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Piracy The Almighty Buck Your Rights Online

Piracy Is a Market Failure — Not a Legal One 591

Posted by Soulskill
from the dollars-and-sense dept.
Mr.Fork writes "Michael Geist, Canada's copyright law guru and law prof at the University of Ottawa, posted an interesting observation about the copyright issue of piracy. Canada's International Development Research Centre came to a conclusion that 'piracy is chiefly a product of a market failure, not a legal one' after a multi-year study of six relevant economies. 'Even in those jurisdictions where there are legal distribution channels, pricing renders many products unaffordable for the vast majority of the population. Foreign rights holders are often more concerned with preserving high prices in developed countries, rather than actively trying to engage the local population with reasonably-priced access. These strategies may maximize profits globally, but they also serve to facilitate pirate markets in many developed countries.'"
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Piracy Is a Market Failure — Not a Legal One

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  • Amen to that (Score:3, Informative)

    by Tigger's Pet (130655) on Monday April 04, 2011 @03:28PM (#35712040) Homepage

    Let's hope that somebody who can actually achieve something in the marketplace actually listens to what Michael Geist has got to say.

    • Re:Amen to that (Score:5, Insightful)

      by Hatta (162192) on Monday April 04, 2011 @03:47PM (#35712356) Journal

      Don't bet on it. All the science we have has told us that Cannabis is at least as safe as any drug in our medicine cabinets. Yet we have been fighting a war against it for decades.

      You can't use facts to win a debate the government isn't even willing to have.

      • Re:Amen to that (Score:5, Interesting)

        by dcposch (1438157) on Monday April 04, 2011 @09:44PM (#35716204)
        I certainly agree that cannabis should be legal and that its legal position relative to alcohol and tobacco is ridiculous. I also agree that the general lack of rationality and open-mindedness surrounding that debate is frustrating. However, I don't think it's fair to blame just the gov't. California had an election this November on legalizing pot, and it failed by a significant margin. This is partly due to popular stupidity, and partly, I suspect, because the puritan types show up to elections more reliably than people who care about marijuana. If even California, the hippy state, can't muster a majority on that issue, how can we expect the rest of the US to do better? We're a democracy, after all. The federal gov't keeps a hypocritical drug policy around in part because a majority of Americans still seem to want it that way.
    • Re:Amen to that (Score:4, Insightful)

      by mini me (132455) on Monday April 04, 2011 @03:48PM (#35712376)

      I'm somewhat skeptical. I sell an iOS app at the usual App Store rock bottom prices. 90+% of my downloads are still attributed to pirates. I can't really drop the price any lower without giving it away for free. Pirates are going to pirate no matter what the cost is.

  • "Who knew!"
  • by SatanicPuppy (611928) <.moc.liamg. .ta. .yppupcinataS.> on Monday April 04, 2011 @03:31PM (#35712064) Journal

    If demand is below the price set by the seller, the buyer will acquire the item through alternate channels where available.

    Piracy dropped like a stone when cheap downloads became available. If you want to kill it off entirely, stop charging the same price for media that are new and media that are 20 years old.

  • What about Penny Arcade's Indie fundraiser where you could name your own price right down to a penny, with proceeds going to children's charity that was still rampantly pirated? I don't doubt there's a lot of things people pirate because they simply can't afford it otherwise (the necessity of them getting it non-withstanding), but I think there's also a vast number of people that will pirate because they simply don't want to be bothered to pay anything no matter what the price-point.
    • by RichMan (8097)

      I would argue that the payment mechanism can also form a significant barrier. Having to create a paypal or other account or enter a credit card number is a barrier. The entering of the information is a barrier, trust of the system accepting the information is also a barrier.

      • by hjf (703092)

        A lot of online game servers and download sites (like Rapidshare or Megaupload) also accept payments through local resellers. Credit cards are not that common outside US so a lot of people can't pay with them. It's not about security or privacy, it's about accessibility.

      • Long lineups at the checkout are a barrier; so I just stuff the things in my pockets and head for the door.

