Julian Sanchez on the Facts About Piracy

An emerging consensus among responsible stakeholders is that while SOPA and PIPA go a step too far, media piracy is indeed a serious problem. But is this consensus based on sound evidence? Julian Sanchez of Cato suggests otherwise:

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 US 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.

Since the core function of copyright is to incentivize the production of creative works, it’s also worth looking for signs of declining output associated with filesharing. Empirically, it’s surprisingly hard to find an effect. Rather, a recent survey study by Felix Oberholzer-Gee of the Harvard Business School concluded that “data on the supply of new works are consistent with the argument that file sharing did not discourage authors and publishers” from producing more works, at least in the US market.

Julian goes on to raise the larger question of whether a more accurate assessment of piracy levels would justify costly federal intervention:

As a rough analogy, since antipiracy crusaders are fond of equating filesharing with shoplifting: suppose the CEO of Wal-Mart came to Congress demanding a $50 million program to deploy FBI agents to frisk suspicious-looking teens in towns near Wal-Marts. A lawmaker might, without for one instant doubting that shoplifiting is a bad thing, question whether this is really the optimal use of federal law enforcement resources. The CEO indignantly points out that shoplifting kills one million adorable towheaded orphans each year. The proof is right here in this study by the Wal-Mart Institute for Anti-Shoplifting Studies. The study sources this dramatic claim to a newspaper article, which quotes the CEO of Wal-Mart asserting (on the basis of private data you can’t see) that shoplifting kills hundreds of orphans annually. And as a footnote explains, it seemed prudent to round up to a million. I wish this were just a joke, but as readers of my previous post will recognize, that’s literally about the level of evidence we’re dealing with here. 

One gets the impression that a lucrative, politically influential industry is trying to get taxpayers to rescue it from its own incompetence and failure to offer compelling content in accessible formats. The case for bailing out Hollywood seems no more compelling to me than the case for bailing out the automotive or financial services industries. 

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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