Media Piracy

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Executive Summary
Disney and the Pirates of the Industry
As a global company with high interest in both the music and film industries, it is essential that Disney deal with media piracy effectively. With Internet access increasing globally, piracy has the potential to create huge financial losses for Disney. In order to adequately deal with this problem, it is necessary to comprehend the history and evolution of piracy, its impacts on music and film industries, and its effect on the development of innovative business strategies. This brief will address various issues relating to media piracy in order to make insightful recommendations. II.Factors in the Evolution of Media Piracy

A major issue in business today is the protection of intellectual property. While most nations recognize the right to intellectual property, laws differ from one juridical system to another. One common form of protection for intellectual property is a patent. Another important protection of IP is a copyright. Infringement of copyrights has become a salient issue for many businesses that hold intellectual property. In particular, modern multi-media corporations face the universal challenge of piracy of copyrights on electronic and audio-visual media (See Appendix A.1 – A.6 for more information regarding definitions of these terms). Soft-printing music and films is a form of piracy that has become widespread due to the Internet boom of recent history (See Appendix A.7). It is considered a copyright piracy and a theft of intellectual property. It is important to distinguish between the different forms of piracy. Offline piracy, in which films and music are illegally distributed through copying or transferring of copyrighted information on physical media, contrasts with online piracy, which is the unauthorized transfer of media files from the internet (Tech Target IT 2005). While both of these are serious challenges to international businesses, the scope of this brief will focus on online piracy in music and film because it is currently a more relevant problem for most corporations, including Disney. The internet has been the critical factor in the rise of online piracy. High-speed internet offers the ability to share media instantaneously. With the emergence of file-sharing networks, such as Napster in 1999, an outlet was created for file-sharing among millions of users. There has been a snowball effect in these networks, in which many new servers have emerged since the creation of Napster (Harmon 2008). These servers enable users to illegally download music and films quickly and at no cost. This eliminates the need for many to purchase this media legally in stores (See Appendix A.8). Furthermore, as more and more people get access to the Internet and the existing Internet connections are getting faster, this problem is rising (See Appendix 8.9). In developing countries in particular, in which many consumers cannot afford the legal prices of this media, illegal online piracy is a solution. This is usually viewed as a socially acceptable deed, as the theft of intellectual property is generally not considered to be a “crime” (Smiers 2006).

The rise of online piracy at the beginning of the century resulted in reduced sales within the music industry. The US market has experienced a decline in CD sales from 2001 through 2005, with the exception of 2004, peaking at 8.9% in 2003 (RIAA 2005). Internationally, CD sales also dropped since 2001, although the declines are not as significant, with the latest value of 3% reported for year 2005 (IFPI 2006) (See Appendix A.10 for complete statistics regarding the music piracy market). Previously, online piracy was more of an issue for the music industry; however, it is becoming more common in the film industry as well. Motion Picture Association of America estimates that the American motion picture industry lost $2.3 billion as a result of Internet piracy in 2005 (MPAA 2005). Recently,...
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