(Ed. Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)
Congress is looking back on a 22-year-old law that safeguards intellectual property and continues to shape the Internet: the Digital Millennium Copyright Act (DMCA). The Senate Judiciary Committee’s Subcommittee on Intellectual Property is holding a hearing on February 11 that will answer questions of why it was enacted and what the state of the law is now.
A principal goal of the DMCA was to reduce online piracy. Unfortunately, online piracy poses a worse problem for copyright holders today than it did in 1998, especially with the rise of online streaming. Current statistics on online piracy reveal that it has spread to every form of digital content imaginable, including movies, television, music, books, photos, video games, and software. It hurts not just creators, publishers, and distributors but the entire U.S. economy.
The U.S. Chamber of Commerce’s Global Innovation Policy Center estimated in 2019 that online piracy accounts for 26.6 billion views of U.S.-produced movies and 126.7 billion views of U.S.-produced TV episodes every year. The economic impact of digital video piracy extends far beyond the movie and television industries; in total, it is responsible for at least $29.2 billion in lost domestic revenues, 230,000 in lost American jobs, and $47.5 billion in reduced GDP.
Until recently, a large chunk of this piracy took the form of peer-to-peer file sharing, but recent shifts in the way people consume content mean that now over 80 percent of digital video piracy takes the form of illegal streaming. Streaming is increasingly popular among people who pay for the content they consume: As of 2017, 28 percent of U.S. adults and 61 percent of adults aged 18 to 29 said online streaming services were the primary way they watched television. People who pirate content have made a similar switch, enabled by websites, apps, and devices that deliver pirated content live or on-demand.
The music industry has also taken a hit from online piracy, seeing revenues drop from a high of $14.6 billion in 1999 to $9.8 billion in 2018, even as they have fully embraced legal music streaming business models such as iTunes and Spotify. Once again, streaming is the most popular method of obtaining illegal content, replacing file sharing. A 2019 survey of 34,000 Internet users from around the world found that 23 percent of respondents use illegal stream ripping sites, which create downloadable files of music “ripped” from online streaming sites. Illegal stream ripping is especially popular among young people: 34 percent of 16- to 24-year-olds admitted to doing it. As of 2018, 17 million of those stream-rippers live in the U.S., up from 15 million in 2017.
Looking beyond movies, TV, and music, the Authors Guild revealed in 2019 that ebook piracy is responsible for $300 million in lost publisher income every year. Among people who play video games on their personal computers, 90 percent have pirated a game, 20 percent have pirated more than 50 games, and 35 percent currently pirate games. And in 2017, according to the 2018 BSA Global Software Survey, unlicensed software accounted for 16 percent of software installed on personal computers in the United States. The commercial value of this software was an estimated $8.6 billion, money the software’s developers—and the economy—will never see, leading to less software innovation.
This widespread digital piracy robs creators, publishers, and distributors of their earnings and disincentivizes creativity and innovation. As Congress looks back on what the DMCA has accomplished thus far, it’s important to admit that the government still has more work ahead to protect copyright holders and ensure that consumers can continue to enjoy the movies, television, music, books, games, and software the Internet gives us access to. There are two key challenges Congress should address.
First, the DMCA does not address the problem of foreign piracy websites. For example, a book by an ITIF author is widely available on foreign piracy websites and there is little recourse for this individual (although after a request to Google, some illegal copies of the book are no longer searchable). Certainly the U.S. government can and should try to persuade foreign governments to take action against infringing websites, but many of them are located in nations where governments show little interest in protecting intellectual property. This is why 42 countries have established website blocking regimes to block access to foreign websites are clearly focused on providing pirated materials.
Second, while the DMCA is focused on “notice and takedown”—where content owners can request Internet intermediaries to take down infringing content—all too often other copies of the same content are quickly reposted after being removed, leading to a never-ending game of Whac-A-Mole.
Congress may not be ever able to entirely eradicate digital piracy, but it should strive for better policies and stronger enforcement to bring piracy levels down to a minimum.