A comprehensive report recently released by NetNames, finds that the proliferation and purchase of fake branded goods or digitally pirated content have exploded, raising serious dangers for brand holders and consumers alike, with entertainment being one of the worst affected sectors. Additionally, the review outlines the ongoing role of China in bringing the vast majority of these goods into U.S. and European markets.
The report, Counting the Cost of Counterfeiting, reviews the “global pandemic” of counterfeit goods flooding the consumer market, particularly through online channels.
The data-rich report, which draws on hundreds of up-to-the-minute data points as well as NetNames’s own research, frames the alarming speed with which illegal downloading, piracy and counterfeiting is growing, pointing to a 15.6 percent global increase in the sale of counterfeit goods online in 2014 alone. With the rise of social media and mobile, the online landscape is being fragmented, increasingly exposing global brands to counterfeiting as well as phishing, cybersquatting, traffic diversion and other forms of online fraud.
NetNames CEO and report co-author Gary McIlraith said, “Counterfeiting has been with us for centuries, but today it is exploiting the high-growth potential of the Internet. Counterfeiters have proven every bit as adaptable and creative as big business, with the internet allowing them to refine approaches, increase reach, and target the lucrative world of online buyers.”
The U.S., with 55.7 million jobs dependent on IP- and brand-intensive industries, annual losses of $225 billion to counterfeiting represent a growing economic crisis. Though fake Louis Vuitton handbags have become an emblem of casual consumer attitudes about the illegality of these products being sold, the entertainment sector has been one of the worst affected, with counterfeits claiming around $80 billion of the entire $600 billion market.
Other findings of the study include:
98 percent of data transferred in peer-to-peer networks is copyrighted; in 2013, 1/3 of counterfeit software contained malware
70 percent of counterfeit goods seized worldwide come from China
Piracy in entertainment industries currently costs the U.S. economy 373,375 jobs and $16.3 billion in earnings per year
Said McIlraith, “Although we are undoubtedly seeing an explosion of counterfeiting in many forms worldwide, its collision with the online world is what is pouring the most fuel onto the fire. Now is the time to develop and deploy a proactive and effective anti-counterfeiting strategy to safeguard customer confidence, brand equity, sales and revenues.”
For a pdf of the study, please email Meir Kahtan at [email protected].