producers.

Evidence in support:

• In 1999 researchers Shapiro and Varian, authors of Information Rules, concluded that book publishered made more money because of book lending and also movie production companies make more money because of rentals.

• In 1985 S.J. Leibowitz found that "the unauthorized copying of intellectual properties need not be harmful and may actually be beneficial" after studying the copying of journal articles.

•  Many content producers claim a severe loss of revenue due to piracy (a total of 250 billion); however, many claim those statistics are non accurate and often exaggerated.

Evidence against:

• Content producers and organizations like the Recording Industry Association of America claim substantial loss due to piracy.

• The think tank Institute for Policy Innovation claims that copyright infringement not only causes substantial loss for producers but for the entire U.S. economy in terms of lost economic output, jobs, earnings, and tax revenue.

 

 Balanced discussion: Pirating happens.  However, whether it is too extensive or morally wrong is a different issue. The question is does it effect the profits of those who produce the content (which is generally their largest complaint).  As a producer it's an easy conclusion to come to that unauthorized access to your content is losing you money.  However, there is historical evidence that that is not always the case.  "Free" access to content can generate interest in that content which can lead to future sales not only by the the original infringer but by others that the infringer introduces the content to.

However, the digital world is a different beast.  It's much easier now to avoid paying for content.  In the past, getting illegal copies often included a trip somewhere and then making an imperfect copy.  Now we can have near-instant, perfect copies.  So it would make sense that it would happen more often.

There are extreme arguments on both sides: either piracy is killing the economy or piracy is good both economically and ethically.  The truth is probably somewhere in the middle and we should keep observing and researching to find the true effect of piracy.  Despite the effects, it's a safe bet that we won't eliminate it completely and it would be wise for companies to learn to cope by changing business models to thrive in the new digital information age.