Software piracy pushes companies to be more competitive, study claims

Software piracy, long a source of anxiety among app makers and large software companies, may have some beneficial effects. Wendy Bradley, assistant professor of strategy, entrepreneurship, and business economics at Southern Methodist University's Cox School of Business, and Julian Kolev, an economist at the United States …

[Dr.Flay]

Correlation or causation ?

I would argue that piracy was not the driving force, but that it was simply the games industry growing up.

By 2001 the time of bedroom programming teams dominating the games market was well over, and it was already a corporate arena where brand names became more important than the products, and we saw many big names absorbed into oblivion.

A few notable companies had created landmark games that they wanted to keep control of, and make more money from in whatever form even if they subcontract the development to another programming team.

No amount of investment in intellectual properties or licencing will have any effect on software piracy.

They are not related, they just happened at the same time.

[diodesign]

Is this a five minute argument, or a full half hour?

FWIW the study is basically about $100m+ software companies (like Microsoft, IBM, etc) and there was no focus on games developers.

The study looked at the correlation of piracy explicitly mentioned by companies in their paperwork filed to the SEC, and subsequent R+D expenditures and IP creation by those companies. Sure, other factors come into play and it's not 1-1 causal, but that’s a given for this kind of investigation.

It’s not a medical study looking to see if aspartame causes cancer or something like that where the causation is the key thing.

And FWIW, the study was about piracy affecting IP investment and indirectly revenue; it’s not a reversible operation where IP necessarily prevents piracy.

C.

[Version 1.0]

Re: Is this a five minute argument, or a full half hour?

It's worth reviewing the Windows development, initially we all bought a copy and then after a while bought an update or a new version (I still have piles of 3.5 inch floppy disks) ... but Microsoft was watching users stealing the registrations and now we can update to the latest version of Windows for free ...

"The big difference between software for money and software for free is that software for money usually costs a lot less. - Brendan Behan (updated).

[werdsmith]

Re: Is this a five minute argument, or a full half hour?

For years, Microsoft took a very relaxed approach to Windows OS and MS Office licensing. They knew that this was helping them to become the dominant go to product.

An employer uses Office partly because people know how to work with Word and Excel, recruitment is easier. A person wants to learn Word and Excel because these are what employers use, a person could easily install their own copy of MS Offce just by borrowing a CD back in the day. MS never seemed to give a shit.

[Blazde]

Re: Correlation or causation ?

Well, nothing else at all was going on in the computer software world in the decade both before and after 2001 so I think we can confidently say BitTorrent was the sole cause.

Anyway must go, I've got a copy of PC Direct to dig into before bed. The cover disc looks really exciting this month.

[Hugh Jass.]

This be fantastic news fer us pirates.

Been piratin' games e'er since I got th' emulatarrrrr ZSNES on a laptop I used t' have.

[Anonymous Coward]

Home taping is killing music

Anyone got a pencil?

[Hugh Jass.]

Re: Home taping is killing music

Aye, right here, me hearty, to be sure! But wouldn't a pen work bettarrrrrr?

[Denarius]

interesting

Would any study also show that open source software also encourages innovation among bigger software firms ?

[karlkarl]

So companies can stop adding DRM to their products leading us all to piracy now right?

[heyrick]

Previous studies on film and music piracy, the authors note, did not establish an increase in IP-based innovation

I'm not really sure how one could apply the intellectual property nonsense in the case of movies. Sure, you can trademark Deadpool, copyright a script, and so on.

However the situation in the software world right now would be more like Miramax "patenting" a character walking through a door, and freaking out if Universal has a character walk through a door, and long expensive court cases because the Universal character walking through the door had a hat on so clearly it was an entirely different thing and....

Meanwhile Paramount quietly claimed ownership of end credits scrolling on the screen (in any direction) and are tactfully demanding royalties for all content with scrolling credits. They don't ask too much, they don't want it tried in court. But don't think you can cheat and flash up the credits as a series of still frames as Columbia owns that method.

[captain veg]

it's like pop music radio plays

When I started programming PCs, Borland used to give away older versions of their programming tools. In consequence, a lot of CompSci students and hobbyists started using Turbo Pascal. When we landed employment, at least some of us wanted to have the latest Borland IDE, for which our employers paid.

If you don't have a dirt cheap or free version of your product, then piracy is the cost of acquiring a userbase that knows and likes the product enough to swing a purchase later.

-A.

[MrMerrymaker]

Piracy, then

I've pirated. I'm a member of a piracy site.

But we all buy if good enough.

Weird how it works. With games, it's why I miss demos.

Try before you buy. And if you like, you buy.

I KNOW not everyone is that moral. Just, I understand first hand: a good product engenders love for it, and reward for those who make it.

To me a lot of piracy could be solved with a good demo period. What have they got to hide?

[martyn.hare]

Or just make a legitimate purchase superior in every way

I pay for most PC video games because it allows me to get the latest patches and the ability to request technical support if anything goes wrong. In the case of good storefronts (like Steam), it also allows me to download legitimate debug versions as well as run routines to ensure files haven't been tampered with even when games companies are tardy about signing executables and shared libraries (steamcmd is a godsend).

For example, Skullgirls was released in 2012 and still receives patches to this day, including content updates, despite only costing me pennies (if that) per hour in terms of entertainment. Even classics like Quake still receive vendor-supplied patches to this day (albeit very few) and remakes of games are supplied for free (Metro Redux and BioShock Remastered) to people who owned the originals. This kind of support means paying is worth something compared to grabbing a scene release.