      • by cobrausn (1915176)
        I would argue that there is a significant number of people to whom 'payment' is a barrier. As in they don't want to pay for it, and there are plenty of ways to do so that are pretty easy to do and avoid any legal repurcussions, so they don't. Considering what we know about how some people tend to behave when they can do things anonymously, is this really surprising?
      • by mcmonkey (96054)

        I would argue that the payment mechanism can also form a significant barrier. Having to create a paypal or other account or enter a credit card number is a barrier. The entering of the information is a barrier, trust of the system accepting the information is also a barrier.

        My B.S. detector just exploded.

        If your justification for stealing is, too much work to reach for my wallet, you may just be a thief.

        Yes, putting a credit card number in to a form is a (very low) barrier. But downloading and installing LimeWire or a Bit Torrent client is also a barrier. Searching warez sites is a barrier. Running something from an unknown source is a barrier. Plenty of folks make it over those barriers. But PayPal is a "significant barrier"? I doubt it.

        Speaking for myself, it is just a

    • I think there are always going to be a lot of people that steal because they can.

      Winnona Rider? Lindsay Lohan? Did either one HAVE to steal anything?

      The problem is that RIAA logic counts these people as "lost revenue" when they were never going to get their money to begin with. Where they are ACTUALLY losing money is with the people that are willing to pay but where it out prices what they are willing to pay. That is supply/demand economics.

      There are people that will NEVER pay and there are people wil

    • Re:What about... (Score:4, Insightful)

      by PitaBred (632671) <slashdot@pitabre ... g ['s.o' in gap]> on Monday April 04, 2011 @03:49PM (#35712404) Homepage

      So they're not worth worrying about, because they're not and never will be your customers. Look at how much money the indie devs made as compared to what they were on track for without that promotion. Look at all the charity that was helped because of it.

      Yes, there are douchebags out there. But the majority of people are decent folk that understand value exchanges. Give them value for their money, and they'll gladly part with it at appropriate price points. Especially if you make it easy like Steam does.

  • Yet another repost (Score:4, Informative)

    by aBaldrich (1692238) on Monday April 04, 2011 @03:35PM (#35712138)
    This story is based on a Social Science Research Council report.
    The said report has already been extensively debated on Slashdot here [slashdot.org] and here [slashdot.org].
  • 'Even in those jurisdictions where there are legal distribution channels, pricing renders many products unaffordable for the vast majority of the population.

    Most, if not all, Western nations completely invalidate such studies given that music is extremely affordable and reasonably priced - and much cheaper than capitalistic pricing would otherwise allow.

    Its a societal failure, not an economic failure. Period.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Most, if not all, Western nations completely invalidate such studies given that music is extremely affordable and reasonably priced - and much cheaper than capitalistic pricing would otherwise allow.

      Its a societal failure, not an economic failure. Period.

      So you have also done a multi-year study to back up your claim. I'd love to see your data, and compare it to Geist's study.

      • by GooberToo (74388)

        Actually, studies like this contradict multitudes of studies which completely contradict this study. Not to mention, basic economics even contradict this study. So the onus of proof is most definitely not on me. They have an extremely higher burden from proof to overcome the overwhelming evidence they are full of shit.

    • by BassMan449 (1356143) on Monday April 04, 2011 @03:50PM (#35712428)

      The problem is that "extremely affordable and reasonably priced" is very subjective. When I was in college with basically no income a $10 cd was not affordable at all. Now that I have a job it is. Reasonably priced is also subjective. To some people $0.99 for one song is not reasonable at all.

    • Its a marketing failure. When you have to choose between a bag of groceries and a DVD you usually pick groceries. Those that are really into the media they wanted will simply pirate it, since its easy. Not everyone has disposable income, as a matter of fact, most people in the US have limited disposable income because they get paid shit wages and have families to support. If they would lower the price on media, more people would buy it. However, the RIAA/MPAA doesnt want that, because they would make the sa
  • by Onuma (947856) on Monday April 04, 2011 @03:37PM (#35712190)
    Valve has got an excellent method of dealing with piracy. While not perfect, it does tend to cut back on the "I can't afford it, so I'll just steal it" attitude. You really can't argue price points when you can purchase a 12-game bundle for $20US, even if only half of the games are ones you'd actually play.

