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The Recording Industry Association of America is promoting a new report that says that global piracy and counterfeiting cost Los Angeles-area companies $5.2 billion and the city at least $483 million in tax revenues in 2005. This is despite the fact that the number is nearly half the music-industry’s annual sales.

The study(PDF), conducted by the Los Angeles Economic Development Corporation (LAEDC) and commissioned by Los Angeles Mayor Antonio Villaraigosa, Councilmembers Wendy Greuel and Jan Perry and County Board of Supervisor Zev Yaroslavksy, estimates losses in local revenues, jobs, wages and taxes due to piracy. While the report describes economic devastation of piracy across nine different sectors of the Los Angeles economy, it finds the entertainment industries – motion pictures, music, and related industries – to be hit hardest.

According to the report, global piracy disproportionately hurts Los Angeles because of its concentration of so many of the firms that make the original products prone to counterfeiting. As a result, the LAEDC report indicates that the local black market across the nine identified sectors could be valued as high as $17.4 billion.
Local officials also announced the formation of an Inter-Governmental Task Force on Piracy and Counterfeit Goods, a group made up of a diverse cross section of the community representing industry, law enforcement, business leaders, government, prosecutors and judges. The goals of the task force will be to come up with specific policy recommendations and to identify resources to deal with the problem of counterfeited goods.

“This report pointedly illustrates piracy’s true costs, both to the music community and to Los Angeles, and we believe it will be a real catalyst for additional anti-piracy measures by the city,” said Mitch Bainwol, Chairman and CEO of the Recording Industry Association of America (RIAA).
“The LAEDC report confirms what our industry has been consistently saying: the crime of film piracy doesn’t just hurt Hollywood, it damages economies everywhere movies are produced and sold. Motion picture piracy results in lost jobs and wages for middle class American workers inside and outside of the movie industry, and we now have even more evidence of the specific damage it does to the Los Angeles economy and workforce,” said Dan Glickman, Chairman and CEO of the Motion Picture Association of America, Inc. (MPAA). “We appreciate the leadership the City and County of Los Angeles have provided on this issue and for working so hard to curb piracy in Los Angeles.”

The motion picture and television production industry in 2005 generated more than 1.3 million American jobs – over 500,000 of those jobs were in California; $30.24 billion in wages to American workers; and $10 billion in state and federal taxes. In 2005, the worldwide motion picture industry lost $18.2 billion as a result of piracy.

The recording industry reports that the global trade of pirate music discs was worth $4.5 billion globally in 2005, with 80 million discs seized – up from 36 million discs in 2004.