A Detailed Explanation Of How The BSA Misleads With Piracy Stats
from the and-on-and-on-it-goes dept
A couple months ago, when the Business Software Alliance (BSA) released its latest stats on "piracy," it's VP of anti-piracy, Neil MacBride, gave me a call to discuss my earlier complaints about the organizations methodology. Needless to say, we did not see eye-to-eye, and the phone call did little to resolve our differences. I'm still hopeful that eventually the BSA will recognize that it's doing more damage to its own position by publishing obviously bogus numbers. So, with the organization releasing another bogus stat today, it's time to explain why it's wrong and misleading.
Today's report is an attempt to get the government involved in protecting BSA member companies' business model, by claiming that the US is losing out on $1.7 billion in tax revenue due to "pirated" software. And, of course, it comes with a lovely quote from Mr. MacBride: "The most tragic aspect is that the lost revenues to tech companies and local governments could be supporting thousands of good jobs and much-needed social services in our communities." And the BSA is even so kind as to quantify what that (not really) lost tax revenue could do: "For example, the lost tax revenues to state and local governments -- an estimated $1.7 billion -- would have been enough to build 100 middle schools or 10,831 affordable housing units; hire 24,395 experienced police officers; or purchase 6,335 propane-powered transit buses to reduce greenhouse gas emissions."
Except that this is almost entirely incorrect and it's relatively easy to show why:
- The report counts every unauthorized piece of software as a lost sale. You have to dig through separate PDFs to find this info, but when you finally get to the methodology it states:
The software losses are based on the piracy rate and equal the value of software installed not paid for.
That's a huge, and obviously incorrect assumption. Many of the folks using the software likely would not have paid for it otherwise, or would have used cheaper or open source options instead. - The report makes no effort to count the positive impact of unauthorized use of software in leading to future software sales. This is something that even Microsoft has admitted has helped the company grow over time. But according to the BSA's report, this doesn't matter.
- The report also proudly notes: "Software piracy also has ripple effects in local communities." However, "ripple effects" are easily disproved as double or triple counting the same dollar. Using ripple effects like that inflates the final number by two or three times. In the link here, Tim Lee explains this (in reference to an MPAA study done by IPI, but it applies here to the BSA study done by IDC as well):
If a foreigner gives me $1, and I turn around and buy an apple from you for a dollar, and then you turn around and buy an orange from another friend for a dollar, we haven't thereby increased our national wealth by $3. At the beginning of the sequence, we have an apple and an orange. At the end, we have an apple, an orange, and a dollar. Difference: one dollar. No matter how many times that dollar changes hands, there's still only one dollar that wasn't there before.
This is a huge fallacy that the BSA an IDC refuse to acknowledge. When I discussed it with them in May, they insisted that they only wanted to talk about piracy rates, not the loss number. I wonder why...
Yet in IPI-land, when a movie studio makes $10 selling a DVD to a Canadian, and then gives $7 to the company that manufactured the DVD and $2 to the guy who shipped it to Canada, society has benefited by $10+$7+$2=$19. Yet some simple math shows that this is nonsense: the studio is $1 richer, the trucker is $2, and the manufacturer is $7. Shockingly enough, that adds up to $10. What each participant cares about is his profits, not his revenues. - Next, if they're going to count ripple effects in one direction, it's only fair to also count them in the other direction. That is, they complain that:
Lost revenue to technology companies also puts a strain on their ability to invest in new jobs and new technologies. For example, the $11.4 billion in piracy losses to software vendors and service providers in the eight states would have been enough to fund more than 54,000 tech industry jobs.
But what they don't acknowledge is the ripple effects in the other direction. That is, if (going by their assumption, remember) every company that uses an unauthorized copy of software had to pay for it, that would represent $11.4 billion in money that all of those other companies could not use to fund jobs at those companies. What about all of those jobs? - The BSA/IDC stat on lost tax revenue also miscounts on the point above, since it includes the lost income tax revenue from those 54,000 lost jobs, but does not count the equivalent income tax revenue from those other jobs. In fact, in the fine print, the report notes:
"Employment losses are calculated from revenue losses, and only apply to employment in the IT industry, not IT professionals in end-user organizations. Tax revenue losses are calculated from revenue losses (VAT and corporate income tax) and employment losses (income and social taxes)."
In other words, the income tax losses only count one side of the equation and totally ignore the lost income tax revenue from the lost jobs on the other side of the equation. Oops. - It seems likely that the eventual tax benefits of the unauthorized use of software is most likely to greatly outweigh the lost tax revenue elsewhere. That's because the use of software within industries is a productivity tool that increases overall productivity and output, which would increase taxes beyond just the income taxes of the employees. The study, of course, ignores this point.
- Worst of all, the report seems to assume that direct software sales are the only business model for the software industry, ignoring plenty of evidence from companies that have adopted business models that embrace free software -- generating billions of dollars for the economy (and in taxes). And that's what this really comes down to. It's a business model issue. If others started adopting these business models as well, there wouldn't be any "losses" at all.
Most of these points have been made to the BSA and IDC in the past, and both organizations chose not to address them. The fact that they're continuing to use these obviously false numbers and methodology to now push for the government to prop up an obsolete business model should be seen as troubling not just for the dishonesty of it, but for the negative impact it will have on the software industry and our economy as a whole.