    They can afford to charge lower prices because they have a great content delivery method, which cuts out the whole packing/shipping process. There is virtually no extra cost for delivering one or one thousand extra copies, and therefore overhead is minimized = profits maximized.

    I have to agree, at least in part, with TFA. Proliferate your business in a method economical and accessible to the consumer, and you're far more likely to cut down on piracy. After all, if everybody has your product at a price they're willing to afford, there is no reason for piracy.
    • by praxis (19962)

      There is virtually no extra cost for delivering one or one thousand extra copies, and therefore overhead is minimized = profits maximized.

      While I agree that it's logistically much easier, bandwidth is not free and using 1000 times more bandwidth does cost more.

  • by richtaur (1234738) on Monday April 04, 2011 @03:37PM (#35712192) Homepage
    The flow my girlfriend went through recently when trying to watch a season of a TV show:

    1. Checked to see if it was available digitally on standard channels like Netflix and Hulu (it wasn't).
    2. Checked Amazon, where it was available digitally, but only per-episode, at a ridiculous price like $3/ep (making it over $100 for the season, more expensive than on DVD).
    3. Downloaded torrent.

    She was more than willing to buy it, but it has to be easy and reasonable or "other" methods of distribution win.
    • by praxis (19962)

      Not only was it cheaper on the DVD, as far as I know Amazon won't go and revoke your license to the DVD while they might to the digital copy.

    • by zachdms (265636) on Monday April 04, 2011 @04:12PM (#35712720) Homepage

      That anecdote presumes that she has a right to obtain the content on her terms or prices.

      If we're going to assume that her (thrifty) needs trump the plans (or lack thereof) of the copyright holders, then perhaps the law of the land should reflect that.

    • So... (Score:5, Insightful)

      by KalvinB (205500) on Monday April 04, 2011 @04:13PM (#35712734) Homepage

      why not buy the DVDs?

      More likely she wanted it *now* and decided that piracy was a permanent solution rather than the temporary 3-5 day solution while her shiny DVDs shipped from Amazon.

      Piracy is just the new socially acceptable temper tantrum. Individual consumers (as opposed to collective market forces) have decided *they* get to decide the price and medium and if they don't get their way, they'll just take it for free.

      Fine, pirate it, right after you process your order with Amazon. That way you don't have wait to enjoy what you now legally own. Or, why don't you write a check for a price you're willing to pay per episode and send it to the company as a donation?

      I'm guessing you and your girlfriend are perfectly content not paying anything ever because the company dared to not have it your way right now.

      • Re:So... (Score:5, Insightful)

        by Anonymous Coward on Monday April 04, 2011 @05:01PM (#35713392)

        why not buy the DVDs?

        That's why [imgur.com].

    • by Kohath (38547) on Monday April 04, 2011 @04:29PM (#35712986)

      What TV show has 30+ episodes in a season ($100/$3)? TV seasons are usually fewer than 25 episodes.

      Why not order the DVD? Because she wanted to watch it now? Why not order 1 episode for $3 to watch now and order the DVDs to arrive in a day or two?
      Why not go to the store and buy the DVDs now?

      This is always the smoke screen that pirates use. I would have bought it. You want $x ? I would have bought it for $x/2 or $x/3. That goes for all reasonable values of x.

      Now that she downloaded it, what's keeping her from buying the DVDs right now? She's "more than willing to buy it", right?

      • by nblender (741424) on Monday April 04, 2011 @06:46PM (#35714884)

        I pirate my TV content. Here's why:

        - many shows are not available in my country (Canada)...
        - When the shows do appear in canada, they are 1 or more seasons after originally aired.
        - I enjoy discussing certain shows online with my friends in other countries

        additionally:

        - broadcast schedules are sporadic. ie: this season of BigBangTheory has not been regularly broadcast week after week after week. So I prefer to wait until the entire season has been broadcast and then watch the season as a whole.
        - the broadcaster or local distributor often puts animated ads on the bottom of content, occasionally covering up subtitles or other text that is part of the content.
        - my local cableco compresses the crap out of HD content so pirated content is of higher quality, less blotchy.
        - pirated content has had the commercials removed.
        - my cableco messes with the encoding so frequently that my capture methods aren't reliable. (firewire on DCT6200)
        - a PVR from my cableco has limited disk space, can not accomodate additional disks added, and can not be backed up.
        - I also don't have the flexibility to transfer recorded content from my cableco's PVR to my laptop so I can watch it on the plane.

