Does Piracy Force The Price Of Software Up?

[SiM]

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?

You have misunderstood me. Let me give an example, the competition is between pirated windows Vista Ultimate and legit Vista Ultimate. The products are pretty much the same, except for risk of getting caught and fined and the fact that you can only install the legit one once... ignoring these differences, the only other is the support. How much is support worth? Not much for most people... Most people will choose £2 pirated copy over the £100 legit copy.

[TooNice]

There is usually an outrage when the RIAA & al start targeting end users. We are often quick to mention cases where they targeted the granny who does not even have a computer and so forth. But while 'support' might not be worth much for most people, I reckon that a higher risk of getting caught (even as low as 10&#37 would make many pirates turn legit, or seek legit alternatives.

There may be group of people who simply can't afford the asked price, so I am sure that even if the risk if getting caught is high, they would still chance it (not unlike shoplifters). But at least it would restore some equilibrium between risk and 'freebies'. As it is, the only reason for picking a £100 legit copy over a £2 is really your conscience. And there are an increasing number of people (based on various posts I've read) who simply see no wrongdoing whatsoever with pirating.

[Giraffe]

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.

PSP isn't free though.

Paint.NET and GIMPShop will do almost everything and are free.

[Agent]

PSP isn't free though.

Which was the entire point of my post
Read Directhex's post before mine - it will make more sense

[Agent]

And for anyone thats not seen it this is a nice read

[Jay]

I am wondering if us good honest users are paying the price for the dishonest users. I am worried that small to medium business are being priced out of having a proper IT infrastructure.

[directhex]

http://forums.hexus.net/general-disc...-software.html

[Agent]

http://forums.hexus.net/general-disc...-software.html

You do realise that if that gets bumped, I will be able to post *that* pic, don't you?

[directhex]

You do realise that if that gets bumped, I will be able to post *that* pic, don't you?

yessir!

[Dreaming]

I agree with chuckskull with my limited economics knowledge, piracy is an effect not a cause. It does lead to other things, in the way the multiplier effect works...

But if there is a supply and demand for good x, it has a natural price point. If you are running a company, and have a natural monopoly or there are such barriers to entry that you have a monopoly anyway then you will price your product higher than the natural price point.

This is damaging to the free market and has a negative overall effect i.e. Joe Bloggs who would have bought Microsoft Office at £50 can no longer afford to buy it at £300 even though Microsoft would have been still making money off that particular sale (so it is one they should have gone in), hence the investment in to making a product isn't being fully realised in benefits to society, it is being manipulated to make supernormal profits.

In the natural market a lot like in the theory of evolution (lol) people tend to find a way around this i.e. if you price food too high people will riot instead of starve to death. In this case, a lot of software may be priced too high for certain areas (China example a good one) and so they resort to piracy rather than be deprived of the inherit benefits of using said program.

I don't think it's always the case (although often is, I use paint.net instead of photoshop despite a million and one students 'needing' photoshop to make avatars or somesuch) as directx said that there is a competitor for a lower price point but offering limited functionality.

I think part of the problem is the way people look at the price of software as being a big one off, in the same way you might see a BMW advertised for £30K which is massive. But there are two things to account for - the utility you get out of it (i.e. how much is it 'worth' to you, how much would you have to pay for the product to be no better off than if you hadn't got it in the first place) and also the timescale over which you use it. 3 years on a £60 piece of software is £20 a year. 5 years on a £30K car with £10k on depreciation is £2,000 a year (that's just the price of ownership, not running costs).

[TheAnimus]

this assumes software is priced based on developement costs, and how much they can re-coupe.

I think it is priced at what people will pay upto, before sales drop off. The neiches i've sold code to i've always used that model. I know this little app will save you £15k per year, so i'm going to charge £4k per year.

As such i doubt piracy has any real effect on price point. Most people, no matter how they want to dress it up, who pirate are just doing so because their cheap, and its so damn easy, and they often don't need the product anyway. So they wouldn't buy it if it cost £20 or £2,000.

[TAKTAK]

the main problem with piracy is that it makes some companies turn round and say "look were not gonna produce stuff for PC's anymore" just like crytek has done.....

[aidanjt]

As if console discs are never pirated. And if anything is going to make me use cracks, retarded disc 'copy protection' crap like starforce is. DRM has run amuck and it only serves to hurt legitimate users.

[TooNice]

I've not looked at figures, but I highly suspect that console discs are not as pirated in comparison to PC applications. Maybe it's just coincidence, but I just don't see a dodgy looking stack of discs next to a console as often compared to PCs. I hate 'copy protection' as much as the next person, but developers wouldn't have come up with such abominations if piracy was less widespread.

[aidanjt]

But that's just it, it isn't 'widespread', and *no* drm system has *ever* beaten the pirates, the entire concept is broken by design, so it never will, and the annoying thing is, said developers know it.

All these things do is stop average joe copying their media from one type to another, and maybe tossing a copy or two to his mates, which utterly pales in comparison to the real pirates who have bitwise burning farms spitting out 20+ discs a second.

Piracy isn't a new thing, making copies of someone elses work without their permission has been going on as long as there's been ink. Suddenly there's a plague of piracy growing exponentially?.. I hardly think so. If companies want to beat the pirates they need to improve the quality of their work significantly, reduce the prices significantly, and stop thinking they can control the world around them.

[directhex]

hmmm, it IS widespread though. >50%, according to several companies who've tracked use of their products with & without legit keys. and most people credit rampant piracy with killing the amiga, fr'example