Nick Bradbury, creator of TopStyle (probably the best StyleSheet Editor in existence), has a blog (who knew?) and posted an article on Friday about the widespread effects of software piracy on “the little guy.”
It’s a great read, but it falls into the same FUD traps that litter RIAA and Microsoft press releases: the myth that any money at all is being “lost.” Now certainly if, by lost, they mean “not gained” then there MAY be a point, but the fundamental problem with this line of reasoning is the assumption that pirating is nothing more than an alternate behavior from “buying”.
This is, of course, patently false as a few glances at an economics book would tell us. If I’m selling a piece of software for $500, and someone puts it up on a website for nothing, a visitor has the choice to pay for something or get it for free. The only reason anyone DOES buy software with piracy so rampant is that “there’s no such thing as a free lunch” when you pirate a software program, you are accepting a risk in return for a “price reduction.” That risk is of getting caught and facing whatever charges are levied against you. It is also immoral. If those two things don’t make the free program look less attractive to a person than paying for the software, or doing without, that person will pirate the software.
That’s the big issue, here, though… I would guess that the vast majority of software pirates would never buy the software they’re pirating because they can’t (or don’t want to) afford it. Does this make it right? No. Does it mean that it’s not “costing” software companies anything? Yes.
So go read the article, but keep in mind that just because a thousand copies of a $100 software program are pirated doesn’t mean that someone just “lost” $100,000.
From a pure economic standpoint:
He does not “lose” money due to piracy, but he does have “foregone sales and foregone income”. What does this mean?
Everytime you produce something (whether it be software or automobiles) there is a fixed cost (stays the same no matter how many are produced/sold) and a variable cost (dependent on the number produced/sold). His fixed cost is probably things like his time spent making the programs, any other programs he had to use to make his program, and the ability to sell his program. Variable costs include the actual CDs the program comes on and the time spent reproducing the program on the cds, and the selling costs of each cd.
So, once his fixed costs are recouped, he makes more profit off of each copy he sold. If he is not selling additional copies because they are being pirated, he is not receiving that profit from each additional copy sold.
I would agree that most people would not otherwise have possession of the program, but for the fact they got it for free. But some people might buy it if they really wanted/needed it and could not get it any other way.
So, you are half right. He’s not losing 100K, but he is not receiving some money he would be getting in a non-pirated world. At least… thats the simple explanation (and yes its wordy so you should see the complex explanation!)
PS – I write my comments for all, but I am sure Pete you don’t need the detailed explanation of terms I have offered
Because your financial analysis is pretty good for a computer guy 
Hahaha… thanks Bobby, I had kinda gone through lots of that in my head, but it’s good to see someone who really knows write it out.
I’m not above learning a thing or two.
Aside from the actual financial aspects, I think there is one other point to consider. I may have missed it in your post Pete, so if I did, it’s just repetitive.
Just because someone has a copy of pirated software doesn’t mean they WOULD have bought it. In other words, if 1,000 people have a pirated copy of certain software, the vast majority of them may not have needed it. Out of those 1,000, only 50 (example) ACTUALLY needed it and WOULD have paid for it had they not obtained a free copy. If piracy was non-existent, those other 950 people either would just go on living life without that program or bought a different companies version that was less expensive.
The above was just an example and to sum up in one sentence…..just because there are 100,000 pirated copies of software doesn’t mean all 100,000 WOULD have bought it had they not been able to obtain it illegally.
And one more thing to mention, combine my explanation with Bobby’s explanation and you can see that the “lost revenue” can often be GREATLY exagerated.
Aside from the misleading argument about whether potential income can be counted as ‘lost’, how about the moral argument that, as creator of these software tools, Nick has the right to set the terms whereby you use them. His are simple: pay and you can use them.
Think of it from your side now… if you are getting benefit from using his tool and you haven’t met his terms by paying, then haven’t you stolen something?
Some people seem to think that software doesn’t count because it’s intangible or easy to copy without damaging the original, but those are arguments that get away from the basic moral argument of value for value and respecting the terms set by the creator of something.
Likewise, arguments over whether people ‘would have bought software if it wasn’t free/pirated’ also get away from the core. Who really cares about the exact numbers of people who would have bought it. Each one using it beyond the trial period that Nick sets is stealing. How is that different than stealing a car from a dealership then rationalizing that ‘it doesn’t count because I wouldn’t have bought it if I couldn’t steal it’
If his tool isn’t what you need, or you don’t want to pay his price, don’t use it. simple.
I certainly expected someone to come over, not really read anything written, and spout off some self-righteous tripe about the morality of piracy. Thank you, Mr. Wilkinson, for doing just that.
