Profitability of Firms in Copyright-Intensive Industries
32 Pages Posted: 30 Sep 2013
Date Written: June 17, 2013
Firms in the copyright-intensive industries frequently complain that copyright infringement causes significant lost sales, lost revenues, lost profits, and lost jobs. However, as has been noted in numerous impartial studies, the actual impact of infringement on individual firms, on industry sectors, and on the U.S. economy as a whole, is extremely difficult to quantify.
In contrast, what can be quantified with relative ease is the performance of firms in the copyright-intensive industries in terms that matter to investors: revenue, profit, and most importantly, profit margin. Furthermore, the performance of firms in the copyright-intensive industries can readily be compared with the performance of firms in other industries.
In this study, we have examined the performance over the past ten years of five leading firms in three copyright-intensive industries: motion pictures, publishing, and software. We then examined the performance of five leading firms in three other industries: construction, transportation, and mining. Finally, we compared the profitability of the firms in these six industries.
We found that the firms in the copyright-intensive industries were significantly more profitable than the firms in the other industries in every period examined. Moreover, in this ten-year period, the copyright-intensive industries’ profit margins on average grew by 3.98%, while the other industries’ profit margins on average decreased by 0.75%.
The high level of profitability of the copyright-intensive industries suggests that the copyright system serves these industries effectively, and that they are not in need of special government assistance in the form of new legislation or law enforcement resources.
JEL Classification: K00, K29
Suggested Citation: Suggested Citation