The WasteWatcher: The Staff Blog of Citizens Against Government Waste

IAB Report Finds IP Infringement Costs Economy Billions

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


There are some individuals who view intellectual property (IP), particularly movies, videos, and music as free for the taking; illegally posting and distributing content online without any regard to the impact such actions have on the creators and owners of the IP. This sad state of affairs was detailed last year in Citizens Against Government Waste's (CAGW) book Intellectual Property: Making It Personal.

In November 2015, the Interactive Advertising Board (IAB) released a study on the impact of infringing content on the digital marketing, advertising, and media industries. Overall, the study found that the marketing and digital posting of infringing content, such as pirated movies, music, video games, and software applications costs the U.S. economy, and specifically, the digital marketing, advertising, and media industries more than $8.2 billion annually.

The IAB study also found that infringing content such as stolen video programming, music, and other editorial content represents lost revenue opportunities of up to $2.4 billion each year. Invalid traffic, or advertising fraud, which is “non-human traffic” or fake advertising impressions that are not generated by real advertisers, accounts for the largest portion of costs at $4.6 billion. Of this, 72 percent of the loss associated with the web’s fraudulent traffic occurs on desktop computers, and the other 28 percent occurs when using mobile devices.

On July 21, 2015, the Trustworthy Accountability Group (TAG), a non-profit dedicating to eliminating fraudulent digital traffic, combating malware, fighting Internet piracy, and promoting transparency, announced that it would be piloting a new program to block fraudulent data center traffic. It will be interesting to see the effect this pilot program will have on reducing digital piracy, incidents of malware, and fraudulent websites. The IAB study included TAG’s efforts in its report as part of an evolving effort to reduce the impact of invalid traffic and infringing content.

As noted by economists Kevin A. Hassett and Robert J. Shapiro, “innovation in its various forms accounts for 30-40 percent of the gains in growth and productivity by the American economy in the 20th century.” In 2010, the value of IP comprised approximately 80 percent of a company’s total assets based on the Standard & Poor’s 500 Index. Protecting IP from infringement is critical to promoting and expanding the U.S. economy in all sectors.

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