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Stop Piracy? Legal Alternatives Beat Legal Threats, Research Shows (torrentfreak.com)
An anonymous reader writes: Threatening file-sharers with high fines or even prison sentences is not the best way to stop piracy. New research published by UK researchers shows that perceived risk has no effect on people's file-sharing habits. Instead, the entertainment industries should focus on improving the legal options, so these can compete with file-sharing. Unauthorized file-sharing (UFS) is best predicted by the supposed benefits of piracy. As such, the researchers note that better legal alternatives are the best way to stop piracy. The results are based on a psychological study among hundreds of music and ebook consumers. They were subjected to a set of questions regarding their file-sharing habits, perceived risk, industry trust, and online anonymity. By analyzing the data the researchers found that the perceived benefit of piracy, such as quality, flexibility of use and cost are the real driver of piracy. An increase in legal risk was not directly associated with any statistically significant decrease in self-reported file-sharing.
In general, threatening people will not produce better results than encouraging people over the long term.
If you're a music executive who made it to where you are by cheating musicians and paying them as little as possible, and by overcharging customers at every opportunity, you will tend to assume other people will behave the same way you yourself do. It will literally be inconceivable to you that a lot of people, even given the opportunity to get something for free by piracy, would rather pay you what they consider to be a fair amount for your work.
It's an interesting situation, because "intellectual property" and the fact that people actually pay for it, is at complete odds with modern economic theory.
The general understanding of market economics is based on fundamentals like, "Supply and Demand" - and these are easily described using mathematical models: The greater the supply and the lower the demand, the lower the price will be, and vice versa.
If we look at intellectual property and software in particular, we find the following characteristics to be true:
1. It is difficult to create
2. Can be easily copied
2a. For little cost or effort
2b. An infinite number of times
So in a free market you end up with a product that is expensive and time consuming to create, but which once created, can be reproduced as much as anyone happens to care for. If someone wants 5,000 copies of your IP, they CAN and it wouldn't cost them a dime. This means the supply is infinite; in which case the demand doesn't matter and the going price for your product is: Zero! Zero dollars!
The rational economist / businessman see this and knows per their rational / purely selfish point of view, that they can never make money in a market where rational actors will simply "steal" their product by copying, sharing, and distributing it with each other. If you walked into a business class in the 1950's with videogames that can be freely copied past the first sale as your business model, you'd have been flunked out and laughed at.
Their solution? Artificial scarcity! Using the threat of violence against their own customers, these economists and businessmen impose DRM, fines, lawsuits, jail, and even death (should you actually defend yourself from police enacting these legalized threats) in order to limit the supply and force customers to pay for the product.
YET
We see today that games with limited or no DRM restrictions - in fact even games that are literally and intentionally given away for free - still attract profits, and not just small profits, but enough profits to continue running a business. Because the public irrationally supports people creating intellectual property in spite of the fact they can or have, obtained that intellectual property for free.
Ironically I often see in arguments about this (particularly at the hands of business-owned "news"), that it's the pirates, gamers, consumers who are being entitled and demanding. In spite of the fact these are the very people who pay money for things they can have for free to begin with. Meanwhile the publishers go out of their way to actively attack their own customers and spend millions on thwarting the copying and sharing of information. It's like living in a world where the buggy-whip makers have won and outlawed all automobiles. Actually - it's worse than that. It's a case of having automobiles already, and then monied interests outlawed them in order to sell their buggy-whips. It's so farcical I almost can't believe it's the way our modern economies function.
I "know someone who" wanted to rent a 5 year old movie on iTunes not long ago. He was ready to pay for it. The rights holders, however, had decided that this particular movie was only to be made available for purchase, not rental. More than twice the price of a rental. So guess what he did...
Other example, same guy, rented a movie on iTunes then decided he liked it so much he wanted to purchase it. Do you think they would let him convert the rental into a purchase? Nope, full price on top of rental. So guess what he did...
Bad service turns potential customers into pirates. In both examples above the rights holders missed out on the money someone was willing to spend because they were simply too greedy. It's easy to blame the pirates, though.