Copyright Piracy: We All Lose

I think it’s safe to assume that most of us aren’t particularly fond of paying taxes, a thought that hits home this time of year. In a study released today, the Phoenix Center found that the effect of digital theft of intellectual property (IP) is similar to that of a “distortionary tax” on innovation.

The study, “Social Well-Being and IP Theft: A Dynamic Economic Analysis,” provides a detailed analysis which takes direct aim at debunking the misnomer that IP theft is costless. In fact, the study finds that digital piracy imposes significant costs, not only to creators, but also to the general social welfare.

It is obvious and universally agreed upon that innovation and creativity provide great benefits to society. But some have made the outrageous assertion that theft of these products is acceptable because it benefits the thieves. Today’s study proves that far from merely transferring the benefit of creative products from the creator to the user, digital piracy deprives the creators of the fruits of their efforts, and chills future creation and innovation. By reducing the incentive to create, the illegal distribution of copyrighted materials is detrimental to creators, workers, and consumers.

The Phoenix Center goes on to say that “The desire to curtail IP theft should not be viewed as a war between consumers and producers, but as a policy that reduces the general well-being of society. IP theft reduces investment, wages, and household utility.”

If there’s one thing we can agree on, it’s that we must find workable and meaningful solutions to curb mass IP theft. We should—and must—foster America’s creative fiber by reducing the costs (or “distortionary taxes”) for innovating new products.

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