Today’s insanity: a certain amount of piracy is necessary!

There’s a very interesting article at The Long Tail that says that a certain amount of piracy is necessary and should, in fact, be tolerated to a certain degree. Not that the article is advocating piracy; after all, theft is theft and it’s a crime either way. According to the article:

…efficient software and entertainment markets should exhibit just enough piracy to suggest that the industry has got the balance of control about right: not too loose and not too tight. That number is not zero percent (which requires protection methods so invasive they kill demand), and it’s not 100% (which kills the business). It’s somewhere in-between.

The second reason the quest for zero-piracy is a mistake is an economic one: piracy can actually let you raise your prices.

I find that very interesting. The article then goes on to give an example from Microsoft of this in practice. Another reason why piracy, to a small degree, should be tolerated, is that it also raises awareness about your product. In Microsoft’s case within piracy-rife countries such as India and China, pirate software made Microsoft products the de facto standard there. Meaning that Microsoft has a bigger foot in the door than you’d think.

So what is the optimum level of piracy? The article has that answer too:

When all these effects are considered, …[the] right level would vary from industry to industry. Today the estimated piracy rates are 33% for CDs and 15% for DVDs. The industries say that’s too high, but most anti-copying technologies they’ve brought in to lower that figure have proven unpopular. Would even tighter lock-downs help? Probably not. Maybe 15%-30% is simply the market saying that this is the optimal rate of piracy for those industries, and any effort to lower that significantly would either choke demand or push even more people to the dark side.

[Link: The Long Tail]