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BSA Misleading Stats
Apropos of your analysis: Many years ago I was at a conference on the problem of software piracy in Hong Kong. The HK Customs and Excise Dept (the agency responsible for stopping software piracy) had a reception at their offices. A BSA member noted that virtually everyone in the office was using pirated software on their computers. One of the Dept heads acknowledged as such, but noted that "If we had to pay the inflated prices your companies charge for legal copies, we wouldn't be able to pay the salaries of the officers who conduct the software piracy raids that your companies request."
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First, good article. You're definitely right about a potential negative effect on our economy you allude to in the end. I'm not sure I can justify it in the same was as you but it's clearly regression and society doesn't like that, since business relies on society that can't be good.
Second, what else are you doing to counter-act the BSA in their plea to the government? It's obvious that your article is so long that the only people in office that will read it are adviser, who will paraphrase it potentially modifying your general argument you're making. They would either intentionally weaken it because they disagree with you or leave out key points that would get someone on their feet even if the adviser thought it was something easily overlooked.
Third, who is this BSA to calculate what I do with my bandwidth? I'm unpredictable, unresolvable, and unreliable. Maybe I pirate stuff and delete it just to tease these silly organizations and create chaos in the sticks-up-our-asses department.
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"Oh, and just for good measure, the report also falsely claims that: "What many don't realize or don't think about is that when you purchase software, you are actually purchasing a license to use it, not the actual software." That's not exactly true and goes directly against a recent court ruling that said the opposite and goes through a detailed explanation for why a piece of sold software is a sale with restrictions, rather than a license, using previous court precedents."
This is so grossly misleading that I am very much surprised you chose to include it in to your article. It would certainly have helped to mention that this was a trial court decision, and that its hands were tied based upon how the 9th Circuit has defined what precedence must be used when a conflict exists between various panels of the appellate court. Even the district court noted that under more recent precedent the license/sale issues were resolved in favor of the software company, but that circuit rules required that in the event of such conflicts the earliest decision had to be used...and that was a 1977 decision versus the three appellate decisions holding precisely the opposite, which decisions are much more recent (not to mention that the copyright law currently existing in the US entered into effect on 1/1/1978). Perhaps in the near future the 9th Circuit sitting en banc will be called upon to address the conflict, and based upon the more recent appellate decisions in this and other Circuit Courts of Appeal, coupled with the change in copyright law in 1978, the outcome of any such decision is by no means free from doubt.
As for BSA's "rack up" of the numbers and your comments concening the assumptions made, I personally would like to know what analytical method you would use to arrive at what you believe is a more credible number.
And, as much as it will stand the hairs on the back of your neck on end, all the economic analysis in the world you may proffer still does not in the slightest excuse "stealing" (your word...not mine. See: your comment yesterday that extending copyright duration is "stealing" from the public , a "right" in the public that is not expressed in law except perhaps by implication). All laws have a moral dimension, and in the case of "piracy" clearly the moral dimension has been lost on many in a generation that places a higher value on "I want it now", rather than paying up like those who abide by our laws.
One final observation. You chastize those persons/companies who engage in the business of developing and distributing software, calling the business models they use what I term the equivalent of "old school". Economic rationalization, academic studies, economic theories aside, it is in my view presumptuous of you to constantly harp that they need to see the light and give away their workproduct so that they can make it up (and possibly more) providing "scarce" goods and/or services. The simple fact is that not every business fits neatly into the economic mold you openly advocate. Yes, your models can and do work quite well for many businesses, but to generalize it as you do seems to me off the mark. Instead of saying such business have not adapted to the times, perhaps you may wish to consider offering them alternatives directed to their specific circumstances.
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I keep getting confused.
Is it the BSA or NAMBLA that has an unhealthy obsession for little boys?
They seem so similar to me at times.
Oh well.
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Restrictions?
A sales of software is a "sale with restrictions"? On what legal basis does this arise? Certainly not copyright law, which gives a copyright holder a legal privilege of restricting distribution, but does not grant any privilege of restricting the *use* of a copyrighted work. In other words, Picasso can limit distribution of his paintings but he cannot legally force me not to buy one and then, say, paint a moustache onto it. (Distributing the result, an unauthorized derivative work, might be verboten though.)
At least, he can't unless AS A CONDITION OF THE SALE he makes me sign something to that effect, and only hands over the painting to me and accepts my money AFTER I've ticked the little box marked "I, the undersigned, do hereby promise not to paint a moustache onto the painting" and sign on the dotted line.
Under no legal theory that I'm aware of does a software vendor magically develop an ability to use the law to enforce such restrictions that Picasso does not have. In fact, Title 17 Section 117(a)(1) of the US Code clearly establishes that the copies made during normal installation and use of software explicitly don't require prior permission of the copyright holder to make, i.e. cannot be infringing, so the fact that software (often) has to be copied onto a hard drive and (always) has to be temporarily copied to RAM during use does NOT make it different from Picasso's paintings in this regard.
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Re:
And, as much as it will stand the hairs on the back of your neck on end, all the economic analysis in the world you may proffer still does not in the slightest excuse "stealing" (your word...not mine. See: your comment yesterday that extending copyright duration is "stealing" from the public , a "right" in the public that is not expressed in law except perhaps by implication).
