Piracy and How to Reduce It
Upon reading this piece that Alec Saunders wrote about Pirate Bay’s recent legal problems, I remembered something that happened to me a while ago that I feel is relevant to the discussion. As some of you know, I’ve written a couple of books on Check Point VPN-1/FireWall-1. I was told by someone some time ago that an electronic copy of one of my books appeared on the Internet on a site that distributes copyrighted materials illegally.
I was very conflicted upon hearing about this. If I believe the publisher’s point of view, I am losing money as a result of this “piracy.” Another part of me was flattered that someone thought my book was good enough to make an illegal copy of. The logical part of me came to the conclusion that piracy happens and there’s not much you can do to combat it.
Someone posted a comment to Alec’s blog posting thinking that Alec might have had a different opinion if they were posting copies of Iotum (Alec is the CEO of Iotum, which makes a relevance engine for telephony). Alec’s response? “Technology is pushing an old industry where it doesnt want to go, and the techniques theyre using to fight that technology are ineffective.”
Much like the war on drugs is doing so much to curtail the use of illegal drugs in this country and others, cracking down on piracy is doing little to stop it.
Why do people pirate content, i.e. make an unauthorized copy of it? Some would argue it’s because people are ignorant about copyright laws. Some would argue it is because people are too cheap to spend the money on the content. Others would argue it is because people are unable to get the content they want through legal means, or that content is provided in a form that is not suitable for its intended purpose, for example a DVD that you want to watch on your iPod, or a physical book that you’d like to be able to take with you on your laptop.
While I can’t take credit for coming up with the original idea, I have modified it a bit from the way I originally saw it. I will present it here anyway. The piracy equation is the likelihood a particular piece of content will be pirated, which looks like this:
Likelihood of piracy = (cost of legal content * value of pirated content )/ (cost of pirating content * value of legal content * likelihood of getting caught)
Cost here is basically the purchase price or the amount of money/time you must spend to pirate. Value here refers to what you can do with the content once you have it. The risk of getting caught is self-evident.
So let’s see how this plays out with a few examples. Let’s take a copy of Microsoft Windows as an example. The cost of Microsoft Windows is fairly high. The cost of piracy is fairly negligable as is the likelihood of getting caught unless you are moving a large number of physical CDs in countries with strong intellectual property laws and actually enforce them.
Part of the cost of pirating Microsoft Windows includes dealing with the activation process, which hackers have made an easily solvable issue. In this case, I would argue the value you get from the pirated content is actually higher than you get than the value you get from the legitimate product. Why? Ever upgrade your computer and try and run Windows? You have to deal with the lovely, time-consuming activation process all over again. With the cracked version? Not an issue.
How about mobile phone accessories? It was in the news recently that some of Nokia’s phone accessories were being counterfeited, specifically batteries. What’s the cost of those products? Fairly high as well. The value for counterfeit goods versus the real deal? About the same, they cancel each other out. The cost of piracy? Much higher than with software since there are physical goods involved. The likelihood of getting caught? Much higher as well since there’s physical goods involved. There are multiple suppliers of those physical goods (e.g. the plastics, the electronics). There are many people involved. Where do you see these accessories being made? Again, in places with either non-existant or poorly-enforced intellectual property laws.
Now let’s look at something else: music. The cost of music is relatively low. The cost of piracy, however, is even lower as it the likelihood of getting caught unless you are mass-producing counterfeit copies of albums. The value you get from illegally obtained music is higher because it’s more portable than the legally obtained stuff. The proliferation of broadband and the rise of the MP3 file format made it even cheaper to pirate music, thus why Napster (in it’s original incarnation) and other forms of peer-to-peer file sharing have taken off so well.
A funny thing happened to the piracy equation for music a couple of years ago: Apple’s iPod and the iTunes Music Store. Oh sure, legal music had been available online for a while now, but not at the price that Apple was charging–$0.99 US. They also made it so you could use the music on more than just your computer, namely your iPod and your CD player (i.e. ability to burn content to CD). Apple puts “reasonable” restrictions on the content it sells. The value of “unresticted content” found on peer-to-peer networks is higher than the DRM-protected content in the iTunes Music Store, but they are much closer in value than they ever were before.
Apple has proven one thing–people are willing to pay for content online if it is priced right and if the value they obtain from the content is high as well. Has that caused piracy to subside? Not really, however at least the record companies are making more money than they were if Apple didn’t drag them kicking and screaming into the online world.
The RIAA and the like are trying to change the piracy equation by increasing the likelihood of getting caught, or at least making it appear that the likelihood is higher. They are using the gestapo tactics of going to ISPs–without any legal authority to do so, I might add–and saying “give me your access logs.” They are then taking this information and figuring out who to sue. They are using the threat of a protracted legal battle to extort money from people that don’t have it for the express purpose of scaring people into doing “the right thing,” i.e. not pirating content.
At the end of the day, the RIAA and the like cannot control the fact that people pirate content. They cannot reasonably affect the likelihood of getting caught. However, they seem to be focused on something outside of their circle of influence, and that’s not bound to work all that well.
A much saner approach to combating piracy is to increase the value of legal content over illegally obtained content. This means giving people the freedom to do what they want with the content, not unduely restricting access to it. This might be giving them something extra, such as access to support services, special discounts on other products and services, or providing something else of value to the customer. There are any number of ways of increasing the value of legitimately purchased content if they’d only stop and think about it.
Another approach, which can be taken in addition to increasing the value of legally obtained content, is to lower the cost of the product. My editor at Addison Wesley once told me that in order to combat book piracy in poorer countries like India, they frequently have to sell books there at a much cheaper price, else the books would be too expensive for the average citizen and the incentive to purchase it illegally is much greater. Microsoft is also doing this with its operating system and Office products by coming up with a “pared down” version of them for developing countries.
Both the value of legal content and the cost of the content are something well within the content producers control. Doesn’t it make sense to focus your efforts on things you can control rather than things you can’t? Will doing both of these things eliminate piracy? No, I’m afraid not. However, what you will do is increase the number of paying customers as their own personal “likelihood to piracy” equation is tipped in favor of going the legal route.
