Since it seems to be impossible, from a technical standpoint, to prevent piracy, then maybe we have to accept the free rider problem and produce intellectual property on a public basis. One option would be a grant system, as is used in scientific research (solving the free rider "problem" that anyone can read your paper and use your research).
There are numerous other ways to approach it. For one, you can compete with free, and many do precisely that ( Cory Doctorow gives away digital copies of most of his work, but still makes his living mostly by and from his writing.) Another is to sell the associated scarcities rather than necessarily the copyright system itself (as Red Hat does).
And trying to produce it on a public basis produces problems in deciding what to fund. You run into this in public funding of science to, but there often are at least some public goals which helps guide this decision. It would be much more difficult to do with other forms of intellectual property (though we do in fact already do it to a limited degree, look at the National Endowment for the Arts).
Gates has also, in the past, confirmed how important piracy is to Microsoft: "Although about 3 million computers get sold every year in China, but people don't pay for the software... Someday they will, though. As long as they are 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'm convinced Photoshop is intentionally easy to pirate. They make money from business customers, and everyone willing to pay, and because it's essentially free for people unwilling to pay, there isn't much room for a competitor.
All listings are free. With the exception of job postings and agent housing ads in NYC. The exceptions provide enough revenue for the small (~40) staff of CL to keep things rolling. The free postings zero out revenues for anyone else looking to compete in the same space, establishing a large marketplace with strong network effects and an effective monopoly.
We certainly don't want all OSs confined to closed hardware like OS X.
Ubuntu (and open source in general) works because of inverse-free-riders, "free helpers" we might call them. That seems to be a sustainable model, but it likely won't work for annoying grunt programming - note the poor driver support in many Linux distros. For some tasks, someone needs to be paid.
A big couse in pour drivers support is that companies dont publish specs to their devices. If there was only one dominant free OS like linux, companies that make hardwire would want their devices to work with it and so will write drivers or at least publish full spec.
I disagree that it is really sustainable on an industry wide scale. Who pays the salaries of the free helpers so that they have the free time to contribute?
Windows doesn't write driver software either. It's up to the hardware companies to make their hardware compatible if they want to sell it. Windows just happens to have the largest market share. If Linux had even one tenth the share of windows, drivers wouldn't be an issue.
First of all, copying is completely different from stealing, but we've been over that before.
Secondly, stores actually do deal with shoplifting--they euphemistically call it "inventory shrinkage" and just chalk it up as an expense. "Unauthorized" copying isn't even an expense!
Fair point — I was being a bit facetious — but the fact remains that if a critical enough mass of people steal/copy Windows, it’s no longer economically viable. Every user who hasn’t paid for it is being subsidized by those who have.
Windows may not be the best example since it’s so massively profitable, and sells a lot to enterprise customers and OEMs who won’t pirate it. That said, I suspect the business case for producing high-budget, non-mass-market consumer content (say, HBO shows) is starting to tip. How many people pirate Game of Thrones for every one that pays for it?
In the end, we live in a capitalist society — the people making software, movies, music, books, etc. have to get paid for the stuff be made.
So MS would announce that it is no longer making Windows, and companies would then have to decide whether they want to stay in business by moving to another OS or not. I'm sorry, but I think there is a STRONG argument that if something can be obtained easily for free, or worse can be obtained MORE easily for free, then trying to defend the model by making free illegal is much like trying to make people pay a wave tax or it's illegal for them to touch the water at the beach...
"Wave tax"... not bad. I've been trying to work out an analogy myself, flush-right law. Imagine it, we could set up a paradigm in which the plumber who installs a toilet includes a little gadget that makes sure you don't flush a toilet without buying a flush-right from him by authorizing a little payment. Call the technology a Effluent Rights Management (ERM) system. It would need to be complemented, of course, with some legislation making it illegal to circumvent ERM, etc, etc, wouldn't want flush thieves simply taking the devices off their toilets.
And there it is, an artificial market created through technology and legislation, just like the copyright market. I'm sure plumbers would be eager to point out the virtues of having such a system.
If there was legitimately no demand for these products, then sure, they should move on and make something else instead. But there is a demand for them — it’s just that many of the people consuming it are stealing it. This is what laws are there for.
Again, I know this analogy isn’t perfect, but what you’ve said is not all that different from telling a shop owner who was robbed that maybe he should do something else instead.
We're talking about large-scale sharing of movies and software, not 'stealing'. It isn't desirable or practical to have the government regulate the Internet and punish offenders to stop this sharing, so content owners are going to have to adapt.
A more suitable analogy would be to a bookstore owner who's struggling because of (legal) Kindle downloads. Sucks for him, but time marches forwards. Perhaps he should partially convert to a coffee shop or similar.
The word "stealing" is an emotive slogan, not a neutral or accurate description. You must realise that by using it you make yourself appear partisan. That diminishes the impact of any point you are trying to make.
Yeah, it's fine to steal from stores because they budget for it, it's fine to steal from people's homes because they have insurance, etc. Nobody loses!
