‘Good’ Pirates Help Companies Sell More Products

If you are downloading stuff you wouldn't have bought in the first place, according to economist Karen Croxson, you are probably doing the company that created the product a big favor. You, Mr 'Good' Pirate, are telling your friends, adding to the media 'buzz' and driving up sales.

Imagine a situation in the future where Internet pirates are accepted – maybe even recruited – to replace expensive marketing and consumer awareness teams when bringing a product to market. Imagine the reward for the pirate was a free copy of the software/media he agrees to promote. According to an economist, it could be happening right now.

In her talk at the Annual Conference of the Royal Economic Society, Oxford economist Karen Croxson says that when people copy software, music and movies, it may actually help the producer.

“Digital piracy has been claimed to endanger whole industries” said Ms Croxson. “A natural question to ask is: Why do some companies develop water-tight technology to safeguard their intellectual property when others appear more relaxed about copying?”

Many pirates say that they would never have bought much of the stuff they downloaded or copied. If you fall into this category, you might be a ‘good’ or ‘promotional’ pirate. Croxson says that piracy is only a threat to sales when people who originally intended to buy, didn’t, and pirated instead. The others – of which there a many, many millions – never intended to buy and these, says Croxson, cannot possibly harm the seller.

Far from the “all pirates are evil” cry, these pirates tell their friends, and they tell their friends and so the priceless product ‘buzz’ is generated. This consumer ‘buzz’ is difficult to put a price on, but needless to say it’s very valuable indeed. Even if companies ‘paid’ a pirate with a free copy of their product in exchange for him spreading the word about the product, it’s still a fantastic deal – especially if these ‘promotional’ pirates weren’t going to buy the product in the first instance.

Also considered by Croxson are the reasons why people are tempted to copy something, which include value put on time, concerns about being caught and moral issues. Using these and other factors enables Croxson to discover piracy’s true threat to sales of a product and suggest the best responses.

Due to computer games being most popular in the youth market, they are heavily protected. Although young people place a lot of value on games, they have fewer fears when it comes to copying and have more time than most to do so. It’s suggested that this could be ‘bad’ piracy, in that these activities negatively affect sales, without the ‘promotional’ benefits.

On the other hand, business software companies put a lot less effort into anti-piracy measures. It’s suggested that people who use software in the course of their business place higher value on it, have less time to pirate and worry more about the legal aspects, so are less likely to pirate.

Croxson said: ‘With valuable users shying away from copying, the sellers in the business software market find themselves more naturally insulated against lost sales. Those more inclined to pirate, perhaps students, probably wouldn’t have bought the product anyway, so represent virtually free promotion. This helps explain why business software companies do not put as many resources into protection as computer games manufacturers.”

“Building a theoretical model of `promotional piracy’,” says Croxson, “it is possible to distinguish markets that are best advised to put considerable resource into safeguarding their products from others which may live quite comfortably with a higher incidence of digital piracy.”

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