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Piracy: Is It Really That Bad?

Piracy has long been well known as the alter ego of sharing. It embraces the same vision to let everybody know and enjoy the pieces it shares, albeit in a ‘wrong’ way. We will discuss about this ‘wrong’-ness later.

Put the way aside, piracy is a force to reckon. Its movement is so fast that a jailbroken iOS will be available in a matter of days after its official release[1]. This speed even allows you to get a ripped music in seconds. The power it bears could cause a massive loss, or even a significant change in any kind of industry, both positively and negatively.

A question then arises: is piracy really that bad?

The Ongoing Fight

To understand the ‘wrong’-ness of piracy, we first need to comprehend the underlying reasons.

One major reason for piracy is money[2][3]. Most of the time, people complain about overpriced products. They state that manufacturers/developer/producers have put high price for the perceived low value they gain. They demand the price to be lowered with same (or even more) level of features.

Another driver of this act is the bureaucracy: DRM, copy protection, two-step online purchasing, etc[3]. These things have stood between the desire to have the products and the actual owning/using of the products. People face difficulties, and they feel legitimate to pirate the products.

Driven by the stated-but-not-limited-to reasons above, people have developed notable efforts to own or use products illegally. Many tools to crack softwares are available on the web. These tools are distributed via several methods: HTTP file sharing services, direct FTP, emails, torrents, etc. The pirates help each other, from giving simple tutorials to actually sharing the hacked products. They form a huge number of communities, and these communities are growing rapidly, all fighting for freedom under the same flag of skull-and-bones. The act is pervasive. It attacks information and communication technologies (ICT). It also attack art industries: music, painting, etc.

On the other side, manufacturers, producers, and developers are trying their best to protect their properties. They don’t want to lose any penny to the pirates. They invest a great sum of money to ensure their assets are safe. They developed advanced encryptions, digital watermarking, sophisticated authentications, digital rights management systems, etc[4]. These manufacturers enforce the establishment of intellectual property protections: copyrights, patents, etc. In their opinion, there is always a price for every knowledge utilized to build a product. Their effort for protection also covers many industries, from ICT to art. For instance, scientists have recently invented sparse coding to detect fraud on artistic pieces[5].

Up to this day, the fight between pirates and ‘tyrant’ manufacturers are not done yet. Campaigns emerge from both sides, claiming their side as the righteous one.

 

The Loss and Benefits due to Piracy

A massive amount of loss has occurred due to piracy. Business Software Alliance (BSA) reports total worldwide software piracy rate of 38%[6], a number equivalent to $47.8 billion. There is an increasing trend in the number of software piracy. In music industry, Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers’ earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes[7]. International Intellectual Property Alliance (IIPA) also reports a huge sum of loss in various industries, as stated in Table 1[8].

Table 1 Loss Due To Piracy 2004-2008

However, money loss is not the only thing which piracy brings. On the bright side, piracy also gives some positive effects. In their paper, Bin Gu and Vijay Mahajan shows that piracy could be beneficial to firms by attracting the most price sensitive consumers and eliminating them from the market. Without this type of consumer, firms’ incentive to engage in self-destructing price competition is reduced. Firms therefore could increase their profit[9].

Piracy helps companies’ marketing without any fees. According to Oxford economist Karen Croxson, pirates will talk to others about product experiences. This talk then creates consumer buzz which increases brand awareness[10]. One good example of this is Microsoft’s Windows XP. In music industry, piracy has also helped musicians to gain popularity. People listen to their ripped music, like it, buy it, and form a huge fanbase. In movie industry, the companies could benefit from merchandise sales even though their movies are pirated.

Another major impact of piracy is innovation. Every single market that is subject to the risk of piracy improves because of it. Companies are forced to make continuous innovations and better ways of delivering products. Napster, founded in 1999 by Shawn Fanning, despite having legal difficulties of copyright infringement, has changed the music industry and the way we access music forever. The big gaming-console companies were unable to succeed in China due to rampant piracy. Their CDs were copied and sold in black market, leaving a big vacuum in their market. This gap then triggered online games which only needed browser to play.

Socially speaking, piracy has helped ‘poor’ people to have the same experience as the ‘rich’ ones. Piracy also leverages the educational aspect. Thanks to pirated Windows and/or other softwares, many people become more computer literate.

Now that we have seen the pros and cons of piracy, we can’t really say that piracy is bad, can we? However, there is just one thing left to consider: ethical view.

A Word on Ethical View

There is always a context in everything, and piracy is no exception. In such context, at least one or two stakeholder(s) can be identified. In the case of piracy, we can identify at least these stakeholders: Owners/producers/manufacturers, pirates, third party services, customers, and regulators such as governments. Do these stakeholders bear ethical responsibilities?

