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?
This story is based on a Social Science Research Council report.
The said report has already been extensively debated on Slashdot here and here.
In soviet russia the government regulates the companies.
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.
The flow my girlfriend went through recently when trying to watch a season of a TV show:
1. Checked to see if it was available digitally on standard channels like Netflix and Hulu (it wasn't).
2. Checked Amazon, where it was available digitally, but only per-episode, at a ridiculous price like $3/ep (making it over $100 for the season, more expensive than on DVD).
3. Downloaded torrent.
She was more than willing to buy it, but it has to be easy and reasonable or "other" methods of distribution win.
That is exactly my case. Let me use ebooks as an example. I always payed for my ebooks. From Amazon, Fictionwise and Ebooks.com. Then, one not-so-beautiful day, "export" restrictions started applying to ebooks. Most publishers would simply not allow those shops to sell me ebooks, because I was on a different country. I even talked to 2 of the authors, and both were aware of this, not happy, and trying to fight these measures, to no avail. As a corroborating note, these specific books were not available in my country, through any channels. Be it physical books, translated or not, or ebooks. Harper Collins is the leader of this "geographic restrictions", as far as I can tell. Well Mr. Publisher, I went out of my way to try getting these books legally. I contacted the shops, contact you and contacted the authors. For reference, everyone but YOU responded. Everyone pointed fingers at you.
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!
In Eastern-European countries average salaries are around $600, but there's a highly educated youth, with cheap internet access (around $30 a month), and a lot of free time, and relaxed copyright laws (suing warez downloaders is not legally possible; you can only sue those who make a profit while pirating ).
At the university where I studied, teachers expected students to use pirated Matlab, as they didn't had an academic license program, so they provided intranet warez copies.
At the same time there's strong opensource culture as well.
Firefox usage:
Poland: 42%
Slovakia: 41.2%
Hungary: 40.3%
Estonia:37.3%
(And my guess is that in China hacker groups are government supported.)
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 know there are a lot of people who do not like this term, but I am not currently aware of any other term which brings together all of the various products that can be lumped together under "intellectual property".
That's because they're disparate constructs with completely different purposes that should not be lumped together.
Trademarks exist to protect the public so they know what they're buying.
Copyrights exist to provide incentive for creators to share their works through a guarantee of a monopoly on copies.
Patents exist to convince businesses to share valuable processes from which everyone can benefit.
The problem is that "extremely affordable and reasonably priced" is very subjective. When I was in college with basically no income a $10 cd was not affordable at all. Now that I have a job it is. Reasonably priced is also subjective. To some people $0.99 for one song is not reasonable at all.
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.
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
Actually, there's a theory in economics that, while it mostly talks about tax rate vs. revenue, can be applied to price versus profit. The short version is that Price v. Profit follows an inverted parabolic line. There's a sweet spot where revenues are maximized, and it most emphatically is not at the highest possible rate in the graph. The same applies to sales (and in fact, it was in that context that my HS Economics teacher presented it): as you raise the price beyond a butter zone, your profits actually drop because fewer people can afford to buy your product, and either buy the products from the competition or steal it.
https://secure.wikimedia.org/wikipedia/en/wiki/Laffer_curve is a good starting point, though that's the theory as it applies specifically to taxation.
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
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.
I certainly agree that cannabis should be legal and that its legal position relative to alcohol and tobacco is ridiculous. I also agree that the general lack of rationality and open-mindedness surrounding that debate is frustrating. However, I don't think it's fair to blame just the gov't. California had an election this November on legalizing pot, and it failed by a significant margin. This is partly due to popular stupidity, and partly, I suspect, because the puritan types show up to elections more reliably than people who care about marijuana. If even California, the hippy state, can't muster a majority on that issue, how can we expect the rest of the US to do better? We're a democracy, after all. The federal gov't keeps a hypocritical drug policy around in part because a majority of Americans still seem to want it that way.