Nonsense. Post-hoc copyright extension is stealing because it is taking something that all participants agreed should become public domain (the freely available property of the public at large) and depriving that owner of its use. Making property unavailable to the owner is by definition, theft. Copyright infringement does not deprive the copyright owner of the use of his property, and thus is not theft.
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Zip, Zero, Nada for Moral Campaign against "Piracy"
The fact that they're focusing on wasting money fighting piracy means that RedHat and other companies can roll over their collective asses a lot easier.
The fact that they're trying to prop up old business models mean nothing. The free software community will just walk all over them and show the consumers better alternative at far cheaper price and continue to profit.
Fighting "piracy" mean ditty squat if at the end of the day someone decided that "piracy" isn't the problem and that the business model is.
In other words, the collective asses of BSA are as good as dead.
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Re:
"All laws have a moral dimension"
So does lying, but that doesn't seem to stop lots of industry associations from making over-the-top claims.
You rail against "many in a generation" for lacking moral fiber; we rail against many in the business world for lacking moral fiber. That doesn't imply that only one side is lacking, just that we're only talking about the one side in that particular discussion.
"it is in my view presumptuous of you to constantly harp that they need to see the light and give away their workproduct"
Can you point out the quote in this article where Mr. Masnick makes such a statement? I can't seem to find it. Or is this a non sequitur?
"The simple fact is that not every business fits neatly into the economic mold you openly advocate"
That doesn't necessarily invalidate the mold.
"Instead of saying such business have not adapted to the times, perhaps you may wish to consider offering them alternatives directed to their specific circumstances."
As far as I'm aware, Mr. Masnick hasn't signed up to write whatever it is you demand of him.
Moreover, particularly in the software business, it doesn't take much investigating to see models both new (commercial open source, software as a service) and old (custom software development) for making money without having to fight piracy.
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A 99.9 % tax to society on all IP/copyright income would be resonable compensation for the public domain knowledge included and used in any copyrighted work or patent.
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How will it all end?
The BSA keeps telling the same lies again and again. Clearly, as long as the organization exists, given their mandate, they have no choice. Does their leadership even believe their own lies any more? This makes me wonder what will happen to the BSA and similar organizations. I can't imagine circumstances in which the BSA starts telling the truth and somehow manages to stay in business. These people are fighting for their jobs. Hence their apparent irrationality.
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Wow
Wow according to their math my fine would be almost 100 millon$. Oh well, I guess I have kept thousands out of jobs, sorry, :).
Will they take an IOU?
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Re: How will it all end?
Because monopolies allowed extremely incompetent people to stay in business. There is no reason that monopolies inherently encourage more incompetent CEOs, but it does not root out incompetents ones.
Stupid companies are the laughingstock for the rest of industry...but when entire industries are run by incompetent people...it become a social/economic catastrophe.
Now, we're going to enter the market correction stage as FOSS competitors begin to solidify their invasion of the marketplace. The price will be reset to the optimal price range and innovation will increase, but not without a lot of pain and suffering for those that refuse to adapt.
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Re:
Heh, you again. Does it tire you to shill for these companies? Anyway, speaking for myself personally:
"The simple fact is that not every business fits neatly into the economic mold you openly advocate."
This is an even weaker argument than when you try to use it for the music industry. At home and at work, where possible, I use open source software. I've never paid for a Linux distribution myself but my company pays for close to 100 licences. I use Openoffice, MySQL, PHP, Amarok, GMail, Picasa, VLC, K3b, Inkscape, etc. None of these programs have ever been paid for, yet the developers keep working on them.
My reason for doing this isn't simply price, but the fact that I carefully avoid the risks of viruses, spyware, rootkits, vendor lockin and forced upgrades that plague the products of companies like Microsoft. If these people are losing money, they need to stop assuming it's piracy that's the problem. If the BSA spent as much time educating companies on better ways to do business as they do inventing figures and lobbying, the industry would be in much better shape.
10 years ago, I used mainly paid-for proprietary software. Now, I use almost none. The reason why isn't "piracy".
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Re: Re:
"constantly"
This was meant to refer to a recurring theme presented in this and numerous other articles appearing on this site.
"give away workproduct"
A general reference to views expressed concerning businesses dealing with digital goods.
"doesn't necessarily invalidate the mold"
Correct, as was noted.
"demand of him"
Stating "Perhaps you may wish to consider" does not strike me as a demand.
"software business...models both new...and old"
Providing software for free is easy when a company receives income from other sources (ads, rendering services, etc.). Writing code on a custom basis is easy if a company is basically a software botique. The more difficult issue is when none of these arrangements "fit". To say it is an obsolete business model does not do much to enlighten others on what it is that might work.
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Re: Re:
I do not "shill" for anyone. Moreover, I do not recall ever having discussed this issue re the music industry other than to note that there is a moral dimension when one chooses to wilfully violate our laws (no matter how much one may feel provoked by some of the "dunderheads" within the music industry).
Open source is a nice idea and produces quite useful product. I, however, prefer proprietary product when matters such as configuration control, a predictable schedule of updates, etc. are an important concern.
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Re: Re: Re:
And you get them with free software products too..
