Does Internet Piracy Really Hurt the Economy?

Does Internet Piracy Really Hurt the Economy?

Large swathes of the Internet today are protesting legislation now pending in Congress that would censor the Internet and burden many sites with impossible-to-meet regulatory demands. What's the rationale behind enormously meddlesome regulations like SOPA/PIPA? Among others reasons, the "piracy" of copyrighted material is alleged to damage the economy. Julian Sanchez of the Cato Institute has completely dismantled this allegation in two outstanding recent posts. In his latest, he points out that, content-industry wailing notwithstanding, the movie and music industries are doing pretty damn well:


The International Intellectual Property Alliance—a kind of meta-trade association for all the content industries, and a zealous prophet of the piracy apocalypse, released a report back in November meant to establish that copyright industries are so economically valuable that they merit more vigorous government protection. But it actually paints a picture of industries that, far from being “killed” by piracy, are already weathering a harsh economic climate better than most, and have far outperformed the overall U.S. economy through the current recession. The “core copyright industries” have, unsurprisingly, shed some jobs over the past few years, but again, compared with the rest of the economy, employment seems to have held relatively stable at a time when you might expect cash-strapped consumers to be turning to piracy to save money.

In his previous post, Sanchez exposes content-industry estimates of huge economic loss as dishonest confabulation, and digs toward find a more realistic accounting of the overall economic costs of piracy:

[I]n a fantasy world where U.S. movie pirates don’t just circumvent blockage with a browser plugin, and SOPA actually stops all online movie piracy by American users, we get a $446 million economic benefit to the United States in the form of movie revenues, and presumably comparable benefits in music and software revenues? Well, no. Remember our old friend the Broken Window Fallacy. It’s true that some illicit U.S. downloads displace sales of legal products. But what happens to the money the pirates would have otherwise spent on those legal copies? They don’t eat it! As that same GAO report helpfully points out:

(1) in the case that the counterfeit good has similar quality to the original, consumers have extra disposable income from purchasing a less expensive good, and (2) the extra disposable income goes back to the U.S. economy, as consumers can spend it on other goods and services.

As one expert consulted by GAO put it, “effects of piracy within the United States are mainly redistributions within the economy for other purposes and that they should not be considered as a loss to the overall economy.” In many cases—I’ve seen research suggesting it’s about 80 percent for music—a U.S. consumer would not have otherwise purchased an illicitly downloaded song or movie if piracy were not an option. Here, the result is actually pure consumer surplus: The downloader enjoys the benefit, and the producer loses nothing. In the other 20 percent of cases, the result is a loss to the content industry, but not a let loss to the economy, since the money just ends up being spent elsewhere. If you’re concerned about the overall jobs picture, as opposed to the fortunes of a specific industry, there is no good reason to think eliminating piracy by U.S. users would yield any jobs on net, though it might help boost employment in copyright-intensive sectors. (Oh, and that business about 19 million jobs? Also bogus.)

Censoring the Internet would be the wrong way to protect intellectual property rights even were piracy a big economic problem. But piracy has a negligible impact on the economy and mostly affects who gets what. Though some struggling musicians and writers are undoubtedly harmed by illegal filesharing, it seems likely to me that the net distributive upshot of illegal filesharing is progressive, from large, profitable corporations to ordinary consumers. There's no evidence I'm aware of that supports the idea that piracy has led to an overall decline in the incentive to creative production. My bottom line: SOPA/PIPA is wrong and would mean the end of the open Internet we know and love. If it weren't wrong, it would remain an attempt to solve a largely nonexistent problem. And even if stronger copyright protections would significantly help our economy, this legislation wouldn't actually do that.

If you like, contact your legislators now.

A brief history of human dignity

What is human dignity? Here's a primer, told through 200 years of great essays, lectures, and novels.

