Movie piracy is one of the main challenges experienced by authors, producers and the entire film industry. Piracy is the unauthorized or illegal duplication of copyrighted content which is then sold at lower prices as compared to those of the original content (Fredriksson et al. 34). With the increase in ease of access to technology and the internet, piracy has become rampant over the years. It takes the form of cable piracy, Digital Video Disc (DVD) or Compact Disc (CD) piracy or video piracy. Cable piracy occurs when people engage in unauthorized transmission of films via a cable network. This form of piracy is common with new releases where people access the movie content before obtaining permission from the rights holder. DVD or CD piracy occurs when the prints of the content are sent to overseas markets for screening, but instead, pirates illegally copy the content to DVDs or CDs whereas video piracy occurs when films are produced in the form of video cassette without seeking permission from the producer. Movie piracy has been debated with some of the consumers arguing in its favor whereas others strongly disagree citing economic costs. Although movie piracy may be seen as a way of sharing entertainment content, it hurts the economy through lost revenue, lost employment opportunities and degraded country's Gross Domestic Product (GDP).
Through movie piracy, the economy of a country is deeply hurt by a loss of revenue that would be generated by the government in the form of taxes. The Canadian government, for instance, lost a total of $294 million in tax losses (Economic Consequences of Movie Piracy). Similarly, the Australian government lost $193 million over a period of twelve months in tax revenue to movie piracy (Movie piracy costs economy $1.3 billion). The United States federal, state and local governments lose at least $422 million in tax revenues yearly as a result of piracy (Siwek 23). Out of the $422 million, $291 is lost in the form of personal income while $131 is lost in corporate income as well as production taxes (Siwek 23). Evidently, the governments lose a lot of money due to piracy. The lost money would have been used to enhance social areas of the economy such as education and health which would, in turn, improve the people's lives and standards. Therefore, piracy denies the government its sources of taxes and revenue making it unable to develop the economy through social and other investments key for economic growth.
Also, movie piracy hurts the economy of a country as it leads to lost employment opportunities and jobs for citizens. Canada lost 12,600 full-time jobs across the economy as a result of piracy (Economic Consequences of Movie Piracy). Australia lost 6,100 jobs, 2,300 being those directly foregone by the movie industry and retailers (Movie piracy costs economy $1.3 billion). Likewise, the United States regrets to lose 71,060 jobs across the economy annually as a result of the movie and other film content piracy (Siwek 26). It is clear that movie piracy deprives those involved in the production and retailing their jobs resulting in high unemployment among the citizens. Unemployment implies lost the productivity of the citizens and a higher dependency ratio in the economy (Maxton et al. 432). This retards the economy of a country.
Moreover, movie piracy destroys the economy of a country through degradation of the GDP. Movie piracy does not only lead to loses in the entertainment industry but the overall economy. Australian economy lost $551 million of GDP due to movie piracy (Movie piracy costs economy $1.3 billion). Movie piracy leads to several other costs such as reduction in perceived value product (value of the intellectual property), high movie tickets, legal costs, diverting potential customers and foregone production of DVDs and CDs. Such expenses negatively affect various sectors of the economy which in the end accumulate to lose in GDP output thus hurting the economy of a country.
On the other hand, it is argued that movie piracy does not hurt the economy because producers will still make money by uploading the content on YouTube where consumers are charged for viewing and downloading. Whereas this is true, it is important to note that YouTube income for producers is much less than what would be earned through the sale of movie content in DVDs and CDs. Also, the other industries involved in the production of DVD and CD tapes would collapse if the movie content is to be viewed via the internet. It is probable that many people across those industries would lose their jobs and income. Also, the government would lose tax revenues and ultimately the economy is hurt.
Overall, movie piracy hurts the economy of a country through lost revenues, jobs and overall loses in the GDP. Governments lose tax revenues they need to develop other sectors of the economy as a result of piracy. Several people including producers and retailers lose their jobs as a result of rampant piracy leading to a huge proportion of unproductive citizens. Accumulated costs of piracy (in the form of lost personal incomes, tax revenues, and other related expenses) lead to lose in the overall GDP. In the end, the economy of a country retards because piracy deprives it of revenues to citizens and the government.
Fredriksson, Martin, and James Arvanitakis. Piracy: Leakages from Modernity. Litwin Books, 2014.
Movie piracy costs economy $1.3 billion. Theaustralian.com.au, 23 February 2018, www.theaustralian.com.au/business/media/movie-piracy-costs-economy-13-billion/news story/0b461502a97bdd8ba858dd6ffa6ea085?sv=409ef62f3bf4697e6d8004464fbba9c
Siwek, Stephen E. "The true cost of sound recording piracy to the US economy." (2007).
Maxton, Graeme, and Jorgen Randers. Reinventing Prosperity: Managing economic growth to reduce unemployment, inequality and climate change. Greystone books, 2016.
Economic Consequences of Movie Piracy. IPSOS, 23 February 2018, www.ipsos.com/en-ca/knowledge/media-brand-communication/economic-consequences-movie-piracy-canada
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