There is no economic difference between the production of proprietary software and free software goods. The difference is in business models and licensing.
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Re: Re: Re:
What arrangements doesn't "fit"?
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Morality is a lot more complex than that
To violate a law does not equal an immoral action. It may not be the most wise course of action, but it doesn't mean it is wrong.
If the law is itself wrong, there are many ways one could protest.
For many "pirates", it is an act of civil disobedience. For others, it mean inverting the law of copyright into copyleft. While others vote with their dollars. Still others vote in political elections.
Sometime, people just wish to subjugate us. For example, if the law allow a few farmer to have a monopoly on a market, and yet a farmer blackmarket thrives. The majority of people then shop in the blackmarket because it is cheaper. The illegal farmers were simply satisfying a demand, a need so to speak. These law-breaking consumers found more values in sloping in the illegal black market. Are they in the wrong because they broke the law? Of course not.
Some argued that pirates were not in the wrong, and that monopolists are. I agree.
The market, not the government, are the arbiter of what is right and wrong and they reward accordingly. For example, techdirt is awarded for honesty while plagiarizers of techdirt. are rewarded with...no traffic and a lot of cursing.
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Re: Re: Re:
"Open source is a nice idea and produces quite useful product. I, however, prefer proprietary product when matters such as configuration control, a predictable schedule of updates, etc. are an important concern."
I will presume that a predictable schedule doesn't include the unpredictable years it took to upgrade XP to Vista. Nor are you clear about configuration control where I've faced more problems with proprietary software than I ever have with open source, even on Windows.
The reality is that, like many others, you prefer what you "know". More to the point what you think you know.
Your many comments on this and other posts here do appear to have a "shill" factor to them, none the less.
Less, perhaps, shilling for any particular company or organization than for your rather peculiar view of "morality".
What I mean by that is your defense of laws which change short term monopolies in exchange for creation of a product (patents) or "content" (copyright) and extending them beyond their original intention and economic value.
I will point out that there is little or no "morality" involved in the extention of copyright for "publishers" purely to freeze something for commercial gain of the "publisher" which goes against the whole idea of copyright when it became a legal tool in England with "Queen Anne's Act" which was put in place expressly to protect content creators from "publishers" be it Disney or anyone else. An idea and rationale carried on in the US Constitution.
Even less when you consider that all extentions to copyright have occured not because creators asked for them but because "publishers" did.
The same dynamic has been at work over the creation of new patent classes, a lessening of patentablity requirements, the silly idea that by changing something neither important to nor central to the device/invention patented. For example changing an inert compound in a pharmaceutical that somehow makes it all patentable all over again.
Morality? Please point out the morality in that.
Nor is there a whiff of morality in trying to, and sometimes succeeding in, criminalizing what is, in the end, a commercial transaction between buyer and seller.
Your narrow view of morality is that what is moral is to follow a law, no matter how asinine that law may be.
Laws in a free society, like so many other things, can only exist within the consent of the governed no matter what a legislature may do or say. In fact, that's how civil law evolves. To a large extent it's how criminal law evolves. Though consent is a far more vital component of civil law.
A populace that withdraws respect for concepts like copyright and patents is the final and only moral arbiter, particularly in civil law.
That respect for those concepts is dependent on them being what they originally intended and not distorted beyond recognition for the sole use and abuse of large software publishers, music distributors (which is what record companies are), motion picture publishers, drug manufacturers and so on.
Once the public value of these concepts and the monopolies they grant becomes less than zero due to distortion then I'd say the consent of the governed has been withdrawn.
A final point on morality, there is nothing at all moral in economics or trade with a monopoly no matter how briefly is may exist. Monopolies are simply immoral.
Your defence of them while playing the morality card over and over again either indicates a strange view of morality or a blind adherence to law, particularly civil law, as being somehow based on morality rather than what it really does which is regulate such things as trade and commerce.
ttfn
John
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Re: Re: Re:
"I, however, prefer proprietary product when matters such as configuration control, a predictable schedule of updates, etc. are an important concern."
Wow, you're kidding me! I've yet to find any proprietary product that gives as much complete control as an open source product *especially* when dealing with update and configuration control. For instance, Microsoft forces through particular security updates, even if you have automatic updates turned off or have disabled the update in WSUS. No such thing in Linux.
Why is a "predictable schedule of updates" more important than having a patch cover a security holes ASAP? You don't *have* to install an update as soon as it's released. Surely it's better to have the update ready and waiting when you're ready to perform your scheduled update than have a gaping security hole because it's not the vendor's update time yet.
Configurability? Surely you're not claiming that, for instance, IIS is more configurable than Apache?
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a counterpoint
I grabbed a torrent of OSX back in January after being pissed off at Vista, and not really wanting to upgrade to a "more familiar XP experience"
One of the telltale signs of well optimized code: The hard drive actually went to sleep, something I hadn't heard in YEARS. Anyways, I was so impressed with the software. I decided to get a mac a few weeks later. I decided to kill off my entire Microsoft ecosystem.
Point is, if I wouldn't have enjoyed monkeying around with the OS on a more intimate level than what I could get in a store, Apple wouldn't have converted me and gotten over $4200 of my cash.
