01/14/2016 03:29 pm ET Updated Jan 14, 2017

No, Piracy Is Not the Sincerest Form of Flattery

Post co-authored by Alan McQuinn, research assistant at the Information Technology and Innovation Foundation

During the holidays, the piracy-tracking firm Excipio released its annual list of the most-pirated films of 2015, showing that the number of illegal downloads from peer-to-peer networks had dramatically increased in the preceding year. Interstellar topped the list with nearly 47 million downloads, a 55 percent increase from the previous year's favorite, The Wolf of Wall Street. Yet while most people would recognize an uptick in criminal activity as a problem, perennial piracy apologists defiantly insist, against logic and evidence, that this is a sign of good fortune for Hollywood.

A recent case in point comes from Nick Gillespie, the editor-in-chief of Reason, a leading libertarian magazine, who argues that "stealing is great for Hollywood," because it helps studios get in front of more viewers. He goes on to defend those facilitating large-scale digital theft, calling them not criminals but "unpaid advance men" for Hollywood and claiming that piracy "rarely if ever" cuts into revenues for copyright holders. This is ideologically inspired nonsense.

First, these films were pirated because they were popular, not the other way around. Clearly, Gillespie is having trouble understanding the difference between causation and correlation. Would anyone take him seriously if he claimed that Honda sells as many Accords and Civics as it does because they are the most stolen vehicles in the United States? Carjacking is great for automakers, by that logic, because it gets cars in front of more potential drivers.

Second, Gillespie's claim that filmmakers rarely lose money to piracy is patently false. The academic evidence makes this abundantly clear. In fact, the most recent meta-analysis of the impact of digital piracy and sales confirms that the majority of studies have found that piracy has a negative impact. Specifically, 54 percent of papers found a clear, statistically significant negative impact on revenues for the film industry, 36 percent of papers were inconclusive, and only 11 percent found a positive relationship.

Third, Gillespie's argument that piracy helps keep movies circulating in the public "long after the industry PR machine has shut down" ignores the bevy of legal alternatives that consumers have to easily find legal versions of just about any content they want. For example, aggregates TV shows and feature films from a range of outlets, such as Netflix, Amazon, Hulu, iTunes, and even smaller indie sites, such as Snag Films. Piracy offers little extra utility for publicity if lawful consumers can easily see the same film on demand, compensate the copyright holder, and then recommend it to their friends.

Finally, one would expect the editor of a libertarian publication like Reason to not only respect the property rights of content holders, but also to respect the free market. If allowing people to view movies without paying really maximizes sales, then surely the highly competitive movie industry would have figured this out and gone out of its way to enable unauthorized access to the content they own. But Gillespie's view reflects a growing belief among some libertarians that copyrights are little more than "government-granted monopolies" that privilege property over freedom. According to this line of thinking, any restrictions, such as making it illegal to copy digital works, infringes on liberty. But as conservative legal scholar Randolph May and his co-author Seth Cooper show in their new book The Constitutional Foundations of Intellectual Property, the Founders firmly disagreed. In fact, their rationale for enshrining intellectual property protections in Article I, Section 8 of the U.S. Constitution was not just "to promote the progress of science and useful arts," but also to uphold the natural rights of authors and inventors.

Gillespie rightly predicts online piracy will continue, in large part because it is still too easy and usually goes unpunished. But that is no reason to celebrate illegal and unethical behavior. People who download films without paying for them--whether they are the big Hollywood films or small "indie" productions--are breaking the law and cutting into film industry revenue to the detriment of its many workers. A continued increase in piracy could dissuade future filmmakers from creating the next "Interstellar." If consumers want the movie industry to continue to produce brilliant and creative content, someone has to pay for it.

If Gillespie really believes his own argument, then maybe Reason should start encouraging people to illegally download digital copies of Reason Magazine instead of paying the $15 per year subscription fee. The magazine's publishers surely would then get more than their current 50,000 paid subscribers.