Piracy: Who Really Gets Hurt?

PIRACY: WHO REALLY GETS HURT

Software pirates have been sailing the binary seas since the days prior to the Internet. The Internet has made it easier to be both caught and elusive depending on the level of care one takes.  But what is Software Piracy? Software piracy is copyright infringement, or in a sense, violating the rights of the developer to choose the means and method of distribution. Software Piracy disrupts the developer and publisher from controlling the product.

Arguments abound about how it hurts an industry pocketbook; piracy takes money from the developers and drives the cost of production up. In a sense this argument is flawed, but stands with a degree of merit. Developers are paid upon completion of a product by the publisher who in turn pays a distributor to place it on store shelves. Customers then enter the store, and buy it for a price. At the bottom of the tier, developer make the least amount of money but get it all up front whereas retailers and publishers get the money last but have increased potential for profit gains. It’s obviously a lot more complex than that, but for the purpose of this piece we’ll leave it at that. In the end, piracy does financially take a toll on companies - just not the parts that we're told. Companies want us to feel bad for the little guy - the developer or the artist when in reality the publisher and distributor, the big guys take the brunt of it.

But why are people so divided about piracy?

Piracy advocates claim that piracy is responsible for putting names and faces to the products people love, specifically around the Internet. Adobe Photoshop, Norton Anti-Virus, and  Microsoft Windows remain some of the most pirated programs on the internet and it is piracy that has given these companies a hightened level of success. Surely if it's good enough to steal then it's a good product, right?

Access to the Internet is becoming a fundamental basis for being able to participate in the culture and politics of late modern society. The more important this communication gets, the more important it becomes to keep it neutral and open, not in the hands of politicians or corporations.

Studies have indicated that some college students feel it’s wrong to plagiarize but okay to illegally download MP3’s, or at least that is one argument for the hypocritical irony behind it. I don’t feel that the two are so similar that they can be linked. Plagiarism is taking the work of someone else and pawning it off as one’s own where as downloading an MP3 that wasn’t paid for (and not also free) is plain stealing.

XBMC, the most popular alternative setup on modified XBOXs allowed users to swap the hard drive out for a larger one. The purpose being to turn it into a media center. This however wasn't the primary use. Pirates converted the XBOX to a device that could play copied XBOX games and downloaded movies. It was simple, efficient and stable. Torrent searching and media streaming were implemented as part of the functionality and yet XMBC was never sued despite that it helped facilitate the act of misappropriationon.

PSN games have a 5 use license. Players make the purchase and they can delete and reinstall up to 5 times per item. Players can also give out their PSN account data to friends and family so that they can access their Playstation Store account and download to play anything the original user downloaded, but it uses up one of the 5 licenses.

A BSA and IDC piracy study shows astronomical figures of 41% of software on PCs being pirated costing companies billions. Other reports echo the BSA and IDC findings with further studies of their own such as the Detriments of Worldwide Software Piracy while The Economist argues that the estimates are wrong:

The association's figures rely on sample data that may not be representative, assumptions about the average amount of software on PCs and, for some countries, guesses rather than hard data. Moreover, the figures are presented in an exaggerated way by the BSA and International Data Corporation (IDC), a research firm that conducts the study. They dubiously presume that each piece of software pirated equals a direct loss of revenue to software firms.

To derive its piracy rate, IDC estimates the average amount of software that is installed on a PC per country, using data from surveys, interviews and other studies. That figure is then reduced by the known quantity of software sold per country-a calculation in which IDC specializes. The result: a (supposed) amount of piracy per country. Multiplying that figure by the revenue from legitimate sales thus yields the retail value of the unpaid-for software. This, IDC and BSA claim, equals the amount of lost revenue.

Companies profess to want certain things to end in the public eye, but in reality the things they speak out against contribute to their success. They’re like crack dealers giving the first line out for free; enough to get high and addicted and then you’re a return customer for life. This isn’t an uncommon business model. Free samples get handed out in malls, supermarkets and ship in USPS for the sole purpose of putting a product in the hands of people in hopes that they’ll become loyal customers in the future.

"Although about 3 million computers get sold every year in China, people don't pay for the software. Someday they will, though," said Bill Gates in 1998 to an audience at the University of Washington. "And as long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade."

I am not going to profess to know whether or not software piracy is the scourge that industry experts profess, but I can tell you that it seems odd that the only presented solution by these paid experts is to “buy the software". A wealth of information, technological surpluses and bottomless data mines and the best they come up with as a solution is “buy it”?

Something reports don’t seem to take into account is the rise of open software as a possible decline in piracy and continuing assertion that the only alternative to piracy is to spend money. OpenOffice, Blender, Wings3D, PovRay, GIMP, and Linux are all “open” and usually free to download and use and often times do many of the same things that Photoshop, Office, Carrara, Maya and OSX do but they don’t do a lot of things too. The developers of open should pay attention when closed software gets pirated. It allows them to see what things people look for, figure out why its being stolen and then prompts them to develop more things for existing open software. Still, the reports don’t tend to look at this as a possible option in the declination of global piracy and instead tend to focus on the idea that spending money on companies that bring convoluted and contrived DRM and copy protection management software like StarForce or develop pesky (but crackable) dongles for programs like Izware’s Mirai. Why not even to adapt the Gates’ idea and insert the games on torrent site purposefully… hmm… looks like RedLynx thought of that already. Note in that articles it discusses the developers coming up with that idea, not the publisher. Clearly the publishing companies are worried about their profits, and with good reason, but painting it in a way that defines piracy evil on all aspects is bad. What of the people who copy something and never sell it. For most part, a copied game can't be resold, only distributed freely. So the real fight that publishers and distributors take on is the profit loss in the free distribution and nothing in terms of the developers they profess to care about.

The other thing they seem to stop short of is looking at customer value of the product. A publisher and distributor can make all sorts of justifications as to the cost of an item but if the price of that item is not what the customer is willing to pay but also what the customer feels the product is worth.

My theory is that they don’t want piracy to end and this is all theatrics. Weird Al Yankovic said it best when he wrote:

"I know Darth Vader's really got you annoyed
But remember, if you kill him, then you'll be unemployed"

Piracy (as unsavory as it may be to some) drives a facet of the software market. Millions of dollars are lost, but millions more are generated by companies seeking to thwart pirates with new devices and methods of ensuring companies maintain their profit integrity. If the world had no thieves then locksmiths would be jobless, right? If there was a cure for cancer then Big Pharm and other medical research labs wouldn’t be getting billions in funding to ‘find a cure’. So in reality, software piracy is a symbiotic entity on a fish eating its own tail.