Why Software Piracy is Good for Microsoft

jcphil writes "Salon has an article that explains why Microsoft has toned down its anti-piracy actions in China and other developing markets. The answer is simple: due to the network effect, the more users you have, the greater your strength in the marketplace. And it doesn't matter if their Windows is pirated or not. So, in effect, software piracy in countries like China helps Microsoft to compete with Linux." Meanwhile, the RIAA doesn't feel the same logic applies to record sales in the U.S., and has started an ad campaign to convince the public that sharing music hurts artists.

Comments

Groan

[Reality Master 101]

Meanwhile, the RIAA doesn't feel the same logic applies to record sales in the U.S., and has started an ad campaign to convince the public that sharing music hurts artists.

Sheesh, talk about missing the point of the article. The article is talking about developing markets, not the US. Microsoft cares deeply about piracy in the US. The point is that in developing markets, Microsoft wants to establish a foothold.

The other difference is that Microsoft has competition, while there is no direct competition for music. In other words, if you don't like the price of Bruce Springsteen, you're not going to switch to Broos Sprigstein who might be cheaper.

Re:Groan

[Reality Master 101]

Yeah and SOOO many people listen to Classical music.

Huh? You must be young. Sorry dude, but music doesn't survive for 300 years if no one listens to it. And they'll be listening to it in another 300 years. Think they'll still be listening to the latest release of "L33t D3ath P1zza" in 300 years?

Re:Groan

[io333]

I wonder how all this stuff with the piracy and RIAA is playing out with the classical music market.

As a classical violinist, I have some sense of how the current classical scene is and has always been:

Since western musicians have existed, they have always been considered weird (though not nearly as weird as *actors* (!)), treated as servants, and paid accordingly (i.e., little to nothing).

While that changed for a few pop musicians during the 20th century, most classical instrument players have continued, as usual, to either barely stay above the starvation line, or have found a real job to supplement their meager income. There have been a few extremely rare exceptions (e.g., Pearlman) though even those folks make quite a bit less than you might think.

If you dig around and find out how much say, the basoonist in a famous world class orchestra makes, you'll immediately realize that classical musicians are in it for love of music as it is impossible to be there for love of money.

My gut feeling is that as the younger generations get used to paying *nothing* for any music that they want, the highly paid pop performer phenomenon will be considered a 20th century anomaly, and the only money left to be made in the pop scene will be, like it is for classical players, through performance, or through hire.

It wouldn't surprise me if in 15 years BonJovi's main source of income is weddings and birthday parties. I am saying that with a serious tone and a straight face. (no emoticon)

Re:Groan

[Dirtside]

I disagree with your main contention. The superstardom of the 20th century has been possible because of three things:

1) Recorded music. No longer do you have to have a trained human play music for you -- you can have a machine do it, and have it sound just like the original performance (more or less), exactly the
same, every time.

2) Transportation technology (trains, planes, and automobiles). Copies of music can be shipped across the entire country; music is no longer as highly regional as it once was (someone living in California in the mid-1800s might never even hear of a famous performer from the East Coast).

3) Electronic communication (radio, TV, telephones, the Internet). Now you don't even have to have a physical copy of the music sent to you -- it can be sent electronically, faster-than-light.

As a result, mass knowledge of individual musicians has become possible. Two hundred years ago, a few thousand people might have heard of a famous artist. Today, millions and millions of people have heard of them, and can hear all of their music. The only thing that's still "limited" is live performance -- the artist can only be in one place at a time, and due to various physical limits, only so many people can be within sight of the artist at once, watching him perform.

Even if the big labels all go away forever and are replaced by countless independents, we will still see a few superstars packing venues. The best artists with the widest appeal will still be successful, and will still have numerous fans, who will be willing to pay to see them live.

I've always known this

[outsider007]

Let's say you're a 14 year old kid and you're running a pirated copy of windows vs. a legal copy of linux. What happens when you grow up and get an IT job for a small company? you recommend using windows because you're familiar with it. The same is true for productivity software (office,photoshop...) but not games and definitely not music.

