Movie Piracy Costs US $20.5 Billion Per Year

Movie piracy costs the US economy $20.5 billion per year in lost business, jobs, wages and taxes, according to a study released on Friday by the Institute for Policy Innovation (IPI), a Texas think tank. IPI, which describes itself as a nonprofit, nonpartisan public-policy think tank advocating lower taxes, fewer regulations and a smaller, less intrusive government, said it paid for, designed and conducted the study. It started with a finding from a study funded by the Motion Picture Association of America, the primary lobbying organization for major Hollywood studios, showing that major US motion picture studios lost $6.1 billion in revenue to piracy in 2005.

Working from there, IPI researchers projected that total lost output among all U.S. industries — including theater operators, video retailers, ad agencies, advertising-supported media outlets accountants and lawyers, set makers, janitors and suppliers — hit $20.5 billion. Specifically, IPI found that lost earnings for U.S. workers amounted to $5.5 billion annually. Local, state and federal governments lose $837 million in annual tax revenues and 141,030 jobs were not created. Separately, management consulting firm Bain&Company Inc. estimates that US movie studios lose 10 percent of their potential revenue to piracy.

The film industry for years has waged a war against piracy as illegal copies of new films have been made available through street DVD sales or Internet download within days, or in some cases, before a movie’s theatrical release. “Motion picture piracy hurts not only the movie business, but triggers a harmful domino effect that results in lost jobs and wages for American workers inside and outside the industry,” Dan Glickman, chairman and chief executive of the Motion Picture Association of America, said in a statement. “This really impacts everyday folks,” Bartlett Cleland, director at the Institute for Policy Innovation, told Reuters in a telephone interview. “The jobs lost are all over the economy. It’s not necessarily the programmer who develops special-effects software,” Cleland said.

Motion Picture Association of America members include Sony Corp.’s Sony Pictures Entertainment, News Corp.’s Twentieth Century Fox and Time Warner Inc.’s Warner Bros. Studios.