Piracy as a distribution model

Piracy has been used to great effect by Microsoft to grow (and one of the great reasons they are so big still).

By 2001, Microsoft executives were coming to the conclusion that China’s weak IP-enforcement laws meant its usual pricing strategies were doomed to fail. Gates argued at the time that while it was terrible that people in China pirated so much software, if they were going to pirate anybody’s software he’d certainly prefer it be Microsoft’s.

Today Gates openly concedes that tolerating piracy turned out to be Microsoft’s best long-term strategy. That’s why Windows is used on an estimated 90% of China’s 120 million PCs. “It’s easier for our software to compete with Linux when there’s piracy than when there’s not,” Gates says. “Are you kidding? You can get the real thing, and you get the same price.” Indeed, in China’s back alleys, Linux often costs more than Windows because it requires more disks. And Microsoft’s own prices have dropped so low it now sells a $3 package of Windows and Office to students.

I think that piracy is a natural byproduct of an inefficient free market capitalistic economy where the established leaders and legal system are slower to react to cultural and societal changes than the people are. It’s not something that can be stopped by legislation or legal terrorism (e.g. the RIAA suing people to scare other people into compliance with their entrenched business model and laws). The gap between supply and demand is where “pirates” live, and contrary to what some want you to believe, people have shown again and again that they don’t want everything for free, they want to pay a fair price. Their idea of a fair price may not be yours though and that disconnect is where the good parts of the free market is meant to play to create competition.

Matt Mason has a great talk and a great book that dives more into this concept, he calls it The Pirate’s Dilemma. see the videos on his site talks (america is born of pirates). I think it’s important to understand more than just what the large corporations want you believe about history.

Johanna Blakley also has a great talk about intellectual property restrictions (or lack there of) on culture and helps to put things in perspective in terms of total market size for highly regulated intellectual property markets vs ones fairly free of regulation (less IP regulation is correlated with consistently significantly larger industries).

Johanna Blakley: Lessons from fashion’s free culture


Copyright law’s grip on film, music and software barely touches the fashion industry … and fashion benefits in both innovation and sales, says Johanna Blakley. At TEDxUSC 2010, she talks about what all creative industries can learn from fashion’s free culture.

my 2 bits,

– Randall Noval

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