Piracy Is A Part Of The Market
from the it's-not-the-enemy...-and-it-may-not-be-competition dept
Out-law.com has an interesting discussion with a so-called “anti-piracy expert” where he tries to make the point that pirates are not the “enemy” but are “competition.” This is a step in the right direction — though, one ignored by many industries threatened by unauthorized file sharing. As the MySpace Music offering shows, very little thought is given to actually competing with piracy. Most of these solutions simply try to pretend it doesn’t exist — which is a pretty difficult way to compete.
But it’s important to recognize that the market shift goes further than just seeing unauthorized file sharing as competition. To succeed in the marketplace, it shouldn’t even be viewed as competition, but as a tool that can be used to your advantage. The business models that embrace file sharing and use it to drive business to other parts of a business model are doing great, realizing that file sharing isn’t the enemy and isn’t competition, but is a great, efficient distribution mechanism that reaches a lot of people very quickly and effectively. Ignoring ways to make use of that seems pretty dangerous.
Filed Under: competition, markets, piracy
Comments on “Piracy Is A Part Of The Market”
long time no see
Hi Mike
Piracy is huge in emerging markets like China, India and Southeast Asia simply because the “legal” goods are too damn expensive for the average user. Instead of wailing over piracy, perhaps companies should consider the chief reasons why piracy is successful there: pricing and availability.
For instance, DVDs of the latest Hollywood movies are available for $1-$2 each because
a) the studios release the DVDs months after the screen release, if at all they do.
b) the price point is waaaaay above what the average joe can afford.
My 2 cents….
How can you tell? Judging by some of your previous articles, sabotage, bullying and marginally legal dirty tricks are considered the normal way of dealing with competition; they certainly require less mental exertion than improving one’s own products and services on the part of the senior management, especially when the government is unable or unwilling to do very much about it unless they do anything definitely criminal.
Re: Competing WIth Piracy
Jake wrote:
Those are not competitive tactics—unless you count driving away your own customers, and destroying what’s left of your own business model, as a competitive tactic.
In related news...
Businesses and retailers are beginning to realize that employee theft, shoplifting, and inventory shrinkage are great ways to get products out into the marketplace. When asked, a Nike spokesman stated, “Having more inventory on the street is a new way to generate buzz and demand for our products.”
In fact, many business owners are encouraging shoplifters and theives to return in the hope that, once in the store, they may eventually buy more than they steal. “We’ve had thousands of dollars of name brand sneakers ‘walk’ out the door,” said one shopkeeper. “But sales of $1.99 socks and shoestrings are beginning to pick up.”
Re: In related news...
Yea. Because it costs real money to make a digital copy of a song.
When people shoplift, they take something of value from you. They transfer value from you to them. When people pirate, they copy something of value from you. Both you and them now have the same thing, of the same value.
Re: In related news...
Businesses and retailers are beginning to realize that employee theft, shoplifting, and inventory shrinkage are great ways to get products out into the marketplace.
This has been pointed out to you directly in the past, so I’m not sure why you ignore it. There’s a massive difference between *copying* an infinite good and *taking* a scarce good.
You know this, because it has been pointed out to you.
I cannot fathom why you would continue to make this false analogy that you must know is incorrect.
Re: In related news...
Go back and read what’s been said here ad infinitum, both about business models that don’t depend on free goods and on the difference between scarce, tangible goods and infinite digital goods.
Try to understand that somebody stealing an expensive physical good (which at minimum costs time and money to restock, thus immediately losing the shopkeeper and manufacturer money) has absolutely NO similarity to copying a digital file (which costs nothing to stock and *at most* only loses a *potential* sales).
Then come back when you can type without sounding like a blithering idiot.
Re: In related news...
Pointless analogy. The downloaded copies cost the studio nothing, not even bandwidth. This is the equivalent of “furniture pirates” taking pictures of a chair, going home, and building their own identical chair.
Priacy can be good for business
I do admit that, I have downloaded full versions of games and programs in the past, because trial versions just plain suck. If the game/program seems pretty damn good, I did end up buying the full version of it, because I deem it worthy of my money. If it sucked, well, I uninstalled it because it’s just wasting my hard drive space then.
Trial versions these days just don’t offer all the features of a program to be tried, so you don’t know whether those extra features may be even worth it, or all the cool action in that certain game will live up to what you seen or heard about it. I hate to gamble my money on something that may look and sound good but may end up just plain sucking monkey butt.