At quick skimming, owners/producers seem to be the victim. They are robbed, their properties are stolen, and their money are taken illegally. But what if they are plotting something awful? Antivirus manufacturers can plot to release a virus and the vaccine. They developed a deadly virus and put a high price for the vaccine. What if the virus spreads so quickly and widely, attacks poor people that can’t buy the expensive vaccine?] The developers’ ethics are challenged here. They are supposed to provide real solutions to real problems instead of pretending to provide one. In our example case, the antivirus manufacturer should also consider people’s buying ability in deciding their software availability.

Pirates, on the other hand, are often considered as villains. They rob properties, steal them, sell them illegally, and enjoy benefits from these acts. Some people can say that no matter what, stealing and robbing are criminal acts. Though this may be true, I’d like to point out that in some occasions, there would be ‘white stealing’, just as we put it on ‘white lie’. The manufacturers may be the real villain by intentionally putting an unreasonably expensive price for mediocre or low quality products. It is now up to the pirates. I believe that not all robbery is  ‘robin hood act’, as majority manufacturers intend to provide real solutions.

Third party service providers’ (such as file-sharing services) ethics should also be challenged. Why do they provide such services? What are their purposes? What kind of users are they supposed to serve? Do they aware that their services are used for infamous acts? Do they aware that their services are open to such possibilities? These kinds of question should be considered when we are to decide the third party service providers’ ethics. According to Moral Responsibility for Computing Artifact (The Rules), the people who design, develop, or deploy a computing artifact are responsible for that artifact and the foreseeable effects of that artifact.[11]

Customers, while look innocent, should be challenged, too. Are they really that innocent? Are they compliant with copy protection laws? Are they purposedly looking for pirated products? In case they cannot afford to buy the product legally, do they seek better alternative solutions? We should ask these questions because customers without a doubt drive the market.

Governments and other regulators also play a major role in piracy sociotechnical system. The rate of piracy could increase or dicrease, depending on the rules. If, for example, all softwares have to be free, I’m sure piracy will perish. If they decide that all softwares have to be priced ten times higher, piracy rate without a doubt will increase. The questions to ask are: Do they publish the right rules? Are those rules effective? Are they free of personal interest while publishing the rules?

Our communities tend to judge piracy as all-black villain so that we often fail to see the possibilities of its beneficial effect. We also often fail to see the ethical value of other stakeholders, thus our understanding become more and more partial.

To Sum It Up

Piracy, while basically is a form of stealing and robbery, could bring benefits to communities. It is now a matter of ethics, though, that the rate of such act would increase or decrease.

References

  1. “IOS Jailbreaking.” Wikipedia, the Free Encyclopedia. Web. 08 Nov. 2011.<http://en.wikipedia.org/wiki/IOS_jailbreaking&gt;.
  2. “Price Drives Global Media Piracy.” PhysOrg.com – Science News, Technology, Physics, Nanotechnology, Space Science, Earth Science, Medicine. Web. 08 Nov. 2011. <http://www.physorg.com/news/2011-03-price-global-media-piracy.html&gt;
  3. “Talking To Pirates.” Positech Games – Developers of Gratuitous Space Battles & Democracy. Web. 08 Nov. 2011.<http://www.positech.co.uk/talkingtopirates.html&gt;.
  4. USPTO. “Technological Protection Systems for Digitized Copyrighted Works: A Report to Congress.” United States Patent and Trademark Office. Web. 08 Nov. 2011. <http://www.uspto.gov/web/offices/dcom/olia/teachreport.pdf&gt;.
  5. Jones, Willie. “A New Attack on Art Fraud.” IEEE Spectrum 47.3 (2010): 18. Print.
  6. GLOBAL PC SOFTWARE PIRACY Study. Rep. Web. 08 Nov. 2011. <http://www.bsa.org/country/Research%20and%20Statistics/~/media/BEE6DC1E056F4B9699B30E69E7E1DD68.ashx&gt;.
  7. Siwek, Stephen E. The True Cost of Sound Recording Piracy to the U.S. Economy. Rep. Web. 08 Nov. 2011. <http://www.ipi.org/ipi/IPIPublications.nsf/f726f4998ba46f86862567d80074727a/d95dcb90f513f7d78625733e005246fa?OpenDocument&gt;.
  8. “BusinessWorld Online Edition | Philippine Business News & Analysis: Research – Economic Indicator.” BusinessWorld Online Edition | Philippine Business News and Analysis. Web. 09 Nov. 2011. <http://www.bworldonline.com/Research/economicindicators.php?id=0477&gt;.
  9. Gu, Bin, and Vijay Mahajan. “The Benefits of Piracy – A Competitive Perspective.” Web. 08 Nov. 2011. <http://opim.wharton.upenn.edu/wise2004/sat612.pdf&gt;.
  10. “Digital Piracy May Benefit Companies.” PhysOrg.com – Science News, Technology, Physics, Nanotechnology, Space Science, Earth Science, Medicine. Web. 09 Nov. 2011. <http://www.physorg.com/news124984600.html&gt;.
  11. Miller, Keith W. “Moral Responsibility for Computing Artifacts: “The Rules”” IT Professionals 13.3 (2011). Print.

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