        HOWEVER, I pay my cableco monthly anyway. Most of the content I do pirate, is content that would have eventually recorded or at least have come into my home via coax on the cableco's network.. The rest of the content, (foreign content) is I guess truly being pirated but I probably can't buy the DVD's due to region code issues anyway so I'm not a lost sale there anyway.

        Sure, it's a fairly weak justification but I feel morally 'ok' with my decisions.

    • by Kaz Kylheku (1484)

      Yeah, I'm also more than willing to buy that low-mileage BMW M3 I saw in the dealership parking lot. Problem is they wanted around 70K for it! Ridiculous! Who has that kind of money?

      So the logical flow is leading me to getting some 15 year old street punk to steal the car for me.

      That's not only cheaper, but more convenient too, compared to spending, what, like half a day signing some papers and making trips to the bank and stuff.

      • by internettoughguy (1478741) on Monday April 04, 2011 @06:51PM (#35714940)

        Yeah, I'm also more than willing to buy that low-mileage BMW M3 I saw in the dealership parking lot. Problem is they wanted around 70K for it! Ridiculous! Who has that kind of money?

        So the logical flow is leading me to use my matter replicator to duplicate my friends one.

        That's not only cheaper, but more convenient too, compared to spending, what, like half a day signing some papers and making trips to the bank and stuff.

        FTCAFY.

  • Case in point: me (Score:5, Informative)

    by Anonymous Coward on Monday April 04, 2011 @03:38PM (#35712216)

    That is exactly my case. Let me use ebooks as an example. I always payed for my ebooks. From Amazon, Fictionwise and Ebooks.com. Then, one not-so-beautiful day, "export" restrictions started applying to ebooks. Most publishers would simply not allow those shops to sell me ebooks, because I was on a different country. I even talked to 2 of the authors, and both were aware of this, not happy, and trying to fight these measures, to no avail. As a corroborating note, these specific books were not available in my country, through any channels. Be it physical books, translated or not, or ebooks. Harper Collins is the leader of this "geographic restrictions", as far as I can tell. Well Mr. Publisher, I went out of my way to try getting these books legally. I contacted the shops, contact you and contacted the authors. For reference, everyone but YOU responded. Everyone pointed fingers at you.

  • Eastern Europe (Score:4, Interesting)

    by sourcerror (1718066) on Monday April 04, 2011 @03:43PM (#35712296)

    In Eastern-European countries average salaries are around $600, but there's a highly educated youth, with cheap internet access (around $30 a month), and a lot of free time, and relaxed copyright laws (suing warez downloaders is not legally possible; you can only sue those who make a profit while pirating ).

    At the university where I studied, teachers expected students to use pirated Matlab, as they didn't had an academic license program, so they provided intranet warez copies.

    At the same time there's strong opensource culture as well.

    Firefox usage:
    Poland: 42%
    Slovakia: 41.2%
    Hungary: 40.3%
    Estonia:37.3%

    (And my guess is that in China hacker groups are government supported.)

  • by Maxo-Texas (864189) on Monday April 04, 2011 @03:43PM (#35712302)

    "rather than actively trying to engage the local population with reasonably-priced access. "

    You mean like high-school and college students without any income?

  • That's a market triumph! What did you think markets were for?
  • Piracy evidences the unstoppable propagation of art and ideas within and across cultures. To characterize it as a "market failure" only acknowledges the failure of the economically powerful to co-opt and monetize this particular mode of circulation. Even if media prices plummeted to lows that media companies would consider unthinkable, piracy would continue because the impetus to subvert would remain, and the demand for alternative distribution methods, file formats, and content would survive.

  • by arpad1 (458649) on Monday April 04, 2011 @03:54PM (#35712478)

    The good professor's got a peculiar view of things.

