Report claims lower prices the only solution to global piracy

What’s billed as the “first independent, large-scale study of music, film and software piracy in emerging economies” has come to a remarkably simple conclusion: people in poorer nations pirate content because buying it is too expensive.

The main logic of the report by the Social Science Research Council is that media piracy comes about where high priced media, low consumer income and inexpensive digital copying facilities meet. It notes a clear connection between the relative prices of media (compared with income) and the rate of piracy. For example, in countries such as Brazil or Russia, the comparative price of a disc-based media product such as a DVD or software can be as much as 10 times higher than in the US.

According to the report authors, neither cracking down on pirates nor coming up with new ways to digitally distribute content is a particularly effective way to reduce the proportion of unlicensed copying. Instead they believe the only way piracy will fall out of favor is if there’s enough price competition to make goods affordable on a local level — something they acknowledge is unlikely in markets dominated by international companies rather than local firms.

Another point raised in the report is that from a purely economic standpoint, it would make sense to analyse the costs and benefits of legal efforts to crack down on piracy, but that such analysis is compromised by the moral debate on the issue.

One particularly strong element of the report is that it does acknowledge the difficulty of estimating both the value of the piracy market and the costs to businesses. For example, while it’s possible to simply add up the money received by people selling illegally-burned DVDs on street markets, there’s no such price on digital content spread illegally though peer-to-peer filersharing. And of course, it’s difficult to put an actual value on lost sales: at best you can measure the actual fall in legal sales and ignore any other contributory factors to that fall; at worst you can simply claim that every single time somebody downloads a file illegally, they would otherwise have paid the full retail price for a legitimate copy.

The report has been distributed under what is one of the strangest licensing systems I’ve come across: “consumer’s dilemma.” Supposedly designed to make people in richer countries understand the problems facing content users in the developing world, the policy is that there’s an $8 fee to read it in “high income countries”, but no fee in the rest of the world.

(Rather bizarrely, Canada is not classed among those nations where readers must pay up, which raises the possibility of some good old-fashioned cross-border WiFi-jacking. The classification isn’t actually to do with national income, but rather because a Canadian organization helped fund the research.)

To the organization’s credit, it does acknowledge that “for those who must have it for free anyway, you probably know where to look” and that “we have made it exceedingly easy to do so.”

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