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Is online piracy a big problem? Evidence is scant.

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Are online piracy and copyright infringement hurting the economy? It’s always been hard to find solid evidence on this score. The copyright industry — record companies, movie studios, software makers — is always citing reports suggesting that IP infringement is destroying 750,000 jobs per year or costing U.S. companies $200 billion. But as the Government Accountability Office found last year, most of these claims “cannot be substantiated.”


Not ruining the U.S. economy after all

And now, as Nate Anderson reports at Ars Technica, the International Intellectual Property Alliance is taking a brand new tack, arguing in its latest annual report that “piracy inhibits [our] growth in the US and around the world.” But as Anderson observes, the actual numbers in the report don’t seem bear this out. Since 2007, businesses based on copyright have been growing faster than the economy as a whole by a full percentage point. What’s more, the “core” copyright industries (sound recording, movies, TV, software, publishing) are thriving, shedding fewer jobs than the economy as a whole and earning record profits overseas, where piracy is even more rampant.

Now, there are a couple of ways to look at these figures. Maybe these industries would be growing even faster if Congress cracked down on IP infringement and online piracy. Maybe these industries will soon be hurting unless piracy — especially piracy abroad — gets reined in. But it’s hard to find solid evidence that IP infringement is a pressing problem facing the U.S. economy at the moment.

You wouldn’t know that from watching Congress, though. Cracking down on piracy seems to be one of the few issues both parties can agree on these days. For several years now in the Senate, Democrats and Republicans have been teaming up on bills with stricter penalties for online infringers. (The bills have largely been blocked because Oregon Sen. Ron Wyden keeps putting holds on them.) In the House, Texas Rep. Lamar Smith just released a bill that would allow copyright industries to cut off ad revenue and payment processes from alleged infringers.

Aside from worries that excessive enforcement could fracture the Internet or chill online speech, law professors from diverse ideological corners worry that these bills could be unconstitutional.

Yet whenever the House or Senate holds hearings on the measures, the only thing the invited witnesses seem to disagree on is just how much piracy is hurting America. At Senate Judiciary hearing in February, the bidding started with $58 billion per year, swelled to $100 billion per year, and closed out with Sen. Sheldon Whitehouse of Rhode Island saying, “I contend that America is on the losing end of the largest transfer of wealth through theft and piracy in the history of mankind.” It sounds apocalyptic. But even the content industry’s own figures have trouble supporting this contention.

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