Business in the Piracy Age

The technological advances achieved in the past fifty years have led us from the numerous limitations of the typewriter to the seemingly boundless capabilities of the modern computer. Along the way, the computer has shrunk from warehouse-size to notebook-size. Computer software has evolved quickly as well, expanding in the types of programs as well as in the number of options available in each respective program. The average person can perform a wide range of tasks, such as writing papers in a word processing program and touching up family pictures in a graphics editing program. In short, computers have revolutionized the way people work and play.

Home users are not the only beneficiaries though; businesses have had an intricate part in perpetuating the breakthroughs in the hardware and software areas. Microsoft and Google, for example, are household names, having become dominant in their particular market. Different companies now offer niche software for particular industries. Businesses have innovated in creating new software, but they have also enjoyed the benefits as well. Imagine how much fun working on and passing around documents in an office was for workers thirty years ago, and that is just one example.

That being said, the digital age has its own issues. The ease with which people can share digital information in addition to a carefree disregard of copyright law has led to a booming software piracy subculture. Groups of people spread out all over the world publicize working serial numbers for software, create programs that circumvent protective measures intended to thwart piracy of a program, and offer full version downloads of whatever products they can obtain. It is remarkably easy to illegally download virtually any program. Some studies put the losses due to piracy at $53 billion.

The problems that piracy causes affect businesses and individual users. Obviously, if people do not pay for software that they use, businesses do not make money, which can lead to layoffs or other problems. As a result, businesses pass on the cost of piracy to customers in the prices and look for ways to make their program as difficult as possible to illegally use.

Commercial software typically must be “activated” online in order for the purchaser to use the program. The most (in)famous is probably Windows Product Activation, which is Microsoft’s activation scheme for all of its Windows operating systems starting with Windows XP. The user must input a 25-character serial number during the installation and then “activate” their copy of Windows, most easily by connecting to a Microsoft server which receives information about the installation. Companies implement these schemes in order to try to prevent people from violating the software’s license.

I think activation schemes are rather lame because, instead of preventing or significantly hindering piracy, they merely inconvenience and irritate paying customers. The same study that I linked to earlier lists the United States in the group of countries as having the lowest rate of software piracy. All the people pirating software in central and eastern Europe don’t have to activate the same programs because “warez” groups disable activation entirely or provide a work-around for it. Why should a paying customer be treated as if he or she were a criminal? Activation and other anti-piracy schemes essentially ask the honest consumer to provide validation that he or she is not a criminal.

In my view, the reality of software piracy means that businesses need to adapt to changing times and provide a better experience for the customer. Although I am skeptical of the claim by some people that most people will pay for software given a reasonable price, I do think that the high costs and the pointless, confusing attempt to split the market with multiple editions of the same program, such as the various flavors of Microsoft Office or Windows, tempts normally honest people to pirate software. The restrictive end user license agreements are probably a factor as well, but that’s a whole other topic.

I fully respect the right of companies to protect their hard work and products. People ought to respect copyright law and pay for proprietary software or go without it if don’t want to pay the retail price. However, I object to intrusive schemes that unreasonably seek to limit or control how I use software.