Piracy not a big problem??

A January 30 headline at TheHill.com caught my attention: "Report minimizes online piracy impact." Really?

The article was about a new study from the Computer and Communications Industry Association (CCIA), authored by Mike Masnick who writes about technology policy for Techdirt, which focuses on the growth of entertainment choices and opportunities that have emerged in recent times due in large part to the Internet and broadband.

The study highlights, for example, that consumer entertainment spending as a share of household income grew by 15 percent from 2000 to 2008; the entertainment sector employment grew by 20 percent during that last decade, including 43 percent growth among those identified as independent artists; box office revenues, according to the MPAA, rose by 25 percent from 2006 to 2010; music concert sales in the U.S. tripled from 1999 to 2009; and the value of the entertainment industry, according to data from PricewaterhouseCoopers and iDATE, grew from $449 billion in 1998 to $745 billion in 2010.

That's great news, and given the obvious expanded opportunities due to Internet and broadband advancements, it's not a surprise.

The study also offers the following summary on the challenges and opportunities at hand: "For the traditional middlemen, the internet represents both a challenge and an opportunity. There is no doubt that the internet has eaten away at some traditional means by which these businesses made money. But, as the data shows, there is more money going in to the overall market, more content being created, and many new ways to make money. That shows that there is a business model challenge -- and a marketing challenge -- but much more opportunity in the long run. The key challenge for business is in figuring out how to capture more of the greater revenue being generated by the wider entertainment industry. Legacy players certainly face a lot more competition (and fewer reasons that artists have to do deals with them) -- which can explain some of the public complaints about the ‘death' of various industries -- but overall, it's clear that by embracing new opportunities, there are plenty of ways to succeed."

That assessment is basically on the mark. But none of this should minimize the impact of piracy, and the need to countdr such theft.

Unfortunately, though, the minimization of piracy appears to be the main purpose of this CCIA report.

CCIA President & CEO Ed Black declared: "The numbers paint a quite a contrast from the vision of doom and gloom the entertainment industry has pointed to lately. Having a more clear picture of the economic successes and challenges of the content industry will help lawmakers around the world as they consider policies like increased copyright enforcement." As TheHill.com reported, "Both Masnick and CCIA were strong critics of the Stop Online Piracy Act and Protect IP Act, which were championed by the entertainment industry as vital cures for the epidemic of online piracy."

The line of thinking in the CCIA report seems to be that since new opportunities exist, then the very real losses experienced due to IP theft do not matter, and stronger IP rights and protections do not matter. That's absurd.

Internet and broadband technologies have vastly expanded opportunities for creators, consumdrs and businesses. That's not really in dispute. At the same time, this does not mean that real and significant losses due to IP theft are not occurring. The full potential of the Internet obviously is being restrained due to widespread stealing of intellectual property, as has been made clear by countless studies and analysis on, for example, losses to the entertainment and software industries.

Stronger IP protections are not bad for consumers, or for small businesses and independent artists. To the contrary, beefing up IP rights will only further expand choices for consumers, and increase opportunities for independent creators and the business community.

Acknowledging new opportunities should not serve as an excuse for ignoring IP theft.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.