Hollywood loses $20.5 billion to piracy

MUMBAI: It’s not just in India that the film industry is grappling with the issue of piracy. According to a latest survey conducted by the Institute for Policy Innovation (IPI) in the US, Hollywood loses close to $20.5 billion to movie piracy in a year.


 


This study utilizes, as a starting point, the lost revenue figures from a recent and comprehensive worldwide consumer research study conducted by LEK Consulting and released in May 2006 by the Motion Picture Association of America (MPAA). According to the LEK study, MPAA studios lost $6.1 billion to piracy in 2005.


 


Using methodology developed and maintained by the US government, IPI’s study finds that the movie companies’ $6.1 billion loss translates into total lost output among all industries of $20.5 billion annually.


 


It also finds that lost earnings for all US workers amounts to $5.5 billion annually, and 141,030 jobs that would otherwise have been created are lost. In addition, as a result of piracy, governments at the federal, state, and local levels are deprived of $837 million in tax revenues each year.


 


“While the movie industry is clearly harmed by movie piracy, the greater story is the harm to US citizens,” said IPI Center for Technology Freedom director Bartlett Cleland.


 


Author of the IPI report titled “The True Cost of Motion Picture Piracy to the US Economy” Stephen E. Siwek said, “As policymakers seek to maintain the health and vitality of the US economy and preserve our global competitiveness, the importance of recognizing the real costs of piracy and counterfeiting cannot be overstated.”


 


Some of the findings of the report are as follows:


 



  • Motion picture piracy now results in total lost output among all US industries of $20.5 billion annually. Output includes revenue and related measures of economic performance.
  • Motion picture piracy costs US workers $5.5 billion annually in lost earnings. Of this amount, $1.9 billion would have been earned by workers in the motion picture industries while $3.6 billion would have been earned by workers in other US industries.
  • Motion picture piracy costs jobs. Absent piracy, 141,030 new jobs would have been added to the US economy. Of this total, 46,597 jobs would have been created in the motion picture industries while 94,433 jobs would have been added in other industries.
  • Motion picture piracy costs governments at all levels $837 million in lost tax revenue. Absent piracy, an additional $147 million in corporate income taxes from motion picture corporations, $91 million in other taxes on motion picture production or sales, and $599 million in personal income taxes from employees would have been paid annually to federal, state and local governments. 

While 80 per cent of the losses resulted from piracy overseas, 20 per cent were from piracy in the US. According to the study, piracy rates were the highest in China (90 per cent), followed by Russia (70 per cent) and Thailand (79 per cent).


 


The survey was conducted across 22 countries namely: Australia, Brazil, Canada, China, France, Germany, Hong Kong, Hungary, India, Italy, Japan, Korea, Mexico, Netherlands, Poland, Russia, Spain, Sweden, Taiwan, Thailand, the UK and the US.


 


The true cost of motion picture piracy far exceeds its impact on the movie producers themselves, and harms not only the owners of the intellectual property but also all US consumers and taxpayers. As policymakers seek to maintain the health and vitality of the US economy and preserve our global competitiveness, it is imperative that government and industry work together to combat this growing problem.

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