The Cost of Piracy
Does piracy really hurt the software industry? Paul Craig quotes software pirates in his book "Software Piracy Exposed" who don't seem to think their activities hurt anyone. They say that companies don't lose that much revenue due to piracy because software pirates aren't the type to purchase software. Software companies aren't losing revenue because they aren't losing sales. Pirates are either going to steal software or they'll go without -- in either case the software companies don't make money.
But some pirates steal software in order to sell it to other people. They may undercut the original company by a wide margin. These pirates do cost companies money. Perhaps the pirates' customers wouldn't purchase the software for the full price but it's impossible to say that for certain. In this case, lowering the price of the software might deter pirates or their customers. It won't stop all piracy, however, since some people will still want to get the program without paying for it.
Companies face a difficult situation. Lowering the price of their products might increase sales and discourage some piracy but it won't eliminate the problem. Concentrating on building customer loyalty and developing a strong product may also help reduce piracy. Many pirates claim that they are willing to pay for products from companies they trust and admire. But how do you trust a pirate?
Software piracy is a real and ongoing concern for hundreds of companies. We need to study the motivation behind software piracy more thoroughly before anyone can claim to understand it. It appears to be a complex issue with no single cause, and that may mean there is no simple solution to the problem. Lowering software costs may result in more sales as people who would neither pirate nor buy expensive software open their wallets for a purchase. But it may not make a dent in piracy statistics. For that to happen, we'll need to see a shift in our perception of the value of software itself.
Learn more about software and economics by following the links below.
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More Great Links
- Business Software Alliance. "Global Piracy Report 2008." May 2009.http://global.bsa.org/globalpiracy2008/studies/globalpiracy2008.pdf
- Business Software Alliance. "Internet Piracy Report 2009." October 2009.http://global.bsa.org/internetreport2009/2009internetpiracyreport.pdf
- Craig, Paul et al. "Software Piracy Exposed." Syngress Publishing, Inc. Rockland, MA. 2005.
- Crowell, Charles R. et al. "Moral Psychology and Information Ethics: Pyschological Distance and the Components of Moral Action in a Digital World." University of Notre Dame. 2003.
- Depken, C.A., II and Simmons, L.C. "Social construct and the propensity for software piracy." Applied Economics Letters. 2004. Volume 11. pp. 97-100.
- Goldsborough, Reid. "Software Pirates Are Everywhere, Maybe Even at Your Desk." Community College Week. Oct. 5, 2009. p. 22.
- Hinduja, Sameer. "Deindividuation and Internet Software Piracy." CyberPsychology & Behavior. Nov. 4, 2008. Vol. 11, Number 4. pp. 391-398.