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Piracy Hurts Us All

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Piracy Hurts Us All
Last Updated: 01 Sep 2003

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There is no justification for piracy. Not high prices, not
shoddy code, not low income.  And piracy hurts consumers
even though there is not necessarily a loss of physical

The common excuse is:
  "If I wasn't going to buy their product anyway, then
   they're not losing money to piracy."

Well, this is bogus, because you're getting the benefit
of their labor, without them getting the benefit of
proper compensation.  And, you're likely to become a
burden on their support system as well -- all at a cost
to them.

Here's a scenario that illustrates a few of the ways in
which consumers are hurt by piracy:

A company produces a product which they sell for $75,
intending to make $100,000 in sales for the year. The
product sells well enough, but some folks decide that
they like the product, but not to the tune of $75, so
they pirate it. Sales are lower than expected in the
first quarter, but the company can't tell why, so they
increase their marketing expenses.

By mid-year, the company realizes that it is piracy
which is taking a toll on quarterly revenue, since even
more potential patrons decide that they're not paying
for a product that they can get it for free. To stem
the loss of sales, the company is forced to implement
a costly protection scheme (ala dongle) and raise the
cost of the product (to $100) to make up for both lost
sales, and the cost of integrating the anti-piracy
mechanism into their product.

An unfortunate side effect of the anti-piracy technology
is that support costs go up, since there are potential
conflicts with other devices a consumer may have on his
or her system.

As word gets around of the compatibility issues, paying
customers become disgruntled. It doesn't help that the
product is now harder to maintain, and that the price
has gone up for new, honest customers. Due to these
factors, and the ill-will generated by the anti-piracy
measures (which these customers may not understand),
even more customers abandon the product and the company
is forced to lay off staff to avoid closing shop entirely.

When a new version is produced (which takes longer with
the smaller staff and increased testing that must now
take place), the company is unable to release a
competitive upgrade price for those users who don't
already have a dongle, since there is no way for them
to validate that these users are legit. Additionally, a
smaller staff means a more modest upgrade, which makes
the cost harder to justify for the consumer.

Ultimately, customers are deprived of a cost-effective
product that addressed their needs, and have to contend
with additional support issues, because some folks
couldn't play by the rules.

This scenario has been the death of quite a few smaller,
entreprenurial firms that were providing innovative
products because they couldn't deal with the overhead
required to protect their products from piracy.  This
leaves the industry with only the large companies that
are less responsive to consumer concerns, but have
enough cash (or clout) to protect their investments.
And a loss of competition results in less incentive to
lower prices or increase functionality.

Many a game company went under in the 80s and 90s for
these very reasons.

People who pirate are not driven by product cost, even
though that is the most commonly cited factor. This is
easy enough to prove by looking at the low cost of some
pirated software.  I've seen things like WinZip (at $25)
pirated, so it can't be cost -- especially if there are
free alternatives.

Stealing software doesn't induce companies to lower
costs, because it implies high demand. If you want a
company to lower its prices, simply fail to obtain
their product until the price drops to your comfort

Also, the fact that a company is profitable does not
mean that they are unaffected by piracy. If I take $10
from your paycheck, you're not likely to overlook it
simply because of how much I leave behind -- yet, it
is still theft.

The people who pirate are operating under the misguided
belief that they are ENTITLED to the fruits of other
people's labors, which could not be further from the