Online piracy

Scope

A 2019 study sponsored by the U.S. Chamber of Commerce Global Innovation Policy Center (GIPC), in partnership with NERA Economic Consulting "estimates that global online piracy costs the U.S. economy at least $29.2 billion in lost revenue each year." An August 2021 report by the Digital Citizens Alliance states that "online criminals who offer stolen movies, TV shows, games, and live events through websites and apps are reaping $1.34 billion in annual advertising revenues." The DCA claims that they consist of "risky advertising that exposes consumers to fraud and malware."

The groups and individuals who operate piracy websites potentially earn millions of dollars from their efforts. This revenue can come from a number of sources, such as advertising, subscriptions, and the sale of content. Piracy behavior demonstrated that economic theory explains a notable part of the individual variation in a survey study. Individuals with a low net valuation of an original when a copy is available are more prone to engage in piracy than individuals with a higher valuation. Individuals with a low cost of obtaining and handling copies are also more engaged in piracy. The country-wise variation can also be explained by economic variables; GNI/capita and judicial efficiency explain a substantial part of this variation. While these sites are occasionally shut down, they are often quickly replaced, and may move through successive national legal jurisdictions to avoid law enforcement. These efforts at detection and enforcement are further complicated by the often prohibitive amount of time, resources and number of personnel required.

Some jurisdictions, such as Thailand and Malaysia, have no legislation in place to address online piracy, and others, such as the Philippines and Vietnam, have oversight regimes in place that have proven largely ineffective.

Implications

Online piracy has led to improvements into file sharing technology that has bettered information distribution as a whole. Additionally, pirating communities tend to model market trends well, as members of those communities tend to be early adopters. Piracy can also lead to businesses developing new models that better account for the current market. It has been argued that online piracy may help in preventing businesses from investing in unnecessary marketing campaigns. In addition to helping screen businesses, research proposes that some organizations may be better off servicing only their most valued and legitimate customers, or those who buy legitimate copies of their products. Because pirated copies of software are expected to attract customers who are sensitive to price, it may not be to businesses' best interest to engage in extraneous price wars with their competitors or invest heavily in anti-piracy campaigns to win target customers.

Despite the discourse on the digital threat of piracy, it has been shown that innovation and the creation of new works is flourishing more than ever on the Internet. Piracy has also benefited users in countries where content is either unavailable or delayed. In the case of ABC's Lost, the fear of its last episode being pirated in European and Middle Eastern countries pushed the network to accelerate the episode's distribution to those countries, resulting in the episode being available in those countries 24–48 hours after the original American broadcast.

Bill Gates said, in 2007, that piracy in China of Microsoft products helped his company compete against Linux.

Ethics

Despite the massive realm of copying and sharing digital content, consumers who pirate are more willing to pay for legal content when the content is consumer-friendly. A person's ethical and moral predispositions and the judgments that they use to make decisions may indicate consistency across various ethical dilemmas and also indicate their likelihood to pirate software.

A 2018 survey indicated that the prevalence of piracy is due to the industry's inability to cater to the consumer. Many cite unsatisfactory industry practices such as obtrusive DRM in paid software, overpriced media, and split markets as their reason for pirating. Digital piracy has posed a significant threat to the development of the software industry and the growth of the digital media industry, it has, for the last decade, held considerable interest for researchers and practitioners. In the context of Indonesia, moral equity has affected digital piracy behavior negatively. Therefore, efforts to reduce piracy have been focused on highlighting the importance of fairness and justice.

Studying the causes and effects of digital piracy is one way of evaluating the ethics of how our society consumes and spreads media to one another. Ample research in the study of digital piracy can help better understand the psychology and ethics of digital ethics. One of the research approaches that has provided a theoretical framework for studying software piracy has been to place the illegal copying of software within the domain of ethical decision making assumes that a user must be able to recognize software piracy as a moral issue. A person who cannot recognize a moral issue will fail to use moral decision-making schemata. There is evidence that many individuals do not perceive software piracy to be an ethical problem. Research findings published in the International Journal of Electronic Commerce Studies suggested that personal morals decrease digital piracy mainly in the first phase, whereas neutralization is used by individuals to support their behavior throughout other phases.

As more content is fractured into different services, consumers gravitate more towards piracy due to the inconvenience and prohibitive cost of managing multiple service subscriptions to different entities that provide their own content service such as Netflix, Apple TV+, Amazon Prime Video, Hulu, Fandango at Home, Peacock, HBO Max and Disney+. A surge in this practice occurred in 2023, where nearly 229 billion visits to piracy-related websites were recorded, and Quartz partly attributed certain platforms' subscriber losses, namely Disney+ and Hulu, to increased piracy.