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Re: Re: Re: Re:
Having worked withing the aerospace and defense industry, the cost of prototyping (such as Boeing's 777) is so high that high end proprietary software is mandatory to design and develop certain products within budgetary constraints. In the case of Boeing and other aerospace/defense contractors open source simply does not cut it because of the clear need for tight configuration control.
In the case of the 777 it has been reported (though accurate figures are not publicly known) that Boeing invested approximately $1B to develop the necessary software tools. Over time many of these tools have been replaced with proprietary software tools due to enhanced functionaly for design and virtual prototyping. Whether or not such software is developed in-house or otherwise, tight configuration control is an absolute must.
Designing an ordinary consumer article using open source is one thing, but designing a highly complex system is quite another...be it a commercial of military aircraft, military weapons systems, structures such as bridges, large buildings, etc. To my knowledge there are no viable open source options for systems such as these.
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Re: Re: Re: Re: Re:
It "fit", alright.
What you're talking about is customized systems developed in-house. Thus the question of whether or not the software is open is irrelevant.
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Re: Re: Re: Re: Re: Re:
Actually, some of such in-house software is spun out to other commercial entities for further development and refinement. I may be wrong, but I seem to recall that NASTRAN is one such case. I know there are many others, but I will be darn if I can remember their names.
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"Hey, I heard you've started a currency exchange business!"
"Indeed!"
"What's your business model?"
"Oh, when a client comes and gives me $1, I exchange it for $1.50"
"But.... how do you make profit?"
"Profit?! I dunno the 'profit' you're talking about, but my revenues are absolutely skyrocketing!!!"
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Re: Theft
No, it doesn't deprive the owner of his rights, so in that respect it isn't theft. It is, more closely, breaking and entering. If I pick the lock to the local Pizza Place to use their kitchen to make me a snack, I've broken in and used their stuff (even if I don't take their food).
By the same token, if I use someone's software without paying, I've broken in and used their stuff unlawfully.
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Re: Re: Re: Re: Re:
Apple, meet orange.
Bespoke in-house software is a special point that's irrelevant to anything we're talking about in this article. Do you have any examples of a proprietary commercial product that's more configurable than the open source equivalent?
It's also interesting that you specifically mention Boeing since they were heaving involved in creating the ODF document standard that's become standard in almost all office programs. Except Microsoft's, of course, since they're still trying to push OOXML so that they can continue to lock people into MS Office...
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Why the obfuscation then?
If the BSA is right, why don't they use real facts, numbers, and vetted methods? If they could, they would. But they can't, so must use bad data to prop up their own faulty business model.
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At $400 retail MS Office 2007 Pro is way too high for the average home user to consider. I wonder how many sales they would make if they sold it for $40?
If they sell 1,000,000 copies at $400, they make $400 million. If they sell 100 million copies at $40 each, they make $4 billion.
I can't prove that MS would sell 100 times the copies at that lower price. But I doubt it cost them $4 billion to produce it.
In essence, I think part of the reason software is pirated as much as it is (regardless of whether you use the BSAs numbers or someone else's), is because of the price. The HK reference above would seem to support that.
Which begs the question: How do these companies determine the MSRP for their software products? And also: Why do they price them so high that the average user cannot afford them even if they use them at work?
Woadan
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Re: Re: Re: Re: Re:
I chuckle whenever I hear of references to prototyping in the aerospace industry. Makes me think to the Catia snafu as it relates with Airbus.
Your right though. However, no product be it open source or proprietary can replace good communications within the product development team. In the case of Airbus, Airbus France decided to use aluminum wiring requiring larger wiring harnesses while Airbus Germany used copper wiring when developing the A380. Because aluminum is less efficient at transferring current, larger wiring harnesses and cable ducts which were not compensated for with the multiple fuselage pieces.
Point is, the software is only as good as it's programmer. In highly regulated industries such as aerospace, it should be assumed (hopefully) that most software isn't COTS!
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Re:
All laws have a moral dimension, and in the case of "piracy" clearly the moral dimension has been lost on many in a generation that places a higher value on "I want it now", rather than paying up like those who abide by our laws.
and what of the moral dimension? What will you or anyone else do about it? Its a fact that most people will choose to "steal" a piece of software if they can get away with it. Oh well. What now? Send a priest out to fill souls with guilt? Thats about the extent that you can act upon it. DRM doesn't work and only serves to piss off the ones who did buy it and using the US court system as a revenue stream will end at some point. Meanwhile, if their zeal to make sure they're compensated, companies lobby to twist laws that ignore basic rights of the public of IP law to protect a few who simply can't fathom any other way to profit.
At some point these companies need to accept what is rather than trying to protect what cannot be protected.
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I really like this comic!
http://www.whatnowtoons.com/images/wn_145_color.jpg
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Re: Re:
"...basic rights of the public of IP law..."
I did not realize that the public has basic IP rights. Can you elaborate?
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Re: Re: Re: Re: Re:
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Hmmm, No problem!
Whats wrong with that, we do it constantly!
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A Detailed Explanation Of How The BSA Misleads With Piracy Stats
Your ignorance of basic economics is astounding. Your pathetic attempts to cloud the issues probably indicates a guilty conscience.
Yes software thieves might find options other than purchasing that software, so it might not be considered a full sale lost, but the direct costs are lost and lost profit is certainly a lost opportunity cost. The thieves might steal yet another company's software instead if they thought they had to pay. What difference does it make? Losses are real and felt.
