"How exactly does the general consumer "pirating" affect innovation?" Well when a movie comes out, almost everyone has seen it. 30 years ago, if a movie came out, people read about it or skipped it. Very few people could afford to watch every new movie that came out even when prices were low and more people had careers. So if pirating was limited severely, the saturation and publicity that tv and movies have now would shrink drastically. This is a long subject and this is not a place to get into all of this. Basically piracy improves quality of product. In order to make money, the artist/creators have to be innovative.