Conclusion

Internet piracy does have some negative effects to E-commerce, but probably not as bad as the Motion Picture Association of America and Recording Industry Association of America have led people to believe.  While many users have downloaded thousands of songs and movies illegally, it's extremely unlikely that any of these pirates would have actually spent thousands of dollars on these products if they weren't available in pirated form.  Websites such as Mega-Upload (before it was shut down) may have even improved E-commerce from the ads displayed on their websites, considering Mega-Upload and its sister sites had about 11% of all global traffic.  In fact, after Mega-Upload was shut down, global internet traffic immediately decreased by 3%  (http://www.bgr.com/2012/02/09/megaupload-shutdown-did-nothing-to-slow-piracy-study-finds/).  Less ads viewed means less products sold.

Without complete control over the content on the internet, it seems impossible for the government to make sure there is no copy-write infringement.  Pirates will always find a way around these barriers, which makes it seem inevitable that there will be government regulation of the internet as a whole, someday.  Until then, it is hard to say how piracy effects E-commerce.  The simply black and white answer is that it negatively effects E-commerce because it allows people to get free music, movies, and software without paying for it.  However when you look at the increase in internet traffic directly related to piracy, it is very possible that these advertisements lead to a high volume of sales in other sectors outside of the entertainment and software industries.

The recent failures of SOPA and PIPA lead me to believe that the internet as we know it will stay the same for some time.  However, this will probably not last forever.  Hopefully the government can come up with a better anti-piracy bill that will actually stop criminals, without effecting other honest websites.

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Internet Safe, For Now

With SOPA and PIPA put on the back-burner, pirates and internet users can breath easy.. For now.  There is an international treaty in the works that would do essentially the same thing as SOPA and PIPA, but on a global scale.  ACTA, however, is not the exact same thing as SOPA and PIPA.  ACTA will take it past the internet.  ACTA could make generic drugs illegal, as well as stop all copy-write infringements.  Many experts feared ACTA more than SOPA and PIPA, even before they were abandoned, because it would be a measure that would not be voted on, and could be put in action with ease.  Another thing to be aware of, is ACTA is being negotiated in private, and seems to lack transparency.  The European Union is currently in talks of approving or rejecting ACTA, which could have many of the same effects as SOPA and PIPA in regards to E commerce and internet companies as a whole.  If a user was to upload a video onto Youtube, with a copy-write infringement somewhere in the video, Youtube could essentially be shut down.  This could paralyze, and end the internet as we know it.

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Is Piracy Really That Bad?

Content creators love throwing out all these inflated numbers about how much money they are losing, but is it really that bad?  Of course, when someone goes out and downloads some music, they don't actually end up paying for it, thus it is stealing.  But, if the consumer can't get this music for free, will they actually end up buying it? Most likely not, especially if it is from an artist they don't really know that well.  Free music enables consumers to listen to a wider variety of music, and gives them a better chance of finding music they wouldn't have found otherwise.  This leads to them becoming fans, and ultimately purchasing tickets to a concert or telling their other friends about the band.  All of which leads to greater monetary success of the content creator.

The main point of copyright laws is to encourage content creation.  Julian Sanchez in the article Internet Regulation the Economics of Piracy (http://www.cato-at-liberty.org/internet-regulation-the-economics-of-piracy/) points out that the average number of movies being released has actually been increasing.  This shows that internet piracy is not stunting the growth of the entertainment industry, and movies are still making a killing in the box offices with new movies often breaking records when first released.  While piracy is likely costing content creators some money, it also helps spread the word of a certain movie or musician.  Content creation has still been increasing, so that leads some to believe that piracy isn't having quite the negative effects that the entertainment industry says it has.


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