While, yes, the thieves might become so enamored with stolen software that they might elect to buy it later, but reconsider their burden on support resources, presumably stolen too. Stolen software will also lead to increased security costs, from shrink-wrap to lowJack. Government resources brought to fight the crime could be put to better use, and must also be considered a cost to the company and to all of us in increased taxes. Nit pick all you want but when someone steals an item or an idea to use it or not, it is equitable to put that loss on the books. Under just what ethical paradigm can theft be no big deal?
Severe criminal penalties for attempting to copyright or patent ideas not your own should be instituted. Otherwise this is all just a game for con artists like you who think that companies making profits in their lawful businesses can somehow be considered obscene.
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Re: Configuration Control
MLS wrote:
Actually, the most advanced configuration-control software available nowadays is all open-source. From source-code management tools like Subversion and Git (imagine trying to coordinate the ongoing development of the Linux kernel among thousands of contributors), to automated rollouts of custom Linux installations on thousands of cluster nodes--you'll find that the cutting-edge stuff is all to be found in the open-source world.
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Re: A Detailed Explanation Of How The BSA Misleads With Piracy Stats
It's amazing that you took the time to write that, but didn't address a single one of the points in the article. I didn't see the argument that "the thieves might become so enamored with stolen software that they might elect to buy it later" anywhere.
What I did see was a counterpoint to the BSA's argument that everyone who pirates a copy of a program would buy said program at retail if the pirate version was unavailable. I saw clarification of why the BSA's stats were inflated with multiple bogus counting of the same dollar. I saw extremely valid reasoning, acknowledged by Microsoft among others, of how pirated software can be beneficial in unexpected ways.
If you read this, please feel free to actually address these points in the article instead of a strawman you thought you saw. it's easy - Mike's list is numbered. Just write which numbers you disagree with and why.
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public IP rights
Unless all IP/copyright owners grown up with monkeys in the jungle, everyting they do is derivative work from public knowledge. Now if all human knowledge would be under IP like some dream about, how much should be charged to whipe your own ass?
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Re: Re: Re:
i.e.; fair use
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piracy
Well if they want to point fingures at lost tax revinue for a country then think of this. Piracy for music has aloud the creation of MP3 player, increased sales on CD burners and blank CDs, created jobs for programmers and IT proffetionals to suport this pirate community. Then we have the servers and ISPs.
Now for computer software and businesses we have that money saved so these companies can spend the money in better places, like more computers and employees.
The reality though is that probably 95% of the pirates would not purchase the software.
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What is mine is mine
All this talk of piracy should be aimed at those who take a product, reproduce it many times over, and SELL it (usually at a VERY reduced price, i.e., the HK reference) to a great number of buyers (those who who couldn't afford to have the product in the first place because of the inordinate cost) to profit greatly - THAT is piracy, not me selling or giving away a piece of software I don't want or need anymore to someone who might have a need for it, but can't afford a full-priced version. If I buy a product, say new and from an authorized retailer, then by God, I OWN IT! PERIOD! From that point on, I will do whatever I wish with it, i.e., give it away, or resell it to someone who wants it. The analogy being that if I buy a car...I OWN IT! I can do whatever I want with it - resell it, reshape it, modify it, etc., etc. Can you image what would happen to 'potential sales' if a car manufacturer made that kind of onerous stipulation to a potential car buyer!? This concept of NOT owning something you've paid for sickens me to no end. It simply makes me despise the very company(s) that attempt to control something that I've paid for. In the future, should these pinheads like the BSA/MPAA and the rest, feel the need to cornhole the single, end user...they should keep in the forefront of their narrow, little brains that it is they who are creating an atmosphere of hatred towards the very companies they represent 'out of concern for their losses' (which, as we all know, isn't the truth, because they wouldn't be in the business they're in if they weren't getting paid to do what is, essentially, thuggery and good 'ol muscle-work for their 'aggrieved and hapless clients.'). Mike has it right - in every aspect. This whining and handwringing over 'lost sales' is bull, pure and simple. You cannot claim to have lost any damn thing on the supposition that there could have been another full-price sale on a product - that is simply is wishful thinking. These companies should be grateful that someone, somewhere, values their product enough to even what to acquire it. Those 'lost sales' would never have happened in the first place because of the stupid-assed prices being charged; therefore, this 'lost sales concept' just doesn't exist.
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Re: Re: A Detailed Explanation Of How The BSA Misleads With Piracy Stats
Points 1 - 6 are criticisms of the methodology employed, but try as I may I can find no reference to any counter study that attempts to articulate what is believed to be a more accurate assessment of the financials associated with "piracy" (I place the word in quotes because it means so many different things to so many different people). An argument without any attempt to provide an alternate data set is just that...an argument.
Point 7 is once again advocacy of an "release infinite goods and make your money on scarce goods" business model. If "old" models are wanting, then effective advocacy would involve at least some attempt, however modest, to provide some idea of a "new" model that may hold promise for those following "old" models. What may possibly work for the entertainment industry does not necessarily carry over into other industries such as software.