Piracy is a good thing. It gets your product more seen and tried by others around the world. Can’t the corporations simply ask people that pirated their product that if they loved it, to support them by buying it? Yo-ho-ho! This product is deemed worthy! $$$$$
Here's a thought
Maybe somebody is already doing this, but why not use piracy sites to release beta tests of games and software? You could test-run your product and advertise to your customer base at the same time for free, and if the game is good (as Jeff said “worthy”) that would create a feeding frenzy among the customers. Anybody remember when the PS2 first came out? Imagine if you could go into a game store and play one 6 – 10 months before you could buy one… If you can’t beat ’em, join ’em! Just a thought… (hope I don’t get sued for copywrite infringement for quoting a cartoon 😛 )
I guess piracy is part of the market just like shop lifting. Maybe Wal-Mart should find a way to give away its merchandise to capitalize on the thieves.
Eventually.
The operative phrase in the previous post, which all too many simply missed in order to be the first to trot out the timeworn “infinite goods” argument, was “they may eventually buy more than they steal”.
Which is pretty much the core of all of your arguments. Give work away, and hope and pray that under the correct mystical “model” the thieves of the world will somehow repay your efforts and eventually buy more than they steal.
Sorry, but I find it hard to believe that encouraging theft in one area is going to do anything else than encourage more of the same elsewhere.
Nor do I believe in ignoring creative rights, nor do I buy into the fallacy of believing it’s “okay” to ignore production costs simply because the reproduction model has changed, nor do I find any of the oft-repeated “buy X to get Y” models particularly desirable.
Nor do I find the the unmitigated greed and entitlement of today’s “consumer” particularly attractive. (I use the word consumer lightly, as in most cases of this nature they pay and contribute nothing.) Just because technology has made something easy to steal doesn’t mean that that it’s suddenly their “right” to do so.
And because I believe those things, I feel somewhat obligated to repeat them, much as TechDirt feels obligated to reproduce any and all articles that seem to have even a remote chance of supporting their position.
What the heck? If nothing else it generates comments, controversy, and page views, right? (grin)
Re: Eventually.
I have downloaded plenty of media in the past. I have never even been tempted to steal from a store.
It is not the same at all. One harms no one, the other deprives a store owner or corporation of assets. I see no reason why downloading files which are freely shared (albeit against copyright law) would lead to physical theft. The psychology is entirely different.
I am a big movie customer. I buy more DVDs than I should. Many of those DVDs are movies I first “pirated” and would never have discovered without the comments and recommendations of fellow “pirates.” It’s more a matter of convenience than anything. Give me an option to pay a monthly fee for similar convenience, and I would gladly do it. And no, a crappy selection of poor-quality streaming movies does NOT qualify as convenient.
Re: Re: Eventually.
The psychology is just baffling in this case. You can justify stealing digital merchandise but say you would never steal physical merchandise. I don’t buy that argument at all. You steal digital merchandise because the odds of getting caught are slim to none. Given those same odds you would steal physical merchandise as well. Thieves are thieves and the risk of getting caught is the only thing that stops them.
Re: Re: Re: Eventually.
Uh, no. Stealing is stealing, but this is infringing. Quite a bit different in law, and ethically completely different. After all, infringers aren’t ripping the files out of the copyright owner’s hard drive (that would be stealing IP). Someone who actually bought the material is sharing it with others. Dude, you learned about this in kindergarten.
Re: Re: Re:2 Eventually.
What I learned was not to steal. Copying and stealing are a little different, but both against the law. Pirates justification that copying is not stealing just amazes me. But hey, whatever lets you sleep at night, right?
Re: Re: Re:3 Eventually.
Pirates justification that copying is not stealing just amazes me.
It’s not a justification. As you noted, both infringement and theft are against the law. They’re two separate, illegal acts with different penalties attached, and covered by different laws.
Re: Re: Re: Eventually.
and there you’ve got the point, if thieves had no chance of getting caught a lot more people would have become thieves, this doesn’t make it right, nor does it make downloading songs right, But and here comes your misperception, because it happens you will have to deal with it, and I wonder if sueing every man woman and child for downloading a song is a good way of dealing with it. you would jail or povertize alot of would be costumers. and having your buisness model based on lawsuits is even more wrong then illigal downloading imho
Re: Eventually.
We’re not missing that phrase. We’re challenging its validity directly.
It’s built on false analogies. Stealing a sneaker actually results in losses – you put time and money into making that sneaker, and now you don’t have it anymore. It’s *gone*. Infringing on copyright, on the other hand, doesn’t result in losses. You create some content, someone infringes your copyright, and you still have your content. You can still go out and sell it.
