Piracy costs the industry $59 Billlion, BSA reports

Subject: Editorial, General Tech | May 12, 2011 - 07:40 PM |
Tagged: piracy, bsa

Piracy is a sore spot for the entire intellectual property production industry. The infinitely reproducible nature of information creates real challenges for collecting revenue particularly if taken from the mindset of a time where content was much more difficult to copy and theft had to occur for content to be in someone else’s possession.

Slightly NSFW, and Monty Python wouldn't have it any other way.

The Business Software Alliance released last year’s report on software piracy through 2010 and found that piracy has reached the highest level yet. Their report, based on a survey of 15,000 business and consumer PCs (servers were excluded from this survey), claimed that the difference between sales and estimated total dollar value of installed software was $59 Billion.

The sharp increase in piracy shows just how impossible it is to survive in the current mindset of acquiring content for free. Piracy affects content creators both big and small. Analysts fear that a continued mindset of acquiring content for free will devaluate the amount spent on content.

The biggest hurdle towards tackling piracy is confusion between revenue and control. Control is a resource that is not free and implicitly paid for by potential market share. A business model that limits your market without increasingly monetizing the control you gain with that model is a total loss. An unfortunate consequence of this confusion is that lost revenue as attributed to a lack of control rather than a superabundance of it. As Gabe Newell discussed with Tippecanoe Valley High School, businesses need to experiment with their business models because theory cannot necessarily be grafted to any given situation. If you are not seeing what you are expecting, it might be because your expectations are incorrect and you should test the market to determine what you should expect.

Source: PCMag

May 14, 2011 | 09:47 PM - Posted by Windrunner (not verified)

Where's the report's methodology, or is this another magic number pulled out of thin air to pressure legislators into asinine laws like every single dollar valuation of piracy I've seen so far?

Do they have it by country? Do they have it by region? Do they have it within tight geography? How did they gather these statistics?

I'm almost willing to wager that these numbers use similar logic to visiting www.minecraft.net and looking at the registered users and the paid users and assuming every registered user who isn't a paid user is a pirate.

Actually, I wikipedia'd it. https://secure.wikimedia.org/wikipedia/en/wiki/Business_Software_Allianc... The number is complete and total...I can't use the words on PCperspective.

No BSA, just BS. I hope they lose their asses to lawsuits when this number is cited in more congressional stupidity.

May 15, 2011 | 06:57 PM - Posted by Scott Michaud

Well the general theme I was trying to get through with the editorial is that completely regardless of the dollar value: the common mindset that revenue scales with control is most often wrong. Control is a resource. Anti-piracy methods "purchase" control in exchange often for market (lesser number of people willing or able to use your DRM, etc.)

Companies who spend their time focusing on acquiring control rather than revenue have directly made the conscious decision to sacrifice revenue; thus, when they make claims of lost revenue due to piracy, they are fundamentally wrong: it is due to their choice of business model.

If they admit that they are unable to capitalize on their own business: they are admitting that they are unsuitable at managing their own business. Plain and simple.

So dollar value disputes completely aside: there are fundamental problems with the industry, period. And they're not piracy. Plenty have leveraged piracy to increase revenue (see the links in Paragraph 3). The problems are much larger and come with a lack of understanding, particularly with understanding the new ground being broken over the last decade.

May 17, 2011 | 12:02 PM - Posted by Anonymous (not verified)

It’s a subtle point that some might miss. But indeed the companies developing and selling protection schemes clearly have a vested interest in selling their products to content holders that are hoping for a zero loss business model.

The problem here is threefold. Firstly, there is no perfect protection scheme and such mechanisms are often defeated within days or hours of release (or at the very least sooner or later). Secondly, the content holders devote financial resources for such protection schemes which are a drain and are often ineffective protection measures. Lastly, and perhaps the most problematic, is the junk philosophy necessary to come to the conclusion that a misappropriated non-physical product unit (with no protection or defeated protection scheme) is equivalent to a lost sale. It’s a complete fallacy to make such an assertion. There is a high degree of uncertainty here and to assign a number to it would be a theoretical fudge number.