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Re: piracy
I cannot afford a BMW so I will just take one off the lot without paying. This should be viewed as a good thing since I will likely have it serviced at a BMW dealer, it will help create brand loyalty so that later I might actually pay for one, and I will share its use with others so that they too might eventually be inclined to buy one when and as their finances permit.
Please spare me the infinite/scarce goods argument. In many regards it is a rationalization by users to convince themselves that what they have done or are doing is somehow noble because economic theory says so.
Try this on for size. If you do not like what a company is doing, then spend your dollars with one of its competitors. That is how the free market is supposed to work.
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Tax rate further reduces the impact
Moreover, the final dollar value of the taxes contributed is equal to the tax rate on the revenue dollars that the tech companies are paying to the respective governments. Taxes are an area where a great deal of company resources are spent REDUCING the tax burden to a given company. So, ultimately, perhaps 2% of that original revenue dollar is actually going to the government.
As you noted however, the equation isn't necessarily equal on the revenue to the member companies compared to revenue in those stolen copies, so that further reduces the 2% to effectively nothing.
And you are exactly right in that much of the software stolen was from folks who could not afford (or WOULD not afford to pay if they had to pay full price). You might happily want to charge someone in a 3rd world country a $400 price for Vista ultimate but it is very unlikely they would pay that, or any price at all for Vista since they likely see very few hundreds of $ for tech at all, if they even see that much money.
Moreover, many who steal, as you point out, later in life become people of means who buy the later generations of that same software that they "got used to" on stolen copies earlier in life. If you forced them to, say, an open source software that early on in life, who's to say they would reject being a customer later in favor of that "other" software they are then more familiar with 10 years later?
Just another tech organization trying to make itself more important than it actually is. Is it good to try to stop piracy? Sure! Is it going to save the world billions? Nope, sorry.
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Re: Re: Re: A Detailed Explanation Of How The BSA Misleads With Piracy Stats
Selling tech support doesn't count as business models?
Invoke Mike's Law?
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Re: Re: piracy
to MLS: now you are using a purchase/own model to prop up your arguement. nice try.
to the article: there are 2 kinds of "pirates".
1: the scumbags that SELL "warez". darn near everyone in the "warez world" HATE the sellers. 'nuff said.
2: end users that want but can't.
blah-blah-blah "can't afford, don't use/watch/listen to it".
yeah, right. like that is going to happen.
REALITY CHECK: "warez" has been here since the first AFFORDABLE "home record" audio equipment has been available (8-track/cassette tape) .
and you know what?? NO-ONE HAS STOPPED IT. and can't, now.
so companies need to deal with the CONCEPT that "warez" is not going to go away and DEAL WITH IT.
my idea?? SIMPLE.
SOFTWARE: basic "no frills" version is FREE.
charge for features/abilities.
MOVIES/MUSIC: "low-rez" versions FREE. "mid-rez" VERY CHEAP. high-quality WHATEVER THE MARKET WILL BEAR.
free video: youtube quality or slightly better. think "vcr quality" when the tape is old/worn.
pay "mid rez" : at/below dvd-QUALITY as a divx/xvid file. 41.00/$2.00 per movie as a DOWNLOAD. no physical media. can put "burn to disk" kiosks in wal-mart/malls.
high-quality: blu-ray.
MUSIC: 64k/96kbps "fm-quality" = FREE.
128k/192k/256kbps VERY CHEAP ($0.10/$0.25 each)
320kbps = $1.00
want it on "media" ? whatever the market will bear. (can do kiosks on this also)
there is a "give it away" business plan.
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Re: Re: Re: piracy
I see...a company like Adobe should simply give away Photoshop, using the gift as a means to charge for tutorials and tech support.
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Re: Re: Re: Re:
Fair use is not a "right" conferred by law on the public. It is a limitation on the statutory rights of a copyright holder. It may sound to you as if I am wordsmithing, but that is hardly the case under the law of copyrights.
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Re: Re: Re: piracy
You need to write and format properly. It is a pain to read.
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Re: Re: Re: Re: piracy
That's one idea, but I wouldn't "give it away". Instead, sell the software at a reasonable price, without support.
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Excellent article.
One can happily acknowledge that piracy is a very bad thing and still be exasperated at the way most of the media allows organisations like the BSA to get away with grotesquely warped use of statistics (to put it mildly).
I've seen many times press articles reporting unquestioningly the similarly silly claims of various organisations about how much they are losing to piracy (they usually conflate piracy, counterfeiting and bootlegging, just for good measure).
Being dishonest even in a good cause is still dishonesty. And the tendency of the media to just rewrite the press releases of parties with vested interests instead of doing proper journalism is not good for democracy.
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This study...
This study cost USD 1.5M to conduct. This 1.5M could have gone to kitten vaccine factories and saved an estimated 3.4 billion kittens last week alone (the cute kind).
* "Cost of study" figure is based on my brain
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Re: Re: Re: Re: Re: piracy
Software are infinite goods. Therefore, it will become nonviable to sell them at a reasonable price. Sell something that is actually scarcity.
Redhat is ahead of you in that they gave their software away but were able to charge for support. They were able to charge high price even though there are many copycats offering redhat products at cheaper prices.
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Re:
"Piracy" is only a problem for proprietary vendors.
For free software, this is a non problem since it is already freely available.
