Is Piracy a Bad Thing?


Obviously, high seas robbery is bad. It threatens life and deprives people of their property, but is copyright infringement a bad thing? There are those that claim piracy helps an artist because it exposes people to their work who would otherwise not have been. There are others (or the same people) who say they wouldn’t have bothered to look at the work if they had to pay for it, or pay retail. There are people on the other side of the fence who claim piracy costs the world economy more money than exists and there are artists who say their careers are ruined because of piracy. Can any of that make sense?

Definitions

To start with I’ll split piracy, which is actually just copyright infringement, into two areas. The first is what I’ll call counterfeit works and the other is sharing. Counterfeit work is where a work is sold by someone who doesn’t have the legal right to sell it and the profit doesn’t go to the copyright holder. This can include falsely claiming credit for the creation of the work. There is no doubt that the reproduction and sale of counterfeit goods deprives the author of income. If the purchasers are happy to pay for the good, they should probably pay the creator for it rather than some person cashing in on the creators hard work. The other type of copyright infringement is far more innocent in origin. It is where one person allows another to have a copy and no money changes hands. It is done for any number of reasons but in general, it is not done in pursuit of profit.

Counterfeit

The way I see counterfeit trade is that it represents opportunity lost. In the world of economics we’d call it consumer surplus. That is, if you imagine a supply and demand graph, everything to the left of the point where supply meets demand is where people would have more of the good, if it was cheaper. That is consumer surplus. Everything to the right of the point where demand meets supply is retailer surplus, that is where the supplier would be willing to produce more goods if people would pay more. The guy down at the market selling knock off DVDs for $2 a hit is supplying the market at a price point the legitimate supplier is unwilling to meet, for whatever reason. To me, this says there is demand going unmet which is money not going to the supplier. This is all very good when a product is of limited supply, such as is the case with physical goods. That is, there are only so many widgets that can be produced by one company in any given time period. However does this hold up with intellectual property? Not really. If I self publish an e-book, is there really a limit to the supply? No. It can be downloaded an infinite number of times by any number of people. The usual economics don’t apply. It isn’t like I’m only willing to produce 5,000 copies of my e-book at $10/book. Because of this, other people may well supply a copy of my book at $1 to soak up all the extra people who would’ve been my customer. The only way to combat this kind of piracy is to somehow provide better value, more bang for the buck, or to set my price at a point where I take up all (or close to) the demand. Easy? not really. Because you don’t know the size of the market at any given time. It would be fair to say that I want to maximise my profit, so I want to set the price of my book such that I just sell to the entire market (other, physical, goods don’t quite work this way because it may prove more profitable to sell fewer copies at a higher margin because of cost of production and distribution etc…). If I set the price too low, I’ll have saturated my market, sold to everyone who will buy, but they would have been happy giving me more money. If I set the price too high, there will be people who don’t buy because they don’t see the value. Those people, then, might buy counterfeit goods at a lower price.

Sharing

Counterfeit goods is a relatively simple case. I set my price at an appropriate level, penetrate all markets (eg: release globally without delay) and I will maximise my profit. But what about when people aren’t paying at all for my book? This happens when Bob sends a copy of my book (e-book) to Jim by email. Jim and Bob both read my book. Is this different from physical books? My mother leaves books with me all the time when she visits. Some of those books she was given by a friend. So the one book was purchased once and then four or five people read it. Is that piracy or being a good friend? How does that differ from downloading a book from The Pirate Bay? Gut feel says handing a book around to close friends and relatives is different from providing it free to download over the internet where thousands or even millions of people can get a copy, but in what way? Is it just a matter of scale? Are we willing to accept piracy if it is just good friends doing it or is it wrong always? Is a charity shop selling second-hand books for $1 a counterfeit operation? I mean the author doesn’t see any of the $1 and that book may well still be in print on the shelves of book stores. It is these murky areas that stops me from saying that copyright infringement is out and out wrong.

Does it help the author?

So given that counterfeit books are a result of the legitimate supplier failing to meet or understand the size of their market and sharing is such an inherently human thing to do the only thing we can ask is “does it help or harm?” I think the answer is that it starts doing both and the way the author reacts determines if it goes on to hurt or goes on to help.

Help

If I release my e-book on Amazon and then the following week I find someone selling it on e-bay for a discount I can react in at one of at least two ways. I can have a fit, contact legal departments and cry that I’m being robbed like a big baby, (can you tell my prejudice?) or I can realise that there are people who want to pay me money but I’m not letting them. Why wouldn’t I want people to pay me money? So I can examine where my books are being sold, for how much and under what conditions and I can beat the counterfeiters at their own game. All things being equal, I bet people would prefer the legitimate copyright owner get paid for their work, but not so much that they will pay substantially more. So counterfeiting has helped me identify a larger market and lets me expand my sales. Exactly how I arrange that is a detail with too many variables to get into, but I’d be looking at selling more books, not taking legal action (though I might do some basic legal things to allow me to move in to the market). What about sharing? A lot harder to profit from because these people aren’t paying for the book and so you can’t assume you have a larger market. However I can try to inform people about myself, sell them my brand and image. I can use the sharing as a form of publicity. I can have a go at using the “shareware” model where I provide a certain amount of work for free as a sampler to lure people to make a purchase. I think if things got really bad, I could sell advertising space in my e-book using the number of downloads and popularity of my work to justify prices. You see what I’m saying is you can’t deny that these things will happen. As a wise man once said “You can’t control the wind, but you can adjust your sails.”

Harm

The internet is a strange place with laws of its own. If I kicked up a big enough stink about piracy I might even alienate my fans. After all, who do you think is buying counterfeit copies and downloading my e-book? People who like what I’ve done, that’s who. Should I make them feel like criminals? Should I say I despise them and tell them they are bad people? Will that help me and my chances of making more sales? I can’t imagine how it could.

Feel free to disagree with me, there are lots of people in the world who don’t realise they are just plain wrong. (wink wink, nudge nudge)

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About sjohnhughes

Author, nerd, father, runner and more View all posts by sjohnhughes

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