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Piracy Economics
Reader Anonymous Coward the younger sends in a link to an article up at Mises.org on the market functions of piracy. The argument is that turning a blind eye to piracy can be a cheap way for a company to give away samples — one of the most time-proven tactics in marketing. The article also suggests that pirates creating knock-offs might just be offering companies market feedback that they ought to attend to. (Microsoft, are you listening?)
Or the marker of a market that changes very quickly. And I think that currently the OS market is both.
Once a market is mature and stable, each major supplier within that market will have a product for all market segments. ( With cars, almost every manufacturer has a cheap sedan, a mid-size, an SUV, etc. Books come in limited signed editions, then the hardcover, then the quality size paperback, then the pocket paperback. )
There are some markets that are inherently unstable - like fashion - in which illegal knock-offs will always be practical. But in most mature makets the legitimate sellers fill every niche so well that the marginal costs of piracy are not worth it.
MS will get pirated until they have half a dozen or a dozen versions of their product. It would be practical for them to give away the low end version.
PS: This even applies to labor markets. In that case we call the piracy 'slavery', and the low end versions 'volunteers'.
Okay, this seems kinda bullshit to me... Why are we trying to prove that piracy, an illegal act, is somehow "good"?
Sure, there are certain issues to consider in terms of pricing and whatnot; some products cost way more than they should, or at least way more what some people can afford or are willing to pay, but there ARE always other completely legal options. If you don't want to pay for microsoft products, yell at microsoft, change your line of business, go open source, find cheaper alternatives, etc etc. Don't just sit there and pirate the software and then start spouting nonsense about how it's actually GOOD for the company because it's saving them the money for paying for free trials!
PIRACY IS ILLEGAL. Whether or not it's "helping" the company, IT'S ILLEGAL. STOP PRETENDING THAT YOU'RE DOING THEM A FAVOR.
The human power of rationalization is quite strong indeed; no one is stupid enough to think that piracy is legal, and obviously people feel bad about it, so they try and make up stories saying how they're actually helping people by doing it. Yes, there are definitely valid points that need to be examined, as I said before, but still, it's illegal, and everyone knows it, so stop trying to justify it.
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Microsoft just won't be able to compete against a developer and testing community as large as the FOSS community. We are everywhere. And I dare say we are having more fun than the Microsofties.
I've been a member of the Mises Institute for years. It's good to see Slashdot picking up on their articles.
The author's assertion was that the innovator produces the initial, high quality product. Then the pirates produce low quality knock-offs to fulfill a market segment the initial innovator isn't fulfilling. In the case of the record industry, I'm afraid they're well past the point of innovation and the production of high quality products (at least as far as pop music is concerned). In that case they're selling a low end version of their music, but still deluding themselves into thinking it's a quality product.
Either the quality has to go up or the price has to come down.
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When a law is unjust, people not only have a right to defy it, but a duty. Copyrights are unjust. They attack our culture, require the destruction of our privacy to be enforced, attack the free flow of information on the internet, and cause fragmentation to societies knowledge base of literature. The cost and effort to secure and enforce them is growing exponentially as society enters the information age.
The reason why anti-copyright behavior works so well in the free market is simply because copyrights are anti freedom and anti free market. http://davidlita.googlepages.com/copyrights/
Rationalizations? WTF! How about Copyrights are not "rights", theft and stealing is not copying, copyrights are monopolies and not "protection", and intellectual property is not "property". Hell, piracy isn't even piracy.
These are the "Educational Editions" of Office, XP and now Vista. You are supposed to show a valid student Id when you make the purchase, but shops are hectic, busy places and luckily most households have a couple of students lying around anyway. Conveniently some of these allow the software to be installed on multiple machines. So when Joe frowns that some Microsoft software is too expensive, he has a way around it. Microsoft get their money. Not as much as they would have liked, but they get it anyway.
Microsoft _have_ to know this goes on: If they wanted to they could make their educational program so draconian no one would use it, but households shrugging and installing Ubuntu on their machine is Microsoft's worst nightmare.
One particularly significant benefit (to the companies being ripped-off) to piracy is lock-in. As you said, Microsoft might not be where it is now, if it were not for piracy. I think the same goes for programs like Photoshop. Teenagers won't/can't pay $600 for Photoshop. Adobe doesn't lose anything by teen pirates who can't afford Photoshop--but they do gain another crop of kids proficient with their software. If any of these kids use Photoshop professionally, they buy a real license.
I think this is the biggest stumbling block to free software. No one wants to use the GIMP because they can get Photoshop. If fewer could get Photoshop, fewer professionals would have Photoshop experience, and more would be willing to contribute to GIMP. Why use Ubuntu when you can get Windows?
