I’m sure I’ve mentioned this before in other posts but I recently had a debate with a coworker about the true cause for piracy and was left extremely frustrated with his level of ignorance to what the real issue is.
I will start off stating the initial arguments, then likely run off and rant like a madman for the rest of the post. For the sake of simplicity I am only arguing about operating systems.
His Argument
Piracy is wrong and software developers should take a stricter, harsher stance on it to actively disable pirates’ computers or nag them into buying a legitimate copy.
My Argument
Piracy is a result of unreasonable pricing of essential software. Specifically operating systems. Reprice the product, especially when a new version is released and people will stop pirating and pay for the software.
His response to every point I tried to make is “right is right, wrong is wrong.” He completely circumvented the original issue and the correct solution and went with “it’s their [software companies’] product, they can price it however they please.” To me, that screams ignorance. Piracy is a real issue. It causes pricing to become skewed to absurd levels and greatly affects multiple areas of the marketplace. You cannot win this battle by attacking pirates. They find ways around every security precaution out there. To fix the problem you have to first realize the problem is not that people want to steal software. Most people are generally honest and law abiding. They pirate the software because the software is priced in such a way that they don’t feel it’s worth it.
I gave him this example.
I would like to buy a new car but no one sells one I can afford. So I either have to steal one (pirate) or use something else to get around.
My solution was that car manufacturers make an affordable car to circumvent theft and to tap into a new marketplace to make additional profit.
His solution was that if you can’t afford a new car you don’t get one. You ride a bike or take the bus.
Charging $300 for a fully functional operating system is a bit steep for the average PC owner. There are versions at cheaper pricing even so low as $99. However the cheaper versions lack some features certain users deem critical. So to get these features you have to fork out a rather hefty chunk of change and really you’re buying the same operating system. They’re just throwing in a couple of extra plug-ins and hiking the price up.
I am comfortable with a current generation operating system costing between $100-$150, that seems reasonable given the amount of work and money invested into it. It’s not like the developers are going to lose money on it. The operating system is a required piece of software and with how heavily it’s being pushed on the market I can imagine that a year from now a majority of PCs will have the new OS on it. Therefore if you reduce the price of the fully functional version to $150, keep the lower-end version at $99 you will still net a substantial profit as you will turn would-be pirates into paying customers.
Example:
These are fake figures I came up with to illustrate my point.
750,000 customers paying for the $99.00 version
250,000 customers paying for the $300.00 version
Total Sales of $149,250,000.00 for the two versions
1,000,000 pirates using the $99.00 version
500,000 pirates using the $300.00 version
Total Loss of $249,000,000.00
I decide to adjust pricing
750,000 customers paying for the $99.00 version
250,00 customers paying for the $150.00 version
Total Sales of $111,750,000.00 at a loss of $37,500,000.00 from the original pricing
600,000 pirates purchase the $99.00 version
300,000 pirates purchase the $150.00 version
400,000 pirates still pirate the $99.00 version
200,000 pirates still pirate the $150.00 version (was $300.00 figures are based off original pricing to show continued loss)
Total Additional Sales of $104,400,000.00
Total Loss of $99,600,000.00
In the above example we not only reduce the number of users pirating the software by about half but we actually increased profits by $66,900,000.00. Also the total amount of revenue lost to piracy was reduced by more than 50%. Now those were all theoretical, fictitious figures but I’m certain with proper market study and proper repricing developers can see profit increases and piracy decreases with this method.
On this same note, when a new version of an OS is released the older version should see a substantial price drop. This is seen in many other markets where a newer model is released and the old models are intentionally priced lower to help move the product and make room for the new. This would also turn current pirates into paying customers, again increasing your profits.
I agree with developers not supporting or allowing updates to pirated versions of their software. That makes sense. I don’t see how developers installing nag-ware into end-user’s computers or even going so far as to disable the operating system entirely will benefit anyone. They will create a huge number of enemies in the marketplace and lose out indefinitely on future purchases of their products. The idea is to make people not want to pirate, not piss them off so much as to take what currently is viewed as “unfair pricing” and turn it into intentional piracy out of malice.