Slashdot Mirror
Piracy Is a Market Failure — Not a Legal One
Mr.Fork writes "Michael Geist, Canada's copyright law guru and law prof at the University of Ottawa, posted an interesting observation about the copyright issue of piracy. Canada's International Development Research Centre came to a conclusion that 'piracy is chiefly a product of a market failure, not a legal one' after a multi-year study of six relevant economies. 'Even in those jurisdictions where there are legal distribution channels, pricing renders many products unaffordable for the vast majority of the population. Foreign rights holders are often more concerned with preserving high prices in developed countries, rather than actively trying to engage the local population with reasonably-priced access. These strategies may maximize profits globally, but they also serve to facilitate pirate markets in many developed countries.'"
Are they sure the current strategy actually maximises profit?
They are claiming that a strategy which maximizes profit globally creates underserved markets which turn to illegal channels to recieve content they cannot purchase legally. In short - either sell it to people at a reasonable price or they'll pirate it from someone who can.
Nope! They are saying that they're trying to maximize profit globally, but are instead leaving money on the table in markets which differ too much from the main ones in which they make most of their money today.
Most, if not all, Western nations completely invalidate such studies given that music is extremely affordable and reasonably priced - and much cheaper than capitalistic pricing would otherwise allow.
Its a societal failure, not an economic failure. Period.
So you have also done a multi-year study to back up your claim. I'd love to see your data, and compare it to Geist's study.
Exactly! Piracy is a victimless crime, like punching someone in the dark.
When our name is on the back of your car, we're behind you all the way!
Don't bet on it. All the science we have has told us that Cannabis is at least as safe as any drug in our medicine cabinets. Yet we have been fighting a war against it for decades.
You can't use facts to win a debate the government isn't even willing to have.
Give me Classic Slashdot or give me death!
I'm somewhat skeptical. I sell an iOS app at the usual App Store rock bottom prices. 90+% of my downloads are still attributed to pirates. I can't really drop the price any lower without giving it away for free. Pirates are going to pirate no matter what the cost is.
So they're not worth worrying about, because they're not and never will be your customers. Look at how much money the indie devs made as compared to what they were on track for without that promotion. Look at all the charity that was helped because of it.
Yes, there are douchebags out there. But the majority of people are decent folk that understand value exchanges. Give them value for their money, and they'll gladly part with it at appropriate price points. Especially if you make it easy like Steam does.
My blog. Good stuff (when I remember to update it). Read it.
I agree with your over all point in generic economics but it also glosses over some very serious issues. Larger sales can also mean higher overhead in support and distribution as well as liability. So while the raw numbers may make sense, once the final numbers are tabulated, lower market penetration at high market price can frequently yield best profit potential (more profit for less work; thusly allow for more expansion and growth and higher paid jobs). Furthermore, this in turn typically has the effect of creating multi-tiered markets whereby they will come in at a lower price point; thusly expanding the market and encouraging yet additional competition.
In this case, pirates very successfully erode the primary markets and all but destroyed the second and especially third tier markets. Which further underscores, this absolutely is not an economic failure. This is a societal failure, which BTW, many studies have long, long shown, in that lots of people now believe crime is not criminal so long as they can convince themselves, true or otherwise, no one is hurt. And that if they want something, regardless of the cost and the size of their blinders, they'll steal it because, while they've done nothing to earn it, they deserve it. Literally, we now have the self-entitled generation.
This is, of course, why you see so many pirates constantly parroting the same completely false propaganda over and over again. Its because they continue to reassure themselves and attempt to recruit others, which in turn acts as a form of self re-assurance, they are not criminals. This is very important to sustain the delusion else it means admitting that yes, in fact you are a criminal. And most people simply don't want to admit they are, in fact, criminals. Which brings us back around again - its a societal failure - not an economic failure.
they're trying to maximize profit globally, but are instead leaving money on the table
You phrase that as if it leaving money on the table were an accidental consequence. Its not. It is a deliberate choice.
Because media giants can not effectively control traffic of LEGALLY purchased media, they choose not to sell it at all in poor countries, or sell media at ridiculously high prices, in order not to fuel international markets, undercutting US/EU prices. If you could safely order LEGAL CDs from third world countries for pennies on the dollar, why would you buy at Downtown USA prices?
Sig Battery depleted. Reverting to safe mode.
