If Politicians Pushing SOPA/PIPA Want To Create Jobs, They Should Support The Internet -- And Stop Treating Copyright Companies As Special

from the evidence-based-policy-making dept

A key element of the political rhetoric around SOPA/PIPA was the idea that it was about jobs, and that jobs are so critical in the current economic climate that safeguarding them overrides any other concern the Net world might have about the means being proposed to do that. But then the key question becomes: who are really more important in terms of those jobs - the copyright industries, or companies exploiting the potential of the Internet that would be harmed if the Net were hobbled by new legislation?

A timely new McKinsey report entitled "Internet matters: The Net's sweeping impact on growth, jobs, and prosperity" provides us with some independent evidence on the topic. Here are the relevant findings:

The Internet is a critical element of growth. Both our macroeconomic approach and our statistical approach show that, in the mature countries we studied, the Internet accounted for 10 percent of GDP growth over the past 15 years. And its influence is expanding. Over the past five years, the Internet’s contribution to GDP growth in these countries doubled to 21 percent.
The latest information (pdf) from the International Intellectual Property Alliance (IIPA) claims the GDP contribution from the "core copyright industries" in the US in the years 2007-2010 went from 6.43% to 6.36% - that is, its contribution to the overall GDP was largely unchanged over this period. So the contribution of the "core copyright industries" to GDP growth over this period was also around 6%. The "core copyright industries" are defined as follows:
The core industries are those industries whose primary purpose is to create, produce, distribute or exhibit copyright materials. These industries include newspapers and periodicals, motion pictures, recorded music, radio and television broadcasting, and computer software.
That is, they include software companies, some of which are doubtless active on the Internet. So the contribution of the non-Internet core copyright industries to the GDP growth from 2007-2010 was less than the 6% figure above. That compares with an overall contribution of the Internet to GDP growth in the mature countries as a whole of 21% (but over five years, not four).

So what about the jobs? Here's McKinsey again:

The Internet is a powerful catalyst for job creation. Some jobs have been destroyed by the emergence of the Internet. However, a detailed analysis of the French economy showed that while the Internet has destroyed 500,000 jobs over the past 15 years, it has created 1.2 million others, a net addition of 700,000 jobs or 2.4 jobs created for every job destroyed. This conclusion is supported by McKinsey’s global SME survey, which found 2.6 jobs were created for every one destroyed.
Again, the IIPA report offers some figures:
the core copyright industries employed 5,496,100 workers in 2007. These workers represented 3.99% of the total U.S. workforce in 2007. By 2010, the number of core copyright employees in the United States had declined by 398,500 workers to 5,097,600.
In an earlier report (pdf), the number of people employed by the core copyright industries in 2002 is given as 5.48 million – roughly the same as in 2007. That is, whether or not the numbers are really representative, there was a net decline in the workforce of the "core copyright industries", which include software and probably some Internet companies, from 2002 to 2010.

By contrast, in France, whose population is roughly a fifth of that of the US, the Internet created some 700,000 jobs net. That was from 1995, but in the early years it is likely that relatively few jobs were created by the then-new Internet, so most of those 700,000 would have been created later on - say 400,000 for the last eight years. In the US, we might expect at least a pro rata number – 2.4 million jobs. That's probably an underestimate, since the US is in the Net vanguard, but even if it's an overestimate, the figure is likely to be much better than the net loss of the core copyright industries.

If the backers of SOPA and PIPA were really as concerned about jobs as they profess to be, they would be doing everything in their power to defend the Internet so as to preserve this incredible engine of growth, not attack it. And they would be pushing the copyright industries to embrace the Internet as rapidly and completely as possible, since the McKinsey report also points out:

Although the Internet has resulted in significant value shifts between sectors in the global economy, our research demonstrates that all industries have benefited from the Web. Indeed, in McKinsey’s global SME survey, we found that 75 percent of the economic impact of the Internet arises from traditional companies that don’t define themselves as pure Internet players. The businesses that have seen the greatest value creation have benefits from innovation leading to higher productivity triggered by the Internet.
Sounds like a perfect solution: instead of fighting the digital revolution tooth and nail, the copyright industries could embrace it like everyone else, stop demanding to be treated like a special case, and start innovating.

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  1. identicon
    Anonymous Coward, 3 Feb 2012 @ 9:26am

    Glyn, once again you are trying to create an excuse for why piracy should be tolerated and permitted, and once again, you fail miserably.

    The internet creates jobs with or without a SOPA law. Do you really think that The Pirate Bay is a great source of employment in the US? Do you think that keeping Megaupload online was doing some great favor for the unemployment rates in Nebraska? The answer is no.

    Most of the business models of piracy and content grifting are low manpower, high automation situations, often relying on the stupidity of end users to do the work for them. When you look at all of the video going on Youtube, example, what do you think the ratio of hours of video to jobs are at that company?

    Jobs for the most part are a local concept. A large number of jobs are spinoffs of other jobs. Office for something opens, hires 300 people. Those 300 people each buy a car every 3 years (100 cars a year), which are sold and maintained by a local dealership, which hires sales staff, mechanics, etc. The local car wash, gas station, the auto parts store, the guy who sells tires... they all get part of it in the end. The guy who works at the gas station rents an apartment, buy furniture from the local furniture store, gets his food at the local super market... and so on.

    30 people working in a data center just doesn't change the economy of my town. It barely ticks over the economy of anywhere. Remember, most of the computer parts used in the servers aren't made in the US, it's all just part of that deal that ships the work overseas.

    Why do you think that the standards of living in China, Thailand, and India have been increasing while the US enjoys high unemployment, foreclosures, and plant closings?

    In the end, you cannot justify piracy or content grifting because it creates jobs, because whatever it creates just isn't enough to make up for all that is lost.

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