AppDetex Brand Protection Blog

Digital Piracy: Costs and Consequences

Posted by Beckie Lombardi on Jul 10, 2018 10:04:22 AM

Digital piracy has been around since the inception of the Internet itself, and while countless countermeasures have been implemented by both government officials and brand holders, the problem has continued to grow to the tune of  $12 billion in losses to the United States' economy in 2017 alone.  Unfortunately, the cost of digital piracy is more than just financial. As a result of piracy and the illegal distribution of pirated content, the financial burden on legitimate companies has resulted in the estimated loss of more than 70,000 jobs annually.

Why is digital piracy on the rise?

With the increase in Internet availability and the ease of procuring domains and setting up new websites, digital copyright infringement increases every day. According to the International Federation of the Phonographic Industry (IFPI), 40% of the individuals who streamed music in 2017 were accessing unlicensed files, resulting in thousands of artists not receiving pay for their hard work and millions of dollars lost in revenue.

Too many people consider piracy a “soft crime” if a crime at all.  Startlingly enough, 70 percent of online users find nothing wrong with digital piracy. Many users do not consider file sharing a bad practice because the author still retains their original file; the only thing taken is a copy.  Unfortunately, this widely used argument does nothing to take into account the hard work the IP holder has put into creating the original.  People who participate in digital piracy often don’t understand or recognize that the livelihood of the IP holder depends on their work and downloading an illegal copy of any online material without compensating its copyright owner is depriving them of potential earnings.

Piracy by the numbers – statistics

  • $2.7 billion in workers earning are lost each year due to online piracy.
  • 25 percent of all global Internet bandwidth is used for online piracy.
  • 8 percent of data that is transferred using P2P networks is copyrighted.
  • 42 percent of software running around the globe is downloaded illegally.
  • 95 percent of the music that is downloaded from the Internet is pirated.
  • 2 percent of movies and 14.5 percent of TV shows on the Internet are pirated.

Consequences for pirates – legal ramifications

Because digital piracy is rampant and those who perpetrate it are rarely caught, many casual pirates don’t realize there are hard consequences for creating, distributing and using pirated content. To help combat this, U.S Copyright Laws have worked diligently to incorporate digital piracy laws in their legal books, including the No Electronic Theft Act (1997) and the Digital Millennium Copyright Act or DMCA (1998).

While many IP holders resort to utilizing the DMCA and issuing “take down” notices, a pirate, if properly prosecuted through the legal system, can face some serious consequences. Current U.S. Copyright Law states that copyright infringements can be punishable by up to 5 years in prison and $250,000 in fines. The offender may also be liable for civil damages such as lost profits or statutory damages, which can go up to $150,000 per work.

Digital piracy affects IP holders, well-established brands and companies and artists, but also consumers who are often forced to absorb losses in the form of increased product prices. Piracy can result in a stagnation of innovation as creators face profit losses and the fear that their ideas will continue to  be stolen should they be put out into public. 

Keeping your brand safe

While there is no 100% effective way to prevent digital piracy at this time, there are steps a brand holder can take to help ensure that the risk of piracy is minimized.[1] 

Implement a robust brand protection strategy from the very beginning: This includes making sure your IP is  properly protected from a legal standpoint including copyrights, trademarks and licenses.  Other brand protection strategies include monitoring the web for unauthorized sites offering your products.  Be sure to have a solid escalation program in place and be prepared to take legal action should a take down notice be ignored or if you discover repeat violations. Building relationships with Internet service providers, registrars and payment providers will make dealing with violators easier and result in faster resolution on take down notices. Consider partnering with a professional brand protection agency built specifically to handle these sorts of situations as they will already have the tools and connections in place.

Promote and protect legitimate sites: Making sure the site(s) you  are affiliated with are the first sites people find when searching for your product is an easy way to help encourage customers to download only legal copies of your products. This also means making sure you’re monitoring the web for infringing sites and taking appropriate actions as soon as they’re discovered. 

Educate your customers:  In many instances, pirated software and files not only contain the copied information, but are often loaded with viruses and malware, making their download not only illegal, but risky as well. Educate your customers about these risks and remind them that software and files legally downloaded from your affiliated sites are not only authorized, but also safe.  

Utilize technological advances:  In many cases, digital software can have certain technological safeties built in that can help protect against piracy. These include digital footprints and breadcrumbs that allow brand holders to track where their software is being installed and used as well as alert them to duplicate copies.   

If you’d like more information about how to keep your brand safe and the best practices for developing a strong anti-piracy program for your IP, please don’t hesitate to reach out to us. If you’re concerned about how your content is being used, why not request a free digital risk assessment? Our team of brand protection specialists can tell you how and where your IP is showing up online.

Request Your Exclusive Digital Risk Assessment

  [1] This blog post provides generalized information and does not constitute legal advice or an attorney-client communication. Each situation is unique and requires consultation with suitable professionals.

Topics: anti-piracy, piracy, brand protection service