You Compete With Free Because You Have To

from the welcome-to-the-marketplace dept

One of the frustrating things in discussing intellectual property issues around here is that every time we suggest a company is making a mistake in its business model, such as by treating its customers as criminals, someone steps up to yell at us for "defending piracy." That's not true at all. We do not, and will not, defend piracy in any form. What we will do, however, is note that most attempts at fighting the piracy are wasted effort that is bad for business and often alienating to legitimate customers. That has been our point all along. Piracy is in the market place and it's simply a fact of the market.

There's increasing evidence to suggest that the best way to "fight" it isn't to lock everything down and limit your legitimate customers, but to change a business model and provide a compelling offering at a reasonable price that people want to pay for. Over time, we've discussed numerous examples of how that works. The simple fact is that some amount of piracy is a market reality -- and there are two strategies to dealing with it. One is to try to fight it directly and lock everything down. That's the path the recording and film industries have chosen, and it hasn't done much to help at all. The other is to admit that not only can you compete with "free" by offering something of value, you can often use the "free" stuff for promotional value -- leveraging that aspect that others in the industry see as a weakness. It's always good to see when companies at least recognize this market reality. Take, for example, this quote today from the head of an Israeli company: "The goal of the world is to beat the Chinese. They don't care about intellectual property. We have to develop something that will take two to three years to copy." In other words, he's recognizing that the market reality is that you have to compete where some element of the market simply won't respect intellectual property laws. That doesn't mean it's impossible and you shut down, but that you adapt to the market and figure out ways to compete anyway.

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  1. identicon
    FaJu, 4 Apr 2007 @ 8:03pm

    Piracy Issues

    Musicians are allowed to sell their own music. The problem is that most people go for big labels and brand names. So the independant musicians end up with no business.

    This has been said countless times before - if the companies stop restricting their customers, and start charging a realistic price for their products, then maybe they could put a dent in the world of piracy. But, sadly, I don't see that happening any time soon.

    I don't want to pay $250 - $300 for Windows Vista. From where I'm sitting, it looks like just another theme for XP. I don't see any real need to upgrade to the new version, and what I don't understand is why it needs to cost so much. Vista won't become the norm for another 4-5 years, anyways, so why bother? That's the big question.

    I go down to the mall, and I see movies on sale for $30 - $40. And these are not Collectors' Edition, or Director's Cut, these are just the movies with a few deleted scenes which nobody cares about. With $20 I could go down to the cinema, buy a large popcorn and drink, and enjoy the movie on a big screen. If I can have that for less than the price of the DVD, then what is the point of even buying the DVDs? If I want to watch the movie again, I could just download it, and not have to sit through those idiotic MPAA anti-piracy commercials.

    Piracy has more convenience, plain and simple. Its easy, and its free. Companies need to get their heads around that, if they want to compete.

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