Do Software Companies Profit from Piracy?
Whether it’s a shoddily recorded taping of a new Twilight film being peddled on a Vietnamese street corner, a newly released Taylor Swift Album being seeded on bitTorrent, or copy of “Moonrise Kingdom” being transferred from one Cornell student to another by way of an on-campus file-sharing application, piracy prevails. The government recently tried to introduce a massive measure, SOPA (Stop Online Piracy Act), that would afford tremendous legal power to fight piracy. After major sites such as Wikipedia and Reddit used their platforms to spread the message that SOPA would endanger the openness of the internet, it was shot down. But by now, piracy has taken a life of its own, and is simply too dynamic to be stopped. Nick Bilton, a technology columnist for the NY Times, says “stopping online piracy is like playing the world’s largest game of Whac-A-Mole.” So the question then becomes: does it really need to be stopped?
Dale Thompson believes that piracy may in fact benefit many software companies. He “created a website to sell counterfeit versions of software from some of the biggest names in the business — but he was trying to make a point, he says” (Financial Post). He believes that with any software, network effects play a large role in whether it gains the critical mass necessary to become a premier technology. Take Adobe Photoshop, the most popular image editing software in the world. It costs in excess of $600 for the newest version. That price eliminates a huge chunk of the market. But piracy offers an alternative for lower-budget folks: download the software illegally, play around, upload some images to the web and, maybe, find your niche. More users leads to more classes and online tutorials, more books and more references to Photoshop’s prevalence. Today, a massive percentage of the market uses Photoshop, without a doubt thanks to both legitimate buyers and multitudinous illegal copies.
If network effects can be attributed to Facebook’s meteoric rise among social networks, it’s more than likely they had a hand in other dominant software growth as well. And that’s exactly the point that Dale Thompson is still trying to prove. But the software companies (including Adobe) are certainly not game. “In December 2011, Adobe, Microsoft and Rosetta Stone sued him… [for a] total award of $445,000.” Their lawyers downplaying any benefit they may have received, going so far as to question the legitimacy of the ‘network effect’ in and of itself. But as more research on how piracy increases the network effect is revealed, these companies may find that in fact, they’ve been winning this game of Whac-A-Mole the whole time. Who knows, without piracy, we might be blaming another company for making celebrities look all too perfect.
http://business.financialpost.com/2012/11/03/the-network-effect-one-mans-quest-to-prove-software-companies-profit-from-piracy/
http://www.nytimes.com/2012/08/05/sunday-review/internet-pirates-will-always-win.html
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