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@MLS
I'm puzzled why you on the one hand take such a sternly moralistic line over piracy (which I also do not approve of) yet seem totally unperturbed by the casual cynicism displayed in the BSA's 'statistics'.
I personally think the BSA's dodgy numbers are themselves a symptom of a problem that is at least as serious as software piracy.
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Re:
See my comment in 3 above, which states:
"As for BSA's "rack up" of the numbers and your comments concening the assumptions made, I personally would like to know what analytical method you would use to arrive at what you believe is a more credible number."
Of course most of these organizations overstate numbers. By how much though is impossible to gauge without someone taking a look at them and crafting a more credible figure. Unfortunately, what seems to happen here is to blast a number, but not then follow up with something that is more realistic.
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The cost of losses? Really?
"For example, the lost tax revenues to state and local governments -- an estimated $1.7 billion -- would have been enough to build 100 middle schools or 10,831 affordable housing units; hire 24,395 experienced police officers; or purchase 6,335 propane-powered transit buses to reduce greenhouse gas emissions."
This is so ludicrous it's not even funny. It's beyond ludicrous and it's beyond sad. Why don't they just come out and say it: "By using pirated software, you're putting your children's lives at risk and making us more vulnerable to terrorism. It's our no-so proven opinion, I mean it's a fact that pirated software supports terrorism. Do you want to support terrorism?"
On a related note, similar figures were presented in a recent documentary movie about the state of the drug wars in the US. If only California legalized and regulated marijuana, they would:
1) Save $1 billion in prosecuting marijuana users and sellers.
2) Take in $1.5 billion in revenue from regulating and taxing the sale of marijuana.
That $2.5 billion could be spent on... well, the entire list above.
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Re: Re:
Mike does mention the triple-counting thing, but you conveniently ignore that because mentioning it would weaken your argument that Mike should produce nothing short of a Ph.D thesis to support his arguments.
You sound like a smart person, so I'll let you in on a little secret: there is no credible figure. Any study on pirating can be easily torn to pieces because any study must rely on assumptions.
The point is that we shouldn't focus on the imaginary cost of piracy, we should focus on make a product more valuable to the end consumer. Well, save and except for you.
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Re: Re: piracy
Oh, that is fresh. MLS giving us a lesson on how the free market is supposed to work, while defending a government-granted monopoly right that distorts the free market.
Yes, when something does not support your position, like the infinite/scarce good argument, just ignore it. Damn the laws of supply and demand. I don't like them, so I will just close my eyes and they will go away.
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DRTFA
its its its
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Where exactly would the consumer get this extra $11.4 billion? It's not like someone who pirates is paying the blackmarket...
If the consumer is spending $11.4 billion more on software, then they spending about that much less on some other taxable product. In the end, the government isn't getting any extra taxes.
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Re:
Please explain why "piracy" is a big major problem.
As far as I am concerned, this is a business model problem.
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Re: Re:
Whoops. Please delete the parent comment and this comment also.
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What is mine is mine
Doesn't anyone understand the concept of ownership for the end user? Who are you people, anyway!? Shills for the companies? Piracy IS a 'business model' idiots! THAT is who these numbnuts (insert BSA/MPAA here) should be directing their attention towards! What the end user (read INDIVIDUAL) does with his PAID FOR, privately-owned product is HIS, period! Your arguments make no sense in the context of the individual owner. Once paid, forever owned. THAT'S the concept you idiots need to grasp. These whining, self-promoting assholes (Corporations) need to wake up and realize that the individual who is using their product, whether they bought the damn thing on the black market at a reduced price or at a retailer at a full price, only gives their product legitimacy and longevity. It all boils down to greed - pure and simple. Every argument I've seen here has no relevance to the end user. And, to promulgate the idea that 'lost sales' are hurting the industry - that's rubbish, bullshit from top to bottom. If I want a copy of something I simply can't afford (and you all know how stupidly expensive some crap can be MSRP'd at), because I need it - I WILL OBTAIN IT! The damn software is already out in the marketplace! WAKE UP, AMERICA! Those companies that are crying about lost revenues are going to be the first to go down the toilet because EVERYONE is sick and tired of hearing their whining and moaning about a stupid concept of 'lost sales'! Mike, I give you kudos to exposing the utter ignorance and irrationality of this whole turdbag. Note: Microsoft and the other software turds, you're going to go down because of this, I guarantee it, and you have no one to blame but yourselves and these idiots you've hired to do your 'muscle work' (BSA/MPAA, et al). Open source, freeware, whatever, will prevail - you just wait and see! Everyone is sick and tired of your whining because someone just happened to acquire a copy of a program you put out on the market, legitimate or not! You need to thank your lucky stars that anyone is even remotely interested in acquiring a piece of your crap!
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Re: Re: Re: piracy
No...just providing a lesson that appears foreign to many who follow this site...you are not supposed to take things without permission. The law of supply/demand, infinite/scarce, tangible/intangible, IP/public domain, are totally irrelevant for understanding this lesson because this lesson pertains to ethics, and not economics.
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Re: Re: Re: Re: piracy
Right. Ignoring the damaging economic consequences of intellectual monopolies and obsolete business model in favor of blindly following the law is ethical.
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Re: What is mine is mine
Dude. Your comment need paragraph breaks.
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