Study shows huge cost of movie piracy

LOS ANGELES - Movie piracy costs the US economy US$20.5 billion ($31.6 billion) per year in lost business, jobs, wages and taxes, according to a study released on the weekend by the Institute for Policy Innovation, 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 organisation for major Hollywood studios, showing that major US motion picture studios lost US$6.1 billion in revenue to piracy in 2005.

Working from there, IPI researchers projected that total lost output among all US industries -- including theatre operators, video retailers, ad agencies, advertising-supported media outlets accountants and lawyers, set makers, janitors and suppliers -- hit US$20.5 billion.

Specifically, IPI found that lost earnings for US workers amounted to US$5.5 billion annually. Local, state and federal governments lose US$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 per cent 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.

"Our growth is impacted pretty dramatically when you have (piracy)," NBC Universal Chief Executive Bob Wright told reporters at a US Chamber of Commerce summit on piracy and counterfeiting in Washington.

Wright is among the entertainment executives pushing US anti-piracy efforts.

"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.

- REUTERS