Have you ever wondered how much money can be made from digital piracy? Given the fact that hundreds of thousands of illegal downloads are happening by the second, someone somewhere must be making a profit.

Aside from the costs incurred from the use of electricity, internet connections, mass production of counterfeit products and circulation expenses, digital bootleggers barely spend a cent on their illegally-acquired merchandise. What’s more is the fact that the business is tax free. Which means that someone elsewhere is making losses of epic proportions.

A few weeks ago, we covered how these criminals do their pillaging. This week, we discuss how much money they make as well as the losses incurred by the industries they target.

Music

As one of the most common forms of entertainment, music has been hard-hit by rampant piracy. In as much as artists try to advocate for honesty among consumers, not everyone is willing to pay full price for an album.

Anyone with a reliable internet connection can get a full discography by their favourite artist without having to spend a single shilling. Something as simple as clicking download on a torrent can cause the government to lose billions of shillings in revenue.

What most people fail to notice is that piracy doesn’t just harm the people who own the intellectual property; it also has adverse effects on the global economy.

The Institute for Policy Innovation (IPI) reports that over 70,000 jobs in the US alone were lost to music piracy in 2005.

Music piracy causes global losses of USD 12.5 billion every year. That’s KES 1.05 trillion lost to pirates in a digital sea. According to the IPI, tax revenues account for USD 422 million in losses from piracy.

The money spent developing and promoting new artists is barely recovered. An article by the Recording Industry Association of America (RIAA) states that the ability to support new artists has greatly diminished due to rampant piracy. Also affected by the ever-growing trend are sound engineers, technicians, record store clerks, warehouse workers and song writers.

[caption id="attachment_20111" align="aligncenter" width="300"] One of the many symbols for music piracy[/caption]

Movies

Avatar, the world’s highest grossing film, has made USD 2.7 billion in the global box office. Titanic comes second with USD 2.1 billion in profits. The Avengers comes third, having grossed USD 1.5 billion worldwide since its opening weekend. This is nothing compared to what pirates make from bootlegging.

Global piracy in the motion picture industry has led to USD 20.5 billion in losses and 141,000 lost jobs that would otherwise have been created. This is equivalent to USD 857 million (KES 72 billion) in tax revenue lost.

[caption id="attachment_20112" align="aligncenter" width="300"] Pirated Movies[/caption]

Software

Whenever you download a crack for an antivirus or a Key Generator for Photoshop, you are breaking the law. Software piracy in Kenya is estimated at 80%, meaning that most people who use software acquire it illegally.

[caption id="attachment_20113" align="aligncenter" width="300"] Pirated Software[/caption]

But what drives people to do something so cold-hearted and sinister? What reason could they possibly have to steal from people who have worked so hard to produce this content?

Ignorance

Some people break the law without even realizing it. Even something as naïve as making a copy of a music album is counted as piracy. A survey by the RIAA reveals that only 35% of pirates know that what they are doing is illegal. The rest are fully aware of their actions.

Greed and Poverty

Why pay for something when you can get it for free? Better yet, why not sell it at a throw away price and still make a profit doing it? Digital piracy is mostly driven by greed and poverty. Some people want to make as much money as they can for the least possible amount of work. Others just can’t afford to go to theatres or pay full price for a DVD. Retailers with counterfeit movies make it so much easier for consumers to fall prey to such criminal activity.

Consequences

In Kenya, Intellectual Property Laws state that first time offenders get a fine of KES 100,000 or a 2 year jail term for the sale or illegal reproduction of intellectual property. The judge decides the penalties for repeated offences.

Software piracy in the US incurs a fine of up to USD 250,000 (KES 21 million). There is a USD 10,000 fine for each individual pirated DVD brought into the US. Misdemeanours face penalties between USD 2500 and USD 10,000, depending on the circumstances surrounding the offendor. Jail-time depends on the Judge and the effectiveness of the prosecutor.

A campaign by the Kenya Copyright Board was launched late last year to help Microsoft crackdown on software piracy. The move has since seen offenders facing fines of up to KES 800,000.

The Business Software Alliance (BSA) argues that crackdowns such as these would create at least 500,000 jobs by 2013 and USD 32 billion in tax revenues for any given economy.

Vendors countrywide know that Kenyans will jump at the chance to save a shilling. They will exploit this weakness until someone decides enough is enough. But until then, it seems the Jolly Roger will dance in the breeze of a hundred thousand torrents.