In your example, Nike is looking at a balance sheet like this:
-$100 -$100 -$100 … -$100 +$2 +$2 +$2 …
And hoping that they get enough +$2 on the right to make up for all the -$100 on the left. This probably isn’t going to work (though this general principle is a recognized business tactic, in the form of loss leaders). On the other hand, someone with an infinite good is looking at a balance sheet like this:
-$0 -$0 -$0 … -$0 +$2 +$2 +$2 …
Looks quite a bit different to me.
Re: Re: Eventually.
How can you go out an sell the content if people can get it for free(ie -steal)? That is the fallacy that pirates use to justify copying. Something that is free has no value so nobody will pay for it. If there were no way to copy it, then many of the pirates would buy it. They only tell themselves, and others, that they wouldn’t have bought it anyway so copying it was not a big deal. Obviously if you like something enough to steal it then you like it enough to buy it.
Re: Re: Re: Eventually.
How can you go out an sell the content if people can get it for free(ie -steal)?
First of all, it’s not stealing. It may be infringement, but that’s different. But you know that.
Second, the whole point is that you don’t “sell the content.” You sell something scarce that is made much more valuable by the content being free. Focusing on selling the content is your fallacy.
Something that is free has no value so nobody will pay for it.
Actually, that’s false on many levels. First, you confuse value with price. Many things are free that have tremendous value. You value air, for example, but you don’t pay for it, because it’s abundant.
Plus, there are plenty of examples of goods that are “free” where people pay for other ancillary goods around it. Water is effectively (or at least very close) to free in many situations, but people still buy bottled water for convenience and (perceived) safety. In other words, they’re buying the scarcities (convenience and safety) rather than accepting the free good.
This is rather basic economics. I believe you and I have discussed this before. I can only conclude that your repeated ignorance is willful at this point. It does not reflect well of you.
Re: Re: Re:2 Eventually.
Ah, you may be on to me. But hey, it generates hits and that is the point right? I mean, we spend our scarce resource (time) reading and posting here. ;>)
My main point is, people argue the business model is out of date and turn a blind eye to breaking the law. Since when are these idiots entitled to movies and music created by others? If they want them, they can pay for them it is just that simple.
Re: Re: Eventually.
With Nike’s use of poorly paid child-labour and its huge markups just for the ‘swash’ or whatever it’s called your balance sheet should be -$2 -$2 -$2…+$100 +$100 +$100
Re: Eventually.
The operative phrase in the previous post, which all too many simply missed in order to be the first to trot out the timeworn “infinite goods” argument, was “they may eventually buy more than they steal”.
If that’s the operative phrase, then once again, you have not been paying attention. You really ought to read what we write.
Which is pretty much the core of all of your arguments. Give work away, and hope and pray that under the correct mystical “model” the thieves of the world will somehow repay your efforts and eventually buy more than they steal
Actually, no, that’s simply not true. In fact, we’ve come out AGAINST the “give it away and pray” model:
http://www.techdirt.com/articles/20080522/1545021204.shtml
But why let facts stop you?
The point we’re making is understanding how infinite goods *always* make some scarce goods more valuable. The trick is figuring out which scarce goods the infinite goods will make more valuable. This isn’t some “mythical model,” but a rather well proven model with tons of economic research behind it (check out Paul Romer’s work in particular).
Sorry, but I find it hard to believe that encouraging theft in one area is going to do anything else than encourage more of the same elsewhere.
Well, for the millionth time: no one is saying that you encourage stealing. But, again, you know that, don’t you? Or do you really have that much trouble with basic reading comprehension.
Nor do I believe in ignoring creative rights, nor do I buy into the fallacy of believing it’s “okay” to ignore production costs simply because the reproduction model has changed, nor do I find any of the oft-repeated “buy X to get Y” models particularly desirable.
What you call a “fallacy” is basic economics that has been proven historically time and time again. It’s called marginal costs vs. fixed costs. You might want to try reading up on it so you don’t look like a fool.
Nor do I find the the unmitigated greed and entitlement of today’s “consumer” particularly attractive. (I use the word consumer lightly, as in most cases of this nature they pay and contribute nothing.) Just because technology has made something easy to steal doesn’t mean that that it’s suddenly their “right” to do so.
No one has said that it is “right.” We have always been talking about things from the perspective of the producer of the content and how they can best benefit.
