Poor countries have more piracy because media costs too much -- report

Media Piracy in Emerging Economies, an academic report on pricing and copyright infringement in poor countries, comes to the conclusion that high media prices (as measured against the average wage in poor countries) are responsible for piracy -- that is, when you control for social attitudes towards copying, enforcement differences, and so on, the largest predictor of whether a country will have rampant copyright infringement is whether the media in that country is priced high relative to peoples' earning power.

To make their point, the authors have released the report under a provocative "Consumer's Dilemma license" that charges escalating rates depending on whether your IP address is in a rich or poor country (I wrote about this here last week).

* Prices are too high. High prices for media goods, low incomes, and cheap digital technologies are the main ingredients of global media piracy. Relative to local incomes in Brazil, Russia, or South Africa, the retail price of a CD, DVD, or copy of MS Office is five to ten times higher than in the US or Europe. Legal media markets are correspondingly tiny and underdeveloped.

* Competition is good. The chief predictor of low prices in legal media markets is the presence of strong domestic companies that compete for local audiences and consumers. In the developing world, where global film, music, and software companies dominate the market, such conditions are largely absent.

* Antipiracy education has failed. The authors find no significant stigma attached to piracy in any of the countries examined. Rather, piracy is part of the daily media practices of large and growing portions of the population.

* Changing the law is easy. Changing the practice is hard. Industry lobbies have been very successful at changing laws to criminalize these practices, but largely unsuccessful at getting governments to apply them. There is, the authors argue, no realistic way to reconcile mass enforcement and due process, especially in countries with severely overburdened legal systems.

Get the Report (SSRC) (via /.)

• [Calimecita]

  Agree with what others have said. Here in Argentina, the average pay is about A$3,000 (Argentine pesos; last year’s figures, the most recent I could find). A new CD or DVD is A$40 or more. And the kind of music I listen to (mostly stuff I discover listening to online stations)? Forget about it, it simply does not exist here. It’s pirated or nothing. The small specialized shops that might sell some interesting albums have impossible prices, as everything is imported and taxes add 50% more to the original price in U$ dollars :-( Same with poorly known movies – anything that is not ‘popular’ is very hard to find.

  We have the same problems with technical/educational books and software – for example, right now there’s this Comparative Anatomy book I want to buy that’s A$500 in the bookshop! Any imported edition (and most are) is very expensive, even though books are exempt from importation taxes. By the way, I just checked and a newer edition in English is only a few pesos more in Amazon… I think I’ll buy that one, though the minimum shipping rate is A$20 and you need to keep your fingers crossed that nobody in the mail delivery company decides they like your books/dvds, because you’ll never receive them.

  Concerning software, I won’t repeat what others have already shared about the cost of basic software (OS, office tools, etc). Statistical software is almost impossible to buy, even using research project funds – we are already spending a lot of money to pay for access to one or two of the more interesting journals that we use (even the university servers don’t have full access to many). Thankfully, in this case there are open-source and free alternatives that are sometimes better than the commercial packages :-)

  “Antipiracy education has failed.” is 100% true. Pirated CDs and DVDs are for sale on every street (and the computers you buy have pre-installed pirated versions of all the software, with no attempt to educate people about alternative, free programs, but that’s a different issue). And who can enforce anti-piracy laws, when nobody feels entitled to throw the first stone?

• [Calimecita]

  BTW, thanks Cory for writing about this! I missed your first article, but now I’ve downloaded the report and I’ll read it with interest.

• [Blaven]

  Media pricing might be bad in poor countries, but it’s bad in rich countries too. As an example, let’s take a look at music – $15 for a CD is too expensive. But now with downloadable songs at $.99 each, the price really hasn’t dropped much, and this despite the fact that there is no longer the price of CD production, distribution, inventory issues, etc. On paper the music industry should be making insane amounts of money on this model, but of course they don’t since so many consumers have become frustrated with the pricing and went to torrents instead. So now the music industry is going broke, so no way will they want to drop prices and risk further market erosion. They seem to be in a catch-22.

  I see only two solutions to this problem: 1. The music industry realizes that banning piracy is not possible, recognizes it as competition, comes up with a better pricing scheme, and learns to live with a more humble cash flow, or 2. Politicians push through crippling legislation that stops piracy at the expense of ruining the internet and pissing off the populace.

  As for lower prices, I think despite some initial disruption, in the long run it may make the recording industry more profitable. Personally I don’t pirate music, but I also rarely buy $15 CDs