Let users understand the cost of Windows

[Anonymous Coward]

This is exactly why i do not offer to give copies of Windows to people anymore.

If you want Windows, you can go ahead and pay for it yourself. Then you'll understand even better why Microsoft is losing market share to Linux. It's not cheap for an individual, and for a business it's highway robbery. If the price is too high for you, well, why not install something free?

Get them hooked

[mikewas]

Just like drugs?

Give the poor slob some free hits, get him hooked before he knows how bad the dope is, then start charging big bucks.

I've just realised something.

[Dthoma]

I'm starting to think that the returns by allowing privacy are something like the Laffer curve with piracy along the x-axis and benefit along the y-axis; by allowing no piracy, then you don't benefit, nor do you benefit by having all copies of your software pirated. However, if you give some leeway and allow some of the copies of your software to be pirated, then it gives you maximum benefit. Unfortunately, it is entirely possible that the whole piracy vs. benefit graph is more reminiscent of a Neo-Laffer curve, where there are so many possible factors which can affect it that it is impossible to tell in advance what effect piracy will have.

Re:I've just realised something.

[Lemmy Caution]

This is exactly correct.

In Mexico, there was a crackdown on small cybercafes using pirated copies of Windows. A few big busts happen, word gets out, and everyone panics. Many cybercafes start installing Linux everywhere, since they simply can't afford the retail price of Windows.

This hurts Microsoft more than it helps. It weakens their monopoly. On the other hand, they can't lower their prices in Mexico significantly below what it is in the US, or else everyone in the US will simply go down to Mexico to get their licenses. It makes better sense for them to selectively enforce against deep-pocketed violaters (including legitimate businesses that might have just a couple yahoos who install a couple too many copies of a piece of software they otherwise legitimately license) and to leave the streets and schools alone. This is a logic that everyone had been citing for ages, but the BSA had been "debunking" it - until the free software started getting installed everywhere.

Re:I've just realised something.

[gpinzone]

Perhaps the reason no one registered you product is because no one found it to be useful enough to pay for. Your program offers less to the hardcore HTML coder than a fancy text editor and is not nearly as robust as a full blown GUI product. I'm sorry if this sounds like flamebait, but your complaint is the same one that many other software developers cry when their product doesn't generate the revenue they expected.

Re:Please think of the starving artists!

[iCharles]

Likelihood of making anti-piracy ads increases as (one of the following):

1. Your celebrity clock approaches 14:59.
   
2. Your street cred approaches zero
   
3. Your talent approaches zero
   
4. The average age of your audience approaches 18 (or 40, depending on Britney vs. Madonna)
   

Oh my god, I feel soooo bad...

[E-Rock-23]

Not. Come on, do you actually expect us to believe that the artists are suffering because we download their tunes? That's complete bullshit. The artists suffer because of the lopsided contracts that the RIAA companies make them sign. They get an advance, sell so many copies, and still end up oweing the record companies money. That's an insane way of doing business.

The only ones hurting are the RIAA companies themselves. "Wah wah, we're not making the X number of billions we made last decade thanks to services like Napster(RIP), KaZaA, Limewire; We're only making Y number of billions now thanks to users downloading music. X Billions > Y Billions. We want more billions." Cough-bullshit-cough.

If we're smart, we'll continue downloading and taking a chunk out of the RIAA's profit. They're spending millions on this ad campaign, which won't work at all, and lose said millions. What we need is a commercial detailing the evils of the record companies' underhanded practices and how they are hurting artists.

And, for the record, I'm in total agreement with sy$manager's post on the subject. There is no way that downloading "Baby One More Time" is hurting Brittany "I've got fake tits before they're even done developing" Spears' bottom line. Duh, she has a multi-million dollar endorsment deal with Pepsi, is doing movies (that probably net her a few milion apiece), and has several other sources of income besides her contract with the RIAA. Nelly? What the hell kind of name is Nelly, anyway? I can't even take him seriously. And Missy Elliot earns her papers because she herself is a producer. There's no way downloading "Get Your Freak On" is hurting her wallet, that's for sure.

