Does Piracy Force The Price Of Software Up?

[Jay]

I know that Microsoft have a total grip on the software industry in many areas but does piracy force prices up in general or is it more to do with the monopoly Microsoft has at this moment in time?

[aidanjt]

It's just the monopoly, 'pirating' users only make up a tiny portion of MS's userbase. It's the same nonsense with record companies, they just use any excuse to artificially inflate their prices. Same with the government too, at that.

[arthurleung]

To be honest, as software gets more complicated, those software engineers need to spend more time making the program (or hire more engineers). So at least to me, it makes perfect sense for price to go up. Afterall, people don't magically write code twice as fast when their CPU spped doubled.

Record companies are a real rip-off on the other hand though. Their cost have been going down but price never go down.

Things will change in the future though, high oil price -> high food price, high energy price -> higher operating cost -> higher RRP

[Jay]

MS licensing fees are crippling and I think they need to be looked at.

[SiM]

It should drive prices down... Because of competition

[Sinizter]

Piracy might affect the prices of software released by smaller company which does not have wide user base.

But it will zero affect on companies like Adobe, they just priced out of the pockets of the average user - and then add a whopping great penalty on top of that to buy such in the UK.

[vinnyT]

Countries that have high levels of pirated software also have the lowest price for legitimate software, as companies such as MS try to counteract the piracy. Doesn't seem fair, does it?.

[Jay]

No

40 TS Licenses in this country = if buying hardware £2,400 or there abouts (and that is a good price when you look here)

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40 TS Licenses in the US = about £1,000 to £1,500

[aidanjt]

And I bet you'll get the same 40 TS licenses in China for about £100. :/

[SiM]

And I bet you'll get the same 40 TS licenses in China for about £100. :/

lol... prices are very low for legit stuff in China too because of the high levels of piracy there. Like I said it comes down to competition. If the piracy demand/supply is high, then MS lower their prices to compete

[chuckskull]

No, simple fact is, companies will charge the amount people are willing to pay. Piracy might be a handy excuse for high prices but I doubt it actually figures into most companies pricing discussion.

[SiM]

No, simple fact is, companies will charge the amount people are willing to pay. Piracy might be a handy excuse for high prices but I doubt it actually figures into most companies pricing discussion.

What determines what people are willing to pay? Substitute products? Pirated goods are a substitute (close, but not perfect) so what happens in the market for one product will effect the other. I am not saying its the only factor... in a country where piracy is less and MS can make enough money by hiking the price up, they will... if in a country where everyone would switch to pirated stuff at high prices, then MS would lower their prices. This is exactly what they are doing. Even if piracy does not come into pricing decision (I reckon it does) they will forecast demand... demand would be much lower in China with higher prices anyway, whereas it won't change as much here.

[chuckskull]

What determines what people are willing to pay?

The more money people make more they are likely to be willing to pay. Hence rip off Britain. The average Britain earns more than the average American. We also pay more. So sticking with the MS/China comparison.

Piracy is a lot more common, not because the Chinese are all evil pirates, but because of a swathe of economic pressures and the fact until recently no-one, at all cared. Police stations and government offices often ran on pirated software. Again until fairly recently MS products sold only slightly lower than western prices.

If MS could develop a perfect uncrackable DRM tomorrow, do you think people in china would pay UK prices despite having no pirate alternative? No. They simply cant afford to. Piracy is not a cause in this case, it is an effect, pirates moved in to make a quick buck, by selling the same software at a price people could pay. Because of the great Chinese firewall, an average person cant just jump on a torrent site and grab their own copy. Giving the pirates a captive market, so to speak.

MS finally realised this and dropped the prices to an affordable point and started piling pressure on the Chinese gov't(at this point now opening up to the likes of google and yahoo) to fight piracy. So you could argue piracy lead to the price drop, but doing so misses a lot of the root causes and becomes rather circular.

What really caused the price drop? The initial price

[SiM]

I understand your point and reasoning. It does make more sense than mine I guess...

[directhex]

It should drive prices down... Because of competition

the reverse is true.

Let's say there are 2 products - one for £40, one for £400. the £40 one competes with the £400 one - and people opt for the cheaper package unless there's a good reason. now add another product - the £400 one, but for free. perception is that the more expensive product is better, so the people who would have bought the £40 product, instead, pirate the £400 product

as a result, whilst the people who *would* buy the £400 product continue to do so, the people who would buy the £40 product don't anymore - driving the £40 product out of the market

now, there's no competition anymore. what incentive is there for the £400 product to lower its prices?

[Agent]

Good example is Photoshop and PainshopPro

The number of people I've seen pirate PS when PSP does everything they need and more is shocking.