22/05/2013 11:50 BST | Updated 21/07/2013 06:12 BST

The True Cost of Piracy

With the reappearance, and second defeat, of the controversial Cyber Intelligence Sharing and Protection Act (CISPA) in the US Senate, the debate surrounding film piracy has once again ignited. As with all previous attempts to regulate an essentially unregulatable medium in the form of the internet, the multinational corporations sponsoring the bill have been their own worst enemies, trying to fight consumers rather than work with them to understand just why so many are turning to piracy rather than above board means of seeing the latest Hollywood blockbuster or hearing the newest chart-topping album.

And it is absolutely a question of the many rather than the few. Irrespective of the calculated, relentless propaganda that tells us it is only the lowest of the low that would stoop to making their first port of call for a new film The Pirate Bay rather than the multiplex, the facts simply don't back this up. Recent statistics suggest that 82% of people think it's acceptable to watch pirated TV shows, and the growing piracy rates back this up: the season premiere of Game of Thrones was watched illegally over one million times, compared to just over four million legitimate views, with foreign interest in the series being a large cause.

That bills like CISPA are still being proposed demonstrates the perplexing inability of big businesses to grasp the issue. Whilst illegal film downloads are growing steadily thanks to dedicated communities and the ease of doing it continue, music downloads are actually falling, largely due to the fact that the music industry was faced with this crisis the best part of a decade ago, and, having hammered on the wrong door for years, eventually found a successful remedy in the form of cheap, accessible, and quick legal download platforms such as iTunes. Systems like Netflix and LoveFilm are a small step in their right direction, but their extremely limited selections only go so far - a serious problem when torrent sites are able to provide almost every major film ever made.

Still, whilst the trail had already been blazed by the music industry, film studios are still looking to the government to fight their battles for them, under the guise of piracy damaging overall economies. An Institute for Policy Innovation survey estimated that film piracy was costing the US government $20.5bn. However, this study was based on a previous one funded by the Motion Picture Association of America (MPAA), and was heavily swayed by vested interest; these figures fail to take into account, for example, the money consumers not spending on seeing or buying films being spent elsewhere - they simply assume it's never spent.

Truthfully, to paraphrase Mark Twain, reports of the film industry's death as a result of piracy have been greatly exaggerated. According to Joshua Raymond at City Index, studios such as Time Warner continue to present attractive stock prospects - Warner's share price has rallied by over 86% since June last year to hit new heights of $61.32 just this week, a tremendous return in a relatively short space of time, and investors are finding it difficult not to follow the stock higher. Although the highest grossing film since the year 2000, Avatar, is just the 14th all-time when the figures are adjusted for inflation, this fails to take into account the sheer plethora of blockbusters designed to do huge business being produced by Hollywood nowadays and taking business off each other, as well as the ever-growing appeal of US films abroad. In total, over 1/5th of the top 100 grossing films in the adjusted US box office are from 2001 and beyond - hardly the sign of an ailing industry.

Studios will argue that these films are the exception rather than the rule, that for every film that succeeds, dozens fail. However, two of the three highest grossing films of 2012 (The Avengers and The Dark Knight Rises) were also amongst the five most pirated flicks of the year. Hollywood is once again its own worst enemy. A paltry 7% of the potential US market is lost to piracy, whereas the figure is a mammoth 90% in China, the world's largest market. However, the studios continue to pursue domestic and European digital piracy rather than physical piracy further afield, largely due to internet-based activity threatening their long standing monopoly on distribution.

Every condescending advert punters are forced to sit through before a cinema screening that purports the idea that piracy will eventually bankrupt the film business is laced with irony. The industry's obsession with piracy does have some root in understandable fiscal concern, but has more to do with narcissism. The internet has the capability to present the biggest upheaval in the way we watch films since the medium's inception, and this, combined with the ever decreasing costs of making a film, means that Hollywood's iron clad grip on the industry could soon be wrested from them. This is why film still lags so far behind music, a traditionally much more flexible and less oligopolistic industry, in adopting the internet as a major distribution channel, something which is far more detrimental to film's future. Much like George Lucas making a competent film, don't expect any big shifts soon.