Just another case of RIAA Spin trying to get us to shill out damn near $20 for a CD with 12 lame songs on it, when we can download what we want for free, spend $0.20 on a blank CD-R, and put 150+ songs that don't suck on it ourselves. Who's going to win this fight? We are, plain and simple. The RIAA is wasting their time, and ours.

Re:Please think of the starving artists!

[Kierthos]

Tell me about it. This is why a lot of people pirate music. Because they would rather have that one song for free then 17 songs of crap and that one song for $12-$18.

I mean, sure, there are people who collect every single mp3 ripped from an album. But they are the only ones that RIAA should be super-pissed at, because the obvious indications is that they would have bought the album. Me, I'm not about to buy a 80s anthology album just to get After The Fire's "Der Kommisar". I am likely to go out and buy System of a Down's "Toxicity" album though, but only because every song I have heard off of it is good (IMAO, of course).

What the RIAA needs to go is remove their heads from their asses and come to the realization that piracy, in some form or another, will always exist. If they can offer a product that is better in terms of quality, availability (as in being able to buy select songs instead of the entire album), and lower the price, they will see a greater return on their investment.

Kierthos

Re:Microsoft has always done this

[sporty]

Isn't that how drugs are? The first hit is free....

Put activation on 'enterprise' copies

[mgkimsal2]

If MS was really serious about stopping piracy, they would have required the 'activation' home users of XP have to go through for 'enterprise' licensed copies as well. The 'enterprise' licensed copies have no activation requirements, which means that people will still continue to sneak home copies from work to install, bypassing the activation scheme completely.

They've never been serious about stopping piracy. Collecting money - yes. Stopping piracy - no.

First hand experience, this is true.

[cswiii]

My girlfriend is from Beijing originally; We went over there back in April-May, on vacation. I was talking with her brother once about computers -- well more realistically, my gf was translating for us -- and I mentioned that I don't use Windows, that I use Linux. When he asked why, I went on about a few of its strong points, one of them being that it was pretty much free.

His response was that since piracy is so rampant in China, Windows is, in essence, free as well. He added that he doesn't forsee people leaving the windows platform, as long as it's so readily available on the black market. If serious crackdown began to occur, there might be a move otherwise, but until then, there was very little chance of an alternate OS being adopted.

There was a bit more in the discussion too, but I can't remember offhand what it was. In any case, it put things in a really interesting light.

Developing Markets vs. Ours

[siskbc]

Microsoft does indeed fight piracy here (ever hear of the BSA? 'Nuff said). I contend, however, that they probably shouldn't fight piracy of windows, though with XP they have upped the ante a bit. They are benefited immeasurably by their monopoly (ask the DOJ, eh?), something that would be harmed if everyone had to pay for it, or couldn't reuse old OEM copies. I really think that people aren't going to pay an extra $150 to throw XP on their second computer - so here comes Mac OS or linux, which people might find they like more.

When you get down to it, wouldn't disregard for piracy be the best way to engage in dumping of product to eradicate competitors (a practice that would be illegal under antitrust, in their position)? This would be the best way to maintain their install base. I mean, they would still extort the OEM's to get money out of windows, but let anyone who builds their own box or wants to upgrade to do it for free. Unofficially, of course.

Anticompetitive Dumping

[Dr. Evil]

I wonder if you could view a soft stance towards piracy as "dumping" in the marketplace. It is, after all, exactly what you're doing -- saturating the market with product, under cost, knowing that it is hurting your competitors.

IMHO, shareware fits into this, bennefiting from the network effect and hurt competition, while crying that only a small fraction of their customers are paying.

Yeah, I know, it is a stretch.

Re:Depends on the artist

[gosand]

Some artists like Dr. Dre, Eminem, Metalicca are very opposed to piracy, and p2p in general. You have other artists like Prince, KRS-1, Tribe called Quest, who are all for it. The question is, why are you in the game? Are you in the for the love of the music or the love of money?