Credit: Benjavisa Ruangvaree / AdobeStock
Sponsored by the Institute for Humane Studies
  • Human dignity means that each of our lives have an unimpeachable value simply because we are human, and therefore we are deserving of a baseline level of respect.
  • That baseline requires more than the absence of violence, discrimination, and authoritarianism. It means giving individuals the freedom to pursue their own happiness and purpose.
  • We look at incredible writings from the last 200 years that illustrate the push for human dignity in regards to slavery, equality, communism, free speech and education.
Keep reading Show less

Urban foxes self-evolve, exhibiting Darwin’s domestication syndrome

A new study finds surprising evidence of the self-evolution of urban foxes.

A fox at the door of 10 Downing Street on Janurary 13, 2015.

Photo by JUSTIN TALLIS/AFP via Getty Images
Surprising Science
  • A study from the University of Glasgow finds urban foxes evolved differently compared to rural foxes.
  • The skulls of the urban foxes are adapted to scavenging for food rather than hunting it.
  • The evolutionary changes correspond to Charles Darwin's "domestication syndrome."

How much can living in the city change you? If you were an urban fox, you could be evolving yourself to a whole new stage and becoming more like a dog, according to a fascinating new study.

Researchers compared skulls from rural foxes around London with foxes who lived inside the city and found important variations. Rural foxes showed adaptation for speed and hunting after quick, small prey, while urban fox skulls exhibited changes that made it easier for them to scavenge, looking through human refuse for food, rather than chasing it. Their snouts were shorter and stronger, making it easier to open packages and chew up leftovers. They also have smaller brains, not meant for hunting but for interacting with stationary food sources, reports Science magazine.

Interestingly, there was much similarity found between the male and female skulls of the urban foxes.

The observed changes correspond to what Charles Darwin called the "domestication syndrome," comprised of traits that go along with an animal's transition from being wild, to tamed, to domesticated.

The study was led by Kevin Parsons, an evolutionary biologist at the University of Glasgow.

"What's really fascinating here is that the foxes are doing this to themselves," Parsons told the BBC. "This is the result of foxes that have decided to live near people, showing these traits that make them look more like domesticated animals."

The researchers are not suggesting you should go out and get a fox as a house-pet just yet. But they are seeing the evolutionary process taking place that's moving the urban foxes along the path towards becoming more like dogs and cats, explained the study's co-author Dr. Andrew Kitchener from National Museums Scotland.

A fox beneath a tree in Greenwich park, south east London

A fox beneath a tree in Greenwich park, south east London on May 14, 2020.

Photo by Glyn KIRK / AFP

"Some of the basic environmental aspects that may have occurred during the initial phases of domestication for our current pets, like dogs and cats, were probably similar to the conditions in which our urban foxes and other urban animals are living today," said Kitchener. "So, adapting to life around humans actually primes some animals for domestication."

The specimen came from the National Museum Scotland's collection of around 1,500 fox skulls.

You can read the study in the Proceedings of the Royal Society B.

fox sleeping beneath stadium seats

A fox at the LV County Championship, Division two match between Surrey and Derbyshire at The Brit Oval on April 9, 2010 in London, England.

Photo by Clive Rose/Getty Images

​'The time is now' for cryptocurrencies, PayPal CEO says

Is Bitcoin akin to 'digital gold'?

Technology & Innovation
  • In October, PayPal announced that it would begin allowing users to buy, sell, and hold cryptocurrencies.
  • Other major fintech companies—Square, Fidelity, SoFi—have also recently begun investing heavily in cryptocurrencies.
  • While prices are volatile, many investors believe cryptocurrencies are a relatively safe bet because blockchain technology will prove itself over the long term.
Keep reading Show less

"Clean meat" approved for sale in Singapore

Singapore has approved the sale of a lab-grown meat product in an effort to secure its food supplies against disease and climate change.

Credit: Adobe Stock / Big Think
Politics & Current Affairs
  • Singapore has become the first country to approve the sale of a lab-grown meat product.
  • Eat Just, the company behind the product, will have a small-scale commercial launch of its chicken bites.
  • So-called "clean meats" may reduce our reliance on livestock farming, which kills billions of animals worldwide every year.
  • Keep reading Show less
    Scroll down to load more…
    Quantcast