And, you really ought to learn that this has nothing to do with greed and everything to do with incentives. You might want to start by cracking open an econ textbook. Otherwise, again, you look pretty ignorant on fairly basic stuff.
And because I believe those things, I feel somewhat obligated to repeat them, much as TechDirt feels obligated to reproduce any and all articles that seem to have even a remote chance of supporting their position.
Every time you repeat it you show a near complete ignorance of basic economics, because the only fallacies and myths are the ones you’re repeating. I can understand how someone totally uneducated in economics could make these mistakes, but it suggests that you haven’t actually been reading anything we write, just pretending that we’ve said something we have not.
I would suggest that you learn some basic economics. A few key things to focus on: fixed costs vs. marginal costs. Supply vs. demand. Price vs. value. Rivalrous vs. Nonrivalrous. That should give you a good starting point. I would also suggest that if you do NOT learn about these things, you are going to make yourself look particularly bad when you come back and display your ignorance again next time.
Competition
BTW, the competition argument has some rather interesting side effects.
Personally, however, if my life’s work was being stolen I think I might prefer a more direct approach. In fact, I’m reminded of my grandfather who had a sign posted rather prominently near the entrance to his farm…
“Trespassers will be shot.”
Re: Competition
Out of curiosity, what’s your solution?
Sigh. The article doesn’t say you should steal – they are saying that the avenue by which people obtain these goods is so widely accepted, so easily accessed, that the “chances of getting caught are slim to none”. There are very few perfect people on this earth – and when no one is looking, every single one of us at one point or another does something questionable. But the point is when the chance of getting caught is zero, and a LARGE portion of people are participating in something deemed illegal, throwing lawsuits around only makes you look silly. Recognizing a trend and capitalizing on it is what this article is about.
Remember prohibition? That’s right – they made it illegal to drink alcohol. So people made it in their bathtubs – illegal. But because this “crime” was so widespread, the govt eventually realized that it was only costing them money trying to supress it, so they legalized and taxed it. You can still make alcohol in your bathtub – but why, when you can pay a couple of bucks and get a tall glass of delicious Sam Adams Light?
People are arguing the same thing here. The “crime” is so widespread, it suggests that the current model is lacking. So many people do it, that maybe these businesses that are suffering should figure out a way to make it easier, quicker, and cheaper to obtain this content. Once you put more value on purchasing than on pirating, you will quell the mass freeloaders. I would say that for $12.95 a month, a large searchable database with 200 kb/s speed that guarantees no malware that always has 100% of each file available – instead of 99.9% like on my most recent dirty download, is more valuable than an unstable torrent with 3 seeds and .98 availability. Think Zune or iTunes, which both offer content quickly, safely and cheaply.
The point is, when the majority doesn’t find something morally objectionable, maybe the lines in the sand should be redrawn.
“The point is, when the majority doesn’t find something morally objectionable, maybe the lines in the sand should be redrawn.”
You’re making too much sense, someone’s bound to get angry with you… 🙂
So, one one hand, they say that lending a book is not like sharing content, because when you lend you do not retain the original. Fair enough.
But on the other hand, they say that sharing content is stealing, notwithsanding the fact that the owner still retains the original.
Double standards much? 😀
It's like driving ...
The most dangerous thing we do each day is drive our cars. And we know that people die every day in traffic collisions.
So I think we can say that piracy is a part of the market like death is a part of driving.
Rob:-]
“Build a man a fire and you keep him warm for a day. Set a man on fire and you keep him warm for the rest of his life.” Anon
“How can you go out an sell the content if people can get it for free”
Maybe you can’t. That’s the nature of information – the only way to control its spread is to control the means of distribution. So unless someone shuts down the intertubes, that’s how it is going to work from now on. Legality or morality has nothing to do with it – you can’t stop hurricanes any more than you can stop people from sharing information, I’m guessing it’s a fundamental law of nature.
until you can download a pair of sneakers, that guy mike longs’ arguments are just plain silly. retard
Mike, you spend a lot of time talking about piracy of movies and music, but what about digital photos? How about tackling the orphaned photo issue? I mean, if there are poor little orphans out there, why shouldn’t somebody adopt them? But wait, they are digital so the EXIF can be removed thus rendering them as orphans. So some less than scrupulous people could orphan all the photos they want and use them without violating the law.
Re: Re:
Mike, you spend a lot of time talking about piracy of movies and music, but what about digital photos? How about tackling the orphaned photo issue?
Try using a search engine. I’ve discussed the issue at length.