I'm curious who your employer is and what your response would be if the parent said "What happens if nobody pays for a copy of <your company's most profitable product>?"
That explains why they are not identical, that does not explain why they are not comparable. In both cases a single bought copy is shared with an indefinite number of non-paying readers.
What happens if nobody pays for a copy of Windows 8? There won't be a Windows 9.
That would never happen unless MS charged an outrageous sum for it.
If any company finds itself in the position where nearly all of the users are pirating, then there's something wrong. They're charging too much or the DRM is too onerous, or something.
EDIT: if you charge a fair price and make something available, people will buy it rather than pirate it. Louis CK and lots of other people have shown this.
"EDIT: if you charge a fair price and make something available, people will buy it rather than pirate it. Louis CK and lots of other people have shown this."
There are two problems with this assertion. The first is that people's current working definition of a "fair price" seems to be $0.00. Are we really to believe that paying $1.29 on iTunes, or $0.99 on Amazon, for a DRM-free music track is "unfair"? Or that the user experience on either of those services is horrendous and painful? Come on. People pirate, in large part, because they prefer not to have to pay for something if they can get it for free. Let's be honest about that fact. If there's an impulse to "stick it to the man," so be it. I'll be the first to admit that the targets of this mentality -- the entertainment and software industries -- could use a good sticking-to. But let's not pretend that the moral-crusade argument is the sole -- or even the primary -- motivation behind most people's piracy of content. The primary reason is the price, i.e., zero.
Second, while I agree that Louis C.K.'s release shows promise, he seems to be an exception to the rule so far. Who are the "lots of other people" that have "shown" that charging a fair price leads to buying over pirating? Let's take the highly-touted example of Radiohead's pay-what-you-want release of their album "In Rainbows" in 2007. According to the post-release data, 62% of all downloaders of the album paid $0.00.[1] The next-largest segment, 17% of users, paid somewhere between $0.01 and $4.00. If Radiohead were not Radiohead -- i.e., not enormously successful prior to the release of the album -- then they'd not have been able to bear the razor-thin margin on the sale. Essentially, Radiohead gave the album away because they could afford to do so.
When Trent Reznor and Saul Williams released an album online that same year, in the Radiohead model, they gave users the choice between paying $5 and paying nothing. Approximately 154,449 users downloaded the album, and 28,322 users (about 18%) paid for it. At $5 per unit, that's a grand total of $141,610 in revenue for the album, and more likely than not, the production costs met or exceeded that revenue.
And those were hardly releases by big, onerous, anti-consumerist conglomerates, either. Those were pro-consumer, digital-friendly artists willing to put themselves out there to test precisely your proposition: that, if given the choice, people will pay. It seems that, by and large, they won't.
>grand total of $141,610 in revenue for the album, and more likely than not, the production costs met or exceeded that revenue.
Then the business model needs to change. $100K+ is way more than enough to produce an album with modern technology, and it's only going to get cheaper. Music doesn't make as much money as it used to, there isn't room for dozens of middlemen siphoning off the inefficiencies.
In retrospect, I have come to partially disagree with my own assessment. I did not account for the fact that Radiohead also released an $81 box set with the digital download, and that 100,000 loyalists bought the set -- earning the band a cool $8.1 million in addition to the revenues they earned from the digital download (believed to be in the ballpark of $3 million). When you factor this in, the band did very well for themselves. Not quite as well as they usually do on big-label albums (even after middle-men's takes). But for an experiment, I would call it a success.
What's fascinating about "In Rainbows" is that roughly 8% of the users accounted for approximately 80% of revenues from the site. That speaks volumes, and it dovetails really well with recent blog posts (linked here and elsewhere) about the new metrics of success in digital distribution: i.e., monetizing loyalists. A small core of loyalists who are willing to follow you to the ends of the earth are worth more than fairweather fans.
I'm actually contemplating doing a more in-depth analysis on this, Louis C.K., Reznor, and others in this space. While I believe the jury is still out, and I believe that most people will pay nothing if offered the opportunity, there are clearly those who will pony up -- and even those who will pony up big. Piracy -- or free acquisition, in this case -- doesn't seem to matter too much if the loyalists are there, and you can differentiate the product for them. (In this case, the notion of a "fair price" actually seems to be relative).
It's interesting how Radiohead seemed to succeed by recognizing this fact, whereas Reznor's experiment failed to account for it. And Louis C.K. avoided the free option altogether, which is another way to go.
You are not putting forth an argument against my statement. I said "a fair price" and did not include $0.00. Louis CK charged $5. Radiohead and Reznor/Williams let buyers choose. These are very different experiments.
Lastly, I was a huge Radiohead fan until their "In Rainbows" release. I thought it was horrible. After previewing the songs, I didn't buy/download it. I wanted to very badly, because I wanted the experiment to work. I think they did the experiment on that collection of songs because they knew they sucked.
While I understand and see your first point, I strongly disagree with your assessment of the album. It was one of their best, IMO, and critics and fans seemed to have loved it. Go figure.