However, piracy still in some cases offers a superior result compared to a legitimate copy, regardless of price. Historically, I would dual-boot (two XP installs) to pirate anything which used StarForce, because I'd rather have a system which isn't hobbled by unwanted kernel modules. Ditto for cracking SecuROM games prior to Alcohol 120% being a thing, as I really didn't want to have to fetch a CD or DVD if all the data was on my hard disk anyway!

Also, Nintendo still games come to mind as a situation where pirating is the objectively better approach; where the legitimate physical copy will eventually fail or where the digital storefront will cut off my access a decade later. When legitimate purchases come with unnecessary caveats, downloaded ROMs are superior in longevity and paying the Yuzu team for ongoing emulator improvements already gives me a better experience... then why would I want to pay Nintendo?

TL;DR: “The easiest way to stop piracy is not by putting antipiracy technology to work. It’s by giving those people a service that’s better than what they’re receiving from the pirates.” -- Gabe Newell (Valve, 2011)

[Anonymous Coward]

Re: Piracy, then

I have a vague impression that game makers have decided that the protection is good enough to deter all but the most determined 'pirates', so fuck the demos, when people will pay for full monty anyway.

[Cuddles]

Re: Piracy, then

"To me a lot of piracy could be solved with a good demo period. What have they got to hide?"

While there's certainly something to said for a properly constructed demo, the refund policies of the likes of Steam and GoG mean there's simply no point. Buy a game, play it for a couple of hours, and then either decide you like it enough to keep it or get a full refund with zero hassle. Due to the wonders of digital onlininess, you don't even need to worry about making sure it's clean or keeping the receipt. There are still potential benefits to piracy when it comes to things like DRM and online check-ins, but the argument about trying games before committing to buying them hasn't really been valid for a while now.

[Doctor Syntax]

"Fortune 500 companies have long understood the importance of IP management practices to their bottom line, from Xerox to IBM; there’s a lot of value in patents, including (but not limited to) patent-licensing royalties."

So how come so many of these companies have gained themselves a reputation of hollowing out their R&D?

[Anonymous Coward]

Because the "new American Business Model" is to buy up companies that develop new technologies foreign or domestic and acquire THEIR patents that way instead of developing your own...

[vtcodger]

I favor competition

Hey, I'm in favor of competition. This looks like a relatively painless (to me) way to encourage it. Where do I sign up?

[Anonymous Coward]

Piracy and global warming...

.... sorry but this analysis reminded me that.

If they uses 2001 as the changing point there are many, many other changes in those years that modified heavily the IT landscape. Or they are really able to measure the effects of P2P file sharing also, eliminating all other effects, or it's like saying that the decline in pirates is causing global warming.

[hoola]

Re: Piracy and global warming...

Maybe I have misunderstood something, wasn't 201 twenty years ago.

Surely things have change since then. Did big online providers even exist then?

[gobaskof]

Bit Torrent isn't the only thing that happened in 2001. This paper smells a bit like someone analysed the data for an up tick in spending, found a year, and assigned something to fit their preconceived biases. It is not even "correlation" as one axis is boolean "does bit torrent exist".

Also measuring innovation based on IP filing is fundamentally flawed.

[Anonymous Coward]

A religious school of business, eh? Well, at least that makes it clear they aren't worthy of a religion's "charitable status."

But I digress...

Piracy doesn't improve competition at all. What it does is let a lot of people try out games and stuff, realize the crack is broken, and be forced to buy the actual game if they want to play it. Myself, I don't bother - I just buy Steam games galore when they are on for 80-85% off.

As to other software, the licensing doesn't tend to be as aggressively restrictive, so the cracks and pirated software usually work well enough for those who aren't willing to spend money. But with student software programs, there is little excuse for "poor students" to bother pirating software if they bother trying to find the free demos that companies make available to get them locked into using their software.

But we live in a society that expects everything that is available on the internet to be free. People have forgotten that things like music and games and software have dollar values and pay for the income of the people who create it; the people who created it apparently "owe" the pirate free things. :(

[Fursty Ferret]

Do people still pirate stuff? I would have thought a it's a perfectly reasonable assumption that anything you download from a dodgy source is going to have something unpleasant in it that will saunter casually past your anti-virus. The amount of stuff that needs UAC elevation to install on Windows simply means that you're giving it free reign over the whole computer.

[werdsmith]

I don't pirate because everything is either provided by employers, or available free for personal use and students anyway.

[Anonymous Coward]

innovate, as measured by an uptick in (...) patent, copyright, and trademark applications

which proves that patent trolls / hoarders are the most innovative of all, having discovered an innovative way to innovate income by accumulating innovations (and in some case innovating the non-innovative ones)

[ChadF]

Natural Selection

It's just simple evolutionary principles in effect. Adapt to your [changing] environment or die. For software companies, innovating is a way to adapt, rather than just trying to keep a stranglehold on their existing IP and be lazy.

[chr0m4t1c]

Jailbreak != piracy

What on earth is that guff about jailbreak features being added to iOS as the result of piracy?

Sure, jailbreaking can allow pirated apps to be installed, but mostly it's about using features restricted by the OS or App Store rules; I fail to see how something like having home screen wallpaper could be even considered to be the result of piracy.