    The intellectual property owners have a legal monopoly and the market is inherently averse to monopolies rewarding everyone who figures out a way to undercut the monopolists. Far from being a market failure it illustrates the proper functioning of the market and the role of government in interfering with the proper functioning of the market.

    The purpose of copyright, like the purpose of the patent, is to confer a temporary monopoly to encourage the development of worthwhile ideas. That purpose is undercut by endlessly extending copyright into the indeterminable future. It's hard to even guess what that sort of appropriation of the patent system would've resulted in but it would hardly have been to serve the end of encouraging new developments.

  • Because in the market, sellers can choose the price they wish to charge, even if most other people think it is too high. After all, many more people want Ferraris than can afford them. That doesn't mean auto theft is a "market failure."

    Piracy provides copies of content for free; there is no way the content creator can compete with that and make money. So it is necessary to create legal remedies, which create a "price" for pirated content against which the content creators can legitimately compete.

  • You don't simply have a right to help yourself to something just because it is priced out of your range. Doing is is a legal problem, and not a marketing problem. Furthermore, pirates are accustomed to paying nothing at all, which is demonstrably less than what many of them can actually afford.

  • by PFI_Optix (936301) on Monday April 04, 2011 @04:28PM (#35712972) Journal

    The driving force behind piracy has always been, and will always be, "because we can". People have made unlicensed copies of things since the technology existed not because the original was too expensive, but because piracy was cheaper. Too many middle-class Americans do it for me to believe it has that much to do with cost.

    Even if a factor behind piracy is the high price of content, it's self-defeating. Companies have lost the incentive to lower the price of content when sales slow down. People not willing to pay $20 for a DVD can wait for it to come down to $5. But they don't, they pirate, and now the company doesn't stand to sell as many units at $5 than they might have, so they're less likely to reduce the price. One might argue that piracy hurts the tendency to lower prices by removing demand for low-priced content.

  • A short story... (Score:3, Insightful)

    by cyberfin (1454265) on Monday April 04, 2011 @05:09PM (#35713532)
    Mr. Copyright Holder goes to see Mr. Lawyer that is protecting his rights.

    - Mr. Copyright Holder: "How's the fight against piracy going Mr. Laywer?"

    - Mr. Laywer: "Not good. People are committing more piracy than ever..."

    - Mr. Copyright Holder: "Well you see, I've been doing some thinking about this; if we reduce our prices significantly and focus on the quality of our products and remind consumers that when they legally buy our product they also get legal warranty, we should be able in the long run to change the general culture of consumers towards a situation where piracy is met by the general population with disgust rather than with ambivalence. Also, that way we would not have to fork out so much money on litigation."

    - Mr. Laywer: "That'll never work. Oh, and by the way; we need more money for litigation."

    - roll credits -
  • by nilbog (732352) on Tuesday April 05, 2011 @03:24AM (#35717550) Homepage Journal

    Better pass a bunch of poorly written laws with over-reaching and unforeseen ramifications and egregious penalties anyway. You know, just to be safe.

  • by hesaigo999ca (786966) on Tuesday April 05, 2011 @01:04PM (#35722206) Homepage Journal

    I got to say, I agree 1000% with this...if the industry stopped making a big deal about it, and invested in making a better version to avoid piracy, that would solve the problem there.

    If a door maker, makes cheap doors that people can just punch and break, does that mean that the problem is people punching and breaking doors down, and robbing you of your house and possessions....or really is it the door manufacturer's fault for making flimsy doors....i never once heard a door maker say...

    >"god dang, that's another one this week, ...if only people would not punch doors and break them, we would have a more stable product securing people's houses."

    So why is it ok for all these other companies to always blame others....I am not saying it is right for someone to steal....but the definition of stealing is bound to physical objects...when everything we talk about is virtual it becomes a big grey area.....
    so fix the problem by coming out with a steel door, instead of balsa wood....add deadbolts to your door, instead of just changing the small door lock....why cant they come up with a better system for music, movies, software, instead of blaming the people that are doing what comes naturally, finding a way to save money.....if they can, they will.....

Is a person who blows up banks an econoclast?

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