I wasn't the biggest fan of "The King of Limbs," however.
You are merely restating the problem, not putting forward a solution. That's not really adding to the debate.
Copyright exists to solve a genuine problem. When it was conceived in the 18th Century, is was explicitly to encourage and reward the creation of new works (such as Windows 9) that would enrich the public domain.
Few people would argue that the problem has gone away. The current debate is whether the copyright mechanism is still a viable solution.
Was there ever a software company, or music artist, or movie studio that decided not to put out a product because of this so-called free rider problem? Just curious.
Speaking from experience, piracy has a very strong influence on how much money video game companies are willing to spend on development. Piracy is the reason that PC gamers have to put up with games that are primarily designed for consoles, with very little invested in adapting them to a PC interface. Few companies are willing to spend money on PC development when you can only expect a few hundred thousand sales.
> Speaking from experience, piracy has a very strong influence on how much money video game companies are willing to spend on development.
The PC gaming market is very healthy, probably healthier than ever, so I honestly do not know what you are talking about here.
Triple-A games aren't targeted to consoles because of pirates, they are targeted to consoles because consumer demand is higher for console games. Only a few genres are more popular on PC, like RTS, MOAB, and MMORPG.
> Triple-A games aren't targeted to consoles because of pirates, they are targeted to consoles because consumer demand is higher for console games.
The estimated PC install base for one of the console-led titles I've worked on is in the same ballpark as each of the consoles.* The actual sales on PC, however, were far, far less than the consoles.
* We know this due to, e.g. number of people pinging the multiplayer servers, checking for updates etc.
The PC gaming market is almost entirely multiplayer games, console ports, republished older releases, flash games, and independent games sold through Steam. Almost no one is investing significant budgets in easily pirated, single-player PC games. I'm not saying the PC gaming market is unhealthy or dying, but you should realize that every decision PC game developers make is driven by the need to make money in spite of rampant piracy. The OP asked for evidence that piracy has an effect on business decisions - it definitely does for PC games. In fact, I think it's probably the most important factor.
The PC is certainly seen to be less profitable than consoles, which is why it's given a lesser priority.
For multi-platform titles, typically 360 and PS3 titles are developed in parallel. Often the PC version comes later, after the console releases have finished and a small subset of the console devs have time to polish the PC port.
Usually two reasons are given. One is that it's not worth the extra management complexity and dev time to release at the same time as the PC. The other is that the piracy rate on PC is so high that launching all platforms at the same time actually cannibalizes both PC and console sales.
PC games generally cost less at retail, but manufacturing costs are lower and no subsidies go to console owners. Dev costs are slightly harder due to the challenges of developing for a wide range of hardware vs two fixed targets. I think that the profit per unit sale is slightly higher on PC than console (I could be wrong).
Yes, absolutely. The fact that PC sales are normally very low (around a tenth) of console sales for the same title and games without multiplayer are pirated at a much higher rate than multiplayer games is common knowledge and entirely uncontroversial within the game development industry, and always factors into decisions about how much money to invest in PC titles. Pretty much all the major shifts in PC gaming since the late '90s - cheap console ports, the emphasis on multiplayer, MMOs, Steam, etc - have been responses to piracy.
So you're saying that since the difference in PC game sales versus consoles can be accounted for primarily by piracy (not difference in demand), and that PC game sales are 10% of console sales--that 9 times as many people pirate PC games as buy them?
That doesn't take into account that many of the pirates wouldn't have purchased the game if piracy wasn't an option. If we consider that, then we'd need many more pirates, maybe twice as many (18 times as many pirates than purchasers in total), to account for the lower PC sales.
That's not really the way the harm actually plays out.
The free rider problem generally won't affect entities that are very large, rich, and established. Microsoft has a ton of profitable relationships that won't just go away. Besides, they have so much money in the bank that they could easily fund the development of Windows 9 even if they did not receive a penny of revenue from Windows 8. Likewise, Radiohead is not checking the latest rates of piracy before deciding whether to put out another album. They have a big enough fan base that it doesn't really matter.
But, if the free rider problem is bad enough it harms the ability of new entities--who do not have deep cash reserves or established relationships--to grow large enough to challenge the incumbents. To go from garage to professional success means making enough sales to either bootstrap or convince investors to buy in. If most customers are taking the product and not paying, that obviously is going to be a lot harder to do.
You would gave to think that reduced revenue from music has lead to less artists getting funding to produce an album. Of course they can still make it but it might make it harder. Book advance sizes and quantity gave gone down.
What we do know is that many companies who do put out software are implicitly, and sometimes explicitly as in Gates quote elsewhere in this thread, okay with some users pirating as long as their main revenue streams are not threatened.
your suggestion is the status quo (nobody pays but oem's, the ridiculous "retail price" is just a tool the oem's use facing their customers, Look how much more it would cost to build it yourself!). pick a better example :)
What happens if nobody pays for a copy of Windows 8? There won't be a Windows 9.
http://en.wikipedia.org/wiki/Free_rider_problem