The case against software piracy
April 2, 2007
You don’t steal what you bash!
On the one hand, I see many people using cracked versions of (amongst others and for instance) Microsoft Vista and Microsoft Office 2007. These people often pride themselves by saying they never bought a software from Microsoft apart from OEM versions. And on the other hand, the very same people spend a lot of energy, saliva and time knocking to (for instance) Microsoft software.
After watching this type of behavior for several years and giving it some thought, I now systematically step against these people and engage discussions based on the following rationale. you can’t steal products from a company and criticize it at the same time. If you criticize these products so harshly, it may well mean you don’t need these products. So why download and crack these?
By stealing a product from a company (be it software or cheese), you actually disfranchise this company to a revenue equaling the price of the product. This revenue would have been partially reinvested in building a better version of the very same product. Those who pay have the right to criticize because they contribute to improving the product. Those who steal have in my opinion no right to criticize the product as having these pirates saying “this product sucks and is getting worse” is a self fulfilling prophecy. Indeed, how do these guys want this product to get any better if the company that manufactures it doesn’t have the revenues to reinvest in building a better product? Where do product teams find the motivation to give their best, take their work the extra mile?
Things get even worse in the very case of software applications. Quite understandably, Pirates hardly register to the software vendor. So, the software vendor don’t get user feedback from these users - meaning not only do software pirates prevent software vendors from cash they would need to reinvest in building a better version fast, but crackers also harm the capability of software vendors to collect accurate market data and work in the right direction. Hence the fact that pirates also harm the user experience of people who actually purchase software in the mid run. Isn’t that sort of behavior called killing 3 birds with 1 shot?
Let’s briefly examine the case of Microsoft now: I don’t know the exact software license piracy rate figures, but I know the French ones (40%) and the Chinese ones (70%). Let’s be optimistic and assume the global license cracking rate to approach the 1/3 waters (and I’m being very optimistic). So, Microsoft making US$44 billion in revenues from selling software licenses representing 2/3 of the revenues it should have generated means true Microsoft’s sales (net of piracy) should reach 66 billion US dollars.
As structural costs are already taken into account and the marginal software distribution cost is negligible, and providing that the utopia of seeing piracy suddenly stop came true, Microsoft would have JUST THIS YEAR 22 billion US dollars of additional free cash flows to work on improving its applications (recruiting more developers, investing in better CRM, support and feedback collection system, etc.) and working on building better communication channels with its software users. 22 billion USD in one single year, that’s a massive amount you crackers steal from we users who actually pay for the software we use (and not necessarily always like, I acknowledge). Because it’s 3:30am (still with a pile of stuff to do for tomorrow) and I don’t have accurate numbers to crunch, I’m not delving into the all times cost-of-piracy-at-Microsoft calculation, but I guess it easily tops 100 billion USD. This sum of money could also be used to offer software rental services in Africa for instance, to help democratize the use of computers. But there’s no way you would spend the slightest penny on a product, like a software app, that is not material - am I right?
I hope I’m making my point: if you do crack software (like something like one third of the world computer literate population does), then criticizing the software itself and its vendor is, in the eyes of many and hopefully yours now, at an ethical border line.
And yet, the law hasn’t been mentioned in any way in this demonstration…
Jeremy Fain
alexandrelucas
Kari Silvennoinen
Lucien Huang
raphael encaoua
Leonard Sellem
Fidji SIMO
Matthias Schwenk
Remy MIRALLES
ceciiil
Emmanuel Perez-Duarte
Raj Sheelvant
Georgia
April 2, 2007 at 08:46
Jeremy, aren’t your forgetting to integrate 2 main points into your thoughts:
1) In a ‘perfect’ (?) world, where software applications were impossible to crack, what would be the real percentage of additional cash flow from pirates that buy that software? I guess it would be far from 100%…
2) Some major software editors (Microsoft, Adobe, etc.) premium-price their products because of their quasi-monopolistic market position. Thus, they can sell software products twice or thrice the price of its actual value on a perfectly competitive market. Indirectly, honest customers pay for their pirate-counterparts.
Conclusion from 1) and 2):
Software applications with many competitors (FTP uploaders, language software - as you posted about it recently -, …) and lower prices seem to be much less cracked than premium products.
April 2, 2007 at 08:53
Rupert,
1) I am obviously assuming all users, regardless of whether they had already paid for software or not, pay for their software in my ‘perfect world’ picture as you called it.
2) Do you call Vista Premium Edition, Office 2007, Adobe Photoshop, Macromedia Dreamwaver and 3D Studio low price products? Could you please be more accurate about what premium products are in your opinion? Thanks.
April 2, 2007 at 10:28
No, for me Vista Premium Edition, Office 2007, Adobe Photoshop, Macromedia Dreamwaver and 3D Studio are obviously premium price products thanks to their quasi-monopolistic market situation.
April 2, 2007 at 12:43
It’s an endless discussion, this one, which was started since the first software was pirated.
If I were a software-developer, I would welcome any criticism that could help me improve my product. All other arguments you make in regards to stealing being wrong, are valid imo.
My favourite model is: charge professional customers who use software as means to make money. Use all other people as free beta-testers and bug them with annoying pop-ups.