That anecdote presumes that she has a right to obtain the content on her terms or prices.
If we're going to assume that her (thrifty) needs trump the plans (or lack thereof) of the copyright holders, then perhaps the law of the land should reflect that.
why not buy the DVDs?
More likely she wanted it *now* and decided that piracy was a permanent solution rather than the temporary 3-5 day solution while her shiny DVDs shipped from Amazon.
Piracy is just the new socially acceptable temper tantrum. Individual consumers (as opposed to collective market forces) have decided *they* get to decide the price and medium and if they don't get their way, they'll just take it for free.
Fine, pirate it, right after you process your order with Amazon. That way you don't have wait to enjoy what you now legally own. Or, why don't you write a check for a price you're willing to pay per episode and send it to the company as a donation?
I'm guessing you and your girlfriend are perfectly content not paying anything ever because the company dared to not have it your way right now.
Work Safe Porn
What TV show has 30+ episodes in a season ($100/$3)? TV seasons are usually fewer than 25 episodes.
Why not order the DVD? Because she wanted to watch it now? Why not order 1 episode for $3 to watch now and order the DVDs to arrive in a day or two?
Why not go to the store and buy the DVDs now?
This is always the smoke screen that pirates use. I would have bought it. You want $x ? I would have bought it for $x/2 or $x/3. That goes for all reasonable values of x.
Now that she downloaded it, what's keeping her from buying the DVDs right now? She's "more than willing to buy it", right?
Mr. Copyright Holder goes to see Mr. Lawyer that is protecting his rights.
- Mr. Copyright Holder: "How's the fight against piracy going Mr. Laywer?"
- Mr. Laywer: "Not good. People are committing more piracy than ever..."
- Mr. Copyright Holder: "Well you see, I've been doing some thinking about this; if we reduce our prices significantly and focus on the quality of our products and remind consumers that when they legally buy our product they also get legal warranty, we should be able in the long run to change the general culture of consumers towards a situation where piracy is met by the general population with disgust rather than with ambivalence. Also, that way we would not have to fork out so much money on litigation."
- Mr. Laywer: "That'll never work. Oh, and by the way; we need more money for litigation."
- roll credits -
"I'm taking this loop off." - Jack O'Neill
Yeah, I'm also more than willing to buy that low-mileage BMW M3 I saw in the dealership parking lot. Problem is they wanted around 70K for it! Ridiculous! Who has that kind of money?
So the logical flow is leading me to use my matter replicator to duplicate my friends one.
That's not only cheaper, but more convenient too, compared to spending, what, like half a day signing some papers and making trips to the bank and stuff.
FTCAFY.
You're missing three VERY important concepts, and that is "impulse buy" and "laziness". I bought a good half a dozen games this week, could I have pirated them? yep, it would have been no problem I'm sure. But like most people I'm a sucker for a sale and frankly at cheap prices it quickly becomes too much of a hassle to pirate and THAT is the point.
The key as in TFA is to hit that "sweet spot" where most will simply consider it cheaper and easier to buy then pirate. the stick NEVER works, because frankly the pirates are smarter than the *.A.As and always will be. it is the classic "smart cow" problem, where all it takes is a single one to figure out how to get through the fence and the rest will follow.
So instead they should be following the Walmart approach, make it cheap, make it easy. For me if the game is under $20 or the movie is under $10 frankly going through the trouble of pirating it simply isn't worth my time. With Amazon, Steam, and GOG I can have a game instantly or at the max 3 days from the time I click to the time the movie or game is dropped at my door, I get all the extras like multiplayer and access to DLC, so why bother?
But the "lets crank the price til it hurts!" model frankly encourages piracy because nobody likes feeling screwed. $50+ for a four hour game? or $30+ for a movie I'd watch maybe once? I just skip them but I can see why a bunch of people would just download them as they simply aren't worth whats being charged and THAT, that right there, is the crux of the matter. Charging the absolute max the market can bear may be business school 101 crap but IRL it rarely makes for maximum profit. look at what Valve found out with L4D, when they found the sweet spot they sold 1100%! more than they did at release!
So in this case it is simply greed cutting off their nose to spite their face. By ignoring there is a sweet spot they are pricing themselves right out of many markets in both the first and third world, and yet again making piracy the better option. Stupid is as stupid does I suppose.
ACs don't waste your time replying, your posts are never seen by me.