Is "just enough piracy" good for the software business?

Filed under: Security, News, Microsoft, Commercial

Is "just enough piracy" good for the software business?

by Marc Perton Aug 25th 2005

Sure, software piracy is a bad thing (especially when the victims are small developers looking for a break in a market dominated by the big boys — so pay those shareware fees, already!). However, in a recent blog posting, Chris "Long Tail" Anderson argues that a little piracy can actually be a good thing. Anderson says that for DRM to be successful, it would have to be so onerous that it would actually undermine sales, citing the examples of hardware dongles (mostly abandoned by software companies) and onerous registration processes (alas, still with us). Instead, he suggests that companies acknowledge that they're always going to have to deal with a certain amount of piracy, and adjust their business models to it. He even mentions speaking to an unnamed former Microsoft exec, who says the company long ago gave in, and ceded the bottom end of the market to pirates, recognizing that it was better than slashing prices to make their products attractive to more consumers. In turn, says Anderson, Microsoft has been able to charge more for their products, while making them less difficult for corporate customers to install (of course, that doesn't factor in recent efforts like Genuine Advantage, but that's Microsoft for you.) I actually think Anderson's comments make a lot of sense; it's sort of like the way retailers have functioned for years. They quietly factor in a certain amount of "shrinkage" as the cost of doing business; the alternative, of putting everything behind glass, would drive away too many legit customers. Is the software industry's equivalent that torrent of Microsoft Office being downloaded by a teenager would never pay for the legit thing anyhow?

Reader Comments (Page 1 of 1)

Peter said 9:55AM on 8-25-2005

To be sure, companies can never eliminate piracy completely. The problem is when they "adjust their business models" it simply means legitimate customers paying higher prices so the company can make the same profit. That seems pretty unfair and if taken too far would drive more and more potentially legitimate customers to pirated products.

Lisa said 10:30AM on 8-25-2005

There seems to be less of a reason for pirating MS products or actually any mainstream products these days.

There always seem to be a free alternative or a very cheap one at that.

Take MS Office for example, why bother pirating that when OpenOffice does that and more?

Zelidar said 10:31AM on 8-25-2005

Piracy is not all that bad. It enlarges the potential market **for free** and also helps the "Pay if you like it" philosophy. I always end up providing financial support for quality software. Of course the price must be right.

Talking about silly prices, I would not be surprised that Adobe is the most pirated software company. Microsoft has given a lot more thinking into it. Ever heard about the Windows XP Light? Read on�

http://www.geek.com/news/geeknews/2004Aug/gee20040812026449.htm

lost.sync said 10:26PM on 8-25-2005

most people i know who use pirated software buy it after they prove to themselves that it's worth the cost. also, lots of people won't shell out the cost for titles from adobe or macromedia before they know how to use them, which makes a lot of sense to me, honestly. i'd be pissed if i bought illustrator and then later decided that corel draw was a better product, or easier for me to use to get the results i wanted. you can't take software back to the store.

i really think shareware is a pretty decent approach, but it should be shareware like mIRC where you get nagged about once a month, and can use it fully for as long as you like, until you're ready to buy it. companies could figure out a way to keep track of your usage and could up the nag rate if you run an app 5 times a day for 2 years without paying for it, or cripple it or something. but if you just use photoshop once a year when you redo your website, is it worth the price? hardly.

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