(Non-pro’s are usually the ones that pirate in my experience, fot the obvious reasons that they can’t afford it and have way too much time on their hands. And all software is crackable so there will never be a “perfect” world, whatever that means.)
April 2, 2007 at 21:12
Lets look at the debate from the point of view of proprerty rights.
Lets compate software to generic drugs.
- People need drugs which have been developed in the West to cure their terrible diseases. Local companies use the molecules to produce drugs. Means for the owners of the property rights to counter this abuse are inexistant.
Same for software. People want to enjoy life. They cannot afford the software, they just copy it and use it.
April 2, 2007 at 21:14
By the way, for a monopoly, i believe that there should be allowances provided by the state to buy Msoft softs bc otherwise they are victims of the “digital gap”.
April 2, 2007 at 23:06
Alexandre, come on, how can you write such things. How can you compare software with drugs when the latter are used to save lives?
Furthermore, Microsoft is no monopoly but a company that is being going after SAP & Oracle in the enterprise market, after Google & Yahoo! in the Internet market, after Apple & Sony in the consumer electronics market, and is being purchased by a bunch of very competitive free software on its core markets (OS & office apps).
+ Microsoft does a lot for software to be affordable in countries like Africa.
April 3, 2007 at 11:37
Well, i am quite serious saying this since the principle applied is the explanation used by the people who defraud Msoft is the same as the one used for illegal use of patented drugs.
Come on, it benefits everyone! Rupert is right when he says that people would not buy the software bc it is too expensive. It benefits hardware a bit more, but there is a lot of competition out there.
April 3, 2007 at 12:08
I think one of the difficulties that Microsoft and some of the other large vendors face is based around their pricing model. Even in Ireland the piracy rate is 37% or so. It is extremely hard to convince people in small businesses that they are actually doing something wrong.
It’s like people taking pens or other stationery from work, they just don’t see it as stealing.
In my own experience, reminding them how much they will have to pay in fines is the only thing that makes them sit up.
Yet MS and other companies continue to pump in functionality that many users don’t really need and end up offering “bloatware” at what seem like inflated prices.
April 3, 2007 at 13:59
You do realise that nearly every new machine that people buy comes with a pre-installed Operating System, thus taxing customers automatically even if they want to run Linux, right? Microsoft is already making plenty of money, and the way they built Vista, means that many people will have to buy new machines just to run it. But I don’t want to make this thread about Microsoft, because I’m not a fan.
In my opinion, and this follows the discussion in open source (or any digital product), economic realities dictate piracy or the lack of.
1. software is digital, easily distributable, and crackable.
2. the internet is a global place with many different legal systems and cultural/personal beliefs in regards to “paying for stuff.”
3. software is not a tangible product and it is often difficult to determine whether the price charged for it is fair.
4. the majority of pro-users are forced to buy software because they produce commercial work and will face steep fines if they use pirated tools.
Little of this has to do with taking a moral standpoint, which Jeremy is trying to make the case for. Because, frankly, people are more motivated by perceived boundaries than their own feelings. So the argument as to whether pirating software is wrong or right is entirely pointless, as obviously it is wrong, but also obviously people will continue to pirate it.
In my opinion it is more of a problem that the current revenue model for software in no way or how matches the complex reality of how the internet works. Note that I’m not saying prices are too high or low.
(Sorry for writing so much, but I don’t have a blog anymore :p)
April 3, 2007 at 18:14
Vincent> My whole point isn’t to look at software piracy from a moral view point, but to bring to light the fact that many people who don’t pay for commercial software (crackers, pirates if you like) allow themselves to bash both the software and their publishers.
I believe this is wrongdoing: if this software is so bad, then why do they feel the need to take a risk and crack it?
April 3, 2007 at 19:55
Microsoft products affordable in developing countries? Windows Vista Basic costs 295 dollars in China and laborers make about 160 dollars a month.
I don’t know, but saving up two months to buy Vista Basic?
I’m just joking and not really making a point, but those figures are about right accroding to the interweb.
April 4, 2007 at 10:00
Not only that, but the Windows versions being sold are severely handicapped in the sense of capabilities. I think they’re just doing it to have a negotiating strategy with the WTO/UN/whatever to say” “Hey, we provided them with an alternative, we really did. But they didn’t listen. Sue (bomb) them people, sue (bomb) them! Hahahaha (evil laugh)”
@Jeremy: most people don’t crack it, they download an already cracked version. In my opinion they still qualify as users, as a. there’s a ton of data there, b. they can spread viruses, etc. via the apps if they are connected, with the blame falling on the software-maker. Thus they should be listened to anyways.. and the software-maker should upgrade their security. Which is the way software-makers are already operating.
And as far as hacker-ethics go, there is no way to completely understand it. They are probably a god in their community and thus feel that they can comment/complain about everything they want.
April 5, 2007 at 11:30
No understanding of hacker ethic? But there’s even a book about it! http://www.amazon.co.uk/Hacker-Ethic-Pekka-Himanen/dp/037575878X
(if, by hacker you mean the people who hack, not people who download/distribute warez)
April 19, 2007 at 23:53
Kari> regarding your comment (#12), watch this: http://codor.blogs.com/intro/2007/04/with_great_powe.html