Music Piracy Costs U.S. Economy $12.5 Billion, Report Reveals

Global music piracy robs the United States of $12.5 billion in economic output and more than 71,000 jobs annually, according to a new study out this week.

The Institute for Policy Innovation (IPI) released a report Tuesday stating that U.S. workers lose $2.7 billion in earnings to music piracy. The study is one in a series to examine the economic impact of copyright and patent infringement.

Sound recordings -- and other content considered to be intellectual property -- are the most important growth drivers in the U.S. economy, accounting for almost 40% of economic growth and nearly 60% of growth in U.S. exports, according to IPI.

The recording industry loses about $5.33 billion, while retailers lose about $1.04 billion, for a total direct loss of $6.37 billion, IPI reports.

"These direct losses then cascade through the rest of the U.S. economy and the losses of economic output, jobs, and employee earnings multiply," Stephen E. Siwek, author and principal with Economists Inc., wrote in the report.

The report states that the United States loses more than 46,000 production-level jobs and nearly 25,000 retail jobs due to music piracy.

The U.S. government and its citizens lose $422 million in tax revenue, according to the report. That figure includes $291 million in personal income tax and $131 in corporate income and production taxes.

"Piracy harms not only the owners of intellectual property but also U.S. consumers and taxpayers," Siwek said. "Moreover, the impact of music piracy appears to be intensifying."

IPI, an economic public policy organization, said it will soon publish an analysis of the combined copyright industries, including movies, music, software, and video games. IPI said it urges national policymakers to recognize the magnitude of the problem and to make solving it a priority.

IPI's figures are based on the RIMS II mathematical model maintained by the U.S. Bureau of Economic Analysis.