posted by David Adams on Tue 26th Oct 2004 16:30 UTC

"Identity Crisis: Page 3"
I actually didn't embark on this long examination of the history of intellectual property in order to claim that software "piracy" is the major bane of the software industry. It's a problem, especially in certain sectors, but the industry has managed to thrive despite it. But the true challenge to the industry's status quo is not unauthorized copying, but it's related in that the routine justifications that infringers use are closely related to the sentiments that the largest consumers of software are starting to develop. And it's a growing rebellion that the software industry is going to be forced to deal with.

So why do otherwise law-abiding citizens feel that they can morally justify infringing copyright? The industry likes to paint them in one of two colors: either they are morally equivalent to thieves of any other good, no better than the pickpocket or shoplifter, or they are uninformed fools who don't understand that their actions are illegal and hurt the people who produce the software, music and other good that are being shared illegally.

I believe that neither of these characterizations is particularly accurate. In fact, I believe that most of these people are quite sophisticated in their understanding of the economic and moral impact of their actions. They feel justified in infringing because they have made the judgment that the purveyors of these goods in the legitimate marketplace are taking advantage of them and not meeting their reasonable demands for fairer pricing and more convenience in distribution. And in fact, even your typical teenage mp3 hound has a pretty complete understanding of the economic forces at work. They don't do it because they misunderstand. They feel justified in doing it because they do.

Copyright infringement, though immoral, is not morally equivalent to theft of a physical good because infringement does not deprive the owner of his or her possession of the good. If I pick your pocket, you no longer have your wallet. But if I hear you whistling a tune, and start whistling it myself, and teach it to others, I have not prevented you from continuing to whistle. The only problem comes when you expect to have the exclusive right to benefit monetarily from the performance of that tune. In this case, by learning it without your permission I have degraded your capability of selling it to myself and any others that I taught it to. It still has an impact, but a completely different impact than stealing a physical good would have.

In some cases, copyright infringement could have a much more damaging impact than theft of a physical good. I could steal Bono's sunglasses, and he probably would only be mildly annoyed. But if I got my hands on U2's new album a month before release and put it on the internet, that could mean thousands of dollars in lost revenue for him. But even in that case, the impact is different.

Back to the infringer's understanding of economics. Most goods, physical or intellectual, must go through a complex economic cycle between the inventor and the consumer. Physical goods must be designed, patented, manufactured, transported, packaged, transported again, warehoused, marketed, sold, shipped to distributors, sold, shipped to retailers, sold, and delivered to end users. Virtual goods like software and music generally go through the same cycle, though the manufacturing process is usually a bit simpler. At each of these stages, a middleman takes his share. And some of these shares are pretty big bites.

For many products, the retailer takes half of the proceeds, and the distributor takes half of the rest. Printing and/or pressing to digital media cost money, and all of these packages must be shipped back and forth. And what benefit does the average consumer derive from all of this? None. In fact, a negative benefit, because they have to drag themselves to the store to go get the product or wait around for it to ship. The fact that they have to pay an inflated price to support all these unnecessary steps and middlemen just add insult to injury.

Furthermore, there's a populist angle to the justification. After all of the sales and distribution people take their cut, a small percentage actually goes to the company that brought the product to market. The thing is, the people who actually produced the goods, the software or the music, or the book, don't even get nearly all of that. In many cases, the amount that the actual creator receives is less than one percent. And there's recognition of that, and a lack of enthusiasm among consumers to subsidize all of that old fashioned infrastructure in exchange for printed material and physical media that they don't need and a product that should be available instantly but isn't.

There's a similar reluctance to support the old order among business customers, who are even more privy to the way commerce really works. If you want to buy software for your business, you typically either work through some kind of mail order house or systems integrator, who takes a cut, or through a pushy salesperson from the vendor.

And the steps that software firms have taken to reduce piracy have made management of licenses a major headache for larger companies. And the stakes are high. If a disgruntled employee calls the BSA on you, and your lack of organization has resulted in re-use of a few Microsoft Office serial numbers, you could be facing major liability. So businesses end up buying a lot of software, and a lot of it comes in boxes that junk up the place, with little slips of paper containing the oh-so-important license key. And you inevitably end up buying a few more licenses for stuff than you really need, so you have expensive software sitting on the shelf, not being used, which will become obsolete and worthless within 18 months.

Table of contents
  1. "Identity Crisis: Page 1"
  2. "Identity Crisis: Page 2"
  3. "Identity Crisis: Page 3"
  4. "Identity Crisis: Page 4"
  5. "Identity Crisis: Page 5"
  6. "Identity Crisis: Page 6"
  7. "Identity Crisis: Page 7"
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