I don't think anyone argues that the artists should be compensated for their work. But there is this huge, controlling middleman between the artists and the public who compensates them. The artists who are against online music (let's not call it piracy, more on that later) are against it because they believe, or have been lead to believe, that it threatens their livelihood. It doesn't.

The only reason online music is considered piracy is because of the business model of the music industry. If CDs were available for a reasonable price, there wouldn't be as much incentive to copy and distribute music online. But beyond that, it is obvious that being able to download music is popular. Why not embrace it? Most artists make their money from touring anyway, because their contracts with the record company gives most of their royalties away. So they have to tour to make money. How is this different than giving the music away, and still making money on touring and merchandise? Or special edition CDs with extra features?

It is painfully obvious that online music could be a huge business, but the record companies refuse to acknowledge that because they fear it. They should embrace it! If it is so easy for average music fans to make digital copies of music, why is it so hard for them to do it and still make money? It isn't, they are just stupid , power-hungry, greedy bastards.

I don't care if this gets modded as flamebait or troll, it is the truth.

Re:Isn't this

[mentin]

May be the answer is whether you are a monopoly or not? From the post:

So, in effect, software piracy in countries like China helps Microsoft to compete with Linux." Meanwhile, the RIAA doesn't feel the same logic applies to record sales in the U.S.

Even the poster of the article argees MS has something to compete with (Linux). RIAA does not, it owns every record. So it can crack down on piracy without benefiting competitor.

Download Music, Hurt Nelly?

[Alkaiser]

Dude, I'm SO getting a bunch of people started on downloading as many songs as possible. I only hope this hurts Celine Dion, too.

Since when can a guy who comes up with the lyric, "It's getting hot in here, so take off all your clothes!" be considered an artist?

Re:Download Music, Hurt Nelly?

[EastCoastSurfer]

Since when can a guy who comes up with the lyric, "It's getting hot in here, so take off all your clothes!" be considered an artist?

How about some guy who paints someone sitting in some grass on paper like here or perhaps someone who paints some fruit in a bowl like here. How the hell can fruit a bowl be art? Now the line you stated may not be art in of itself, but when tied with all of the songs lyrics and background music it does becomes Nelly's expression of something(not sure what it is though ;). Also, I may dislike it and you may dislike it, but that doesn't mean it is not some form of art.

Re:Who's stealing what?

[Anonvmous Coward]

That problem exists with watches, or any other items today. I could buy a VCR, tape a show I want for up to 30 days, and then return it. Despite that risk, they offer 'satisfaction guaranteed' return policies anyway.

The problem is that you have virtually no way to find out what's on the CD before you buy it. Some (and I emphasize some) places offer a way to listen to the CD. But let's be realistic: Who's going to spend 60 minutes in a store just to hear one CD?

I realize that rational's a little extreme (who's really going to listen to an entire CD to determine purchase of it?, but P2P makes it easy to do exactly that, at 0 cost to the RIAA other than they lose the opportunity to keep your money.

Sorry, but I don't sympathize with the RIAA. If the customer says "we prefer buying individual songs" their strategy shouldn't be "well we'll grease up the politiicians so that the law says you have to follow our business model."

Damn it, it's NOT the same as stealing a CD...

[weave]

"We want to hit fans with the message that downloading music illegally is, as Britney Spears explains, the same as going into a CD store and stealing the CD,

Bullshit, it is not. First of all, if you steal the CD from a store, the person who gets hurt is the store owner. He's already bought that CD from the distributor who bought it from the label, who paid the pittance of a royalty to the artist. So if you go in and steal a CD from the store, it isn't hurting the artist, or the distributor, or the label. It's hurting the store owner only.

Now if you download a CD's worth of stuff from the net, it's a theoretical loss only. No real money is lost, just the *possible* opportunity for a sale. One would have to prove that the person would have went out and bought the CD and didn't because they got it off thet net before you could legitimately count it as a realized loss. And even so, it's a loss of income, not a theft loss where property or money was deprived of the owner (as in, their net worth went down by their share of that CD).

Now both cases are "wrong" but they are in no way "the same thing." There is a real victim in one case, and theoretical victims in the other case.