But you are right, if any program can be pirated without any repercussions, it WILL hurt both the company and the product's future. It is too costly to stamp out ALL piracy--costly to the produce, the enforcer, and the legitimate customers who will get some spill over--so determining the right amount is tantamount to success.
is that giving away samples with limited lifetime will introduce your product while maintain the potential customer because the trial product will eventually have to be replaced. But digital copies do not have such limited lifetime. And since any number of copies can be made, you loose not only the client that got a trial copy, but potentially the entire customer base. And those who offer complete trial versions soon find them to be cracked.
The solution seems to be to offer limited versions that will show the client how great the product is, and how much greater it would be if they buy the official release. Say music in 96kbps mp3, it's ok on your iPod in the subway, but put it on your stereo and it sounds awful. Or the word processor with reduced dictionary, limited fonts and doesn't support large fonts - say above 18pt, or doesn't contain the print facility.
Crackers won't add missing data to a trial version of a song, and they won't add missing functionalities to a program.
"If any of these kids use Photoshop professionally, they buy a real license"
I'd like to think that's true, but a very large number of people who make very good money using software like this (or 3D Studio MAX) never buy a legit copy, even when they can afford to.
DRM-free indie games for the PC and Mac: Positech Games
Even if he could think up some business model where he did something tangential and gave away the sounds, isn't that a waste? Shouldn't he be spending his time doing what he's best at? Shouldn't people be paying for the bit of what he does that they want (the sounds!)? It just seems so inefficient.
I never said he shouldn't be paid for making sounds. I get paid for the work I do, he should get paid too if his services are valuable. The problem he is having is getting paid over and over again for work that he did yesterday and I'm suggesting that he develop a business model that allows him to be compensated for his work upfront. He can hope all he wants that more stringent laws will make people quit stop sharing, but they won't. You would have to undo thousands of years of human evolution to do that.
Time is what keeps everything from happening all at once.
At the end of the day, surely it doesn't matter how many people download the sounds, since the guy's business model is selling the sounds to people who want to use them in their tracks. Copyright still protects him in that instance - since anyone who does use the sound in a track which they gain any kind of commercial success from will be liable for breech of his copyright unless they pay up.
Instead of trying to restrict access to the sounds he produces (which will always fail in this new digital age, anyone paying attention over the last ten years will see that) he could do far better offering the sounds free for non-commercial usage. That way people come to him to download them, not some dodgy torrent site, and it's easier for him to explain his pricing model for anyone who does want to use his work. By forcing the sharers to go underground, he makes it harder for people who find his works to figure out how to get in touch with him and pay for them.
Anyone who is serious about using his sounds in their own works will want to pay, anyone who isn't serious isn't really a lost sale, since they wouldn't have bought the sounds no matter how strongly enforced copyright was. Your friend needs to learn to use sharing to his advantage instead of fighting back the tide - being small makes him more adaptable, an advantage the RIAA dinosaurs don't have. Decrying file sharing won't make it stop, instead it's time to grasp new opportunities.
You've got a pretty obvious bias when you throw out a "prove it" demand like that, with a weak anecdotal argument ("I didn't write a book because I couldn't figure out how to make money doing it") against the respondee.
As far as rebutting your anecdote is concerned, I make a decent living writing software. I'm not getting paid because of copyright (since I'm selling my services as a developer, not the software itself), and the company isn't getting value from my service because of copyright (they get the value from actually using the software I created for them). Just because _you_ can't see a way to make money without copyright doesn't mean that such a way doesn't actually exist - it just means that _you_ don't have a good enough imagination.
Let me flip your question on its head (essentially restating your respondee's post): I've heard and read ad nauseum that copyrights encourage creativity, yet not once has anyone proven it to me. No matter how many times I've asked or searched, I've never read or been referred to any peer-reviewed study supporting the idea that copyright encourages creativity.
It seems highly counterintuitive that a mechanism like copyright (which at its most fundamental is a mechanism that discourages the free expression of ideas) is going to encourage societal creativity, but it gets repeated like a mantra by proponents of copyright, without any kind of logical or evidentiary support. A lot of copyright proponents even mistakenly think that IP has something to do with free-market capitalism.
Before you go around enforcing a bunch of laws that override personal property rights, you'd better make darn sure you're going to get a societal payback that makes that violation worthwhile - but so far, IP proponents keep failing to provide that proof.
maybe they are better businessmen than you think. Its all very well saying "you sell more with a lower price" but thats schoolboy economics. its not that simple. Some products sell MORE at a higher price, as some people want the best, and associate high price with the best. perceived value is greater than actual value in purchasing decisions. Also, given the costs of support, 2 customers at $50 are worse than 1 at $100. Also, halving the price rarely doubles the sales, depending on the product.
At every single price point, a product is a bargian for some and overpriced for others, and in every single price point, there are people at both ends saying "why dont thsoe idiot businessmen realise that..."
Theres a reason these people have huge successfull software businesses, they arent as stupid as people assume they are.
DRM-free indie games for the PC and Mac: Positech Games