Allow me to point out and distill some quotes for you, since reading does not seem to be your forte:
“It is also immoral.” — this was stated unequivocally and without qualification. Nobody on this site has yet claimed anything to the contrary. The question I’m discussing is not about right or wrong, however.
It’s a question of a) why does piracy exist (which I covered briefly in the third paragraph) an b) what it REALLY costs (which is “not as much as software authors claim”)
Something being wrong does not mean that all arguments against it are logically sound. Piracy is wrong, but the argument that every stolen copy represents money stolen from the author is fundamentally flawed and basically false. The moral equity of piracy has no bearing whatsoever on the truth or correctness of this misleading argument.
Next time, Jeff, RTFA.
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p>Ok, I’ll admit, that in my post I got a little carried away and came off more self-righteous than I meant to… (gotta write somewhere I can see the whole thing, not in this little box
and I addressed a few apects of the general arguments that weren’t stated here in trying to make my point… that doesn’t mean I didn’t RTFA or that I’m an idiot thanks. I read your post quite carefully, as well as Nick’s original 2 posts and a number of other response threads.
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p>Pete, you later summarize the 2 points you were trying to discuss, but, in my reading of your post, they weren’t stated so clearly, and you covered more than just those 2 ideas … including the belief that ‘it doesn’t count because not everyone who pirates would have bought it if they had to.’ I’m sure that’s true, and it certainly affects the conversation about estimates of losses, but that idea is used in most conversations to justify the piracy.
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p>FWIW, I agree with you that BSA, MS and most other estimates of the financial losses of piracy are absurd and must be pulled out of someone’s orifice… and even Nick’s quick way of measuring warez Topstyle users has it’s own problems. (for instance, since his shareware trial version allows 20 uses, he could have had the warez copy ping back on the 30th use, not the first, to get a better idea of people continuing to use it rather than casual testers) Anyway, the estimates are just wild guesses generally meant to exaggerate someone’s stand on piracy since there is no hard data on real losses.
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p>Overall, most of the arguments to Nick’s articles that I’ve seen here and elsewhere seem to be trying to push the issue away from personal responsibility and the rights of the software creator to what sound like larger societal/economic rationalizations. I was trying to bring it back in a bit closer. I’m sorry if I came across as self-righteous or off-topic in the process.
Well, I\’ll forgive the fact that you\’re \”new around here\” and not familiar with the fact that I\’m all about some personal responsibility… and I can certainly see where one might think I was trying to excuse piracy, if one were a little over-sensitive to it.
Also FWIW, let me add that I have no doubts that Nick\’s estimates of (especially) shareware piracy in terms of number of copies pirated are probably close to accurate… piracy (especially of shareware) is HUGE.
I hope you\’ll excuse a bit of testy-ness on my part — I get a bit annoyed when I feel that words are being put in my mouth and then I\’m debated on the merits of things I\’ve been assumed to have said or implied.
if any person genuinely believes that pricing a goddamn audio cd at more than $15(on an average) is not immoral but the methods that have been evolved by people to work around this is, let me take the mantle upon myself to tell you something.you are nothing but a dim witted idiot, with a very loose sense of reasoning, also without much of an idea of the fundamental precepts of simple economics, who would take anything that has been handed down to him from a position of power(rules that have to be obeyed come what may..)
ps: i only have one suggestion dude.. you live in a real world where costs and benefits far outweigh most other considerations.
Uh huh. Nevermind Intellectual Property rights.
This is a commie-free zone… take your moral relativism elsewhere.
well, since i’m new here this is most likely going to go over like lead. My problem is with the law itself. Our founding fathers never let me stress this NEVER considered life plus 25 years as being acceptable. There is a reason that it’s one 14 year term, plus if you stay on it you get one 14 year extension. Which as best as i can see is about right. Every “work” is built or derived from another work and it’s this cultural pool that was to be protected. Today i will never be able to use say a song from the 80’s to mix another turn without paying through my *** to do it and the stories of motown artists who were literially cheated out of their share could fill a mult-volume set. While i don’t condone piracy, i do understand the why’s, and 9 out of 10 times it’s economic. That other one time is a toss up of “i’m tired of being screwed” mentality. Right or wrong it’s there. The other question is just how much is an aceptable profit on a work. Most people would say whatever you can get (disney comes to mind) others are more fair and would say what it takes to cover my time and alittle extra. I noticed someone mentioned the price of a cd. which in bulk is less than a penney. something to think about anyway.
disclaimer: I in no way endorse or promote piracy, i do think that at this point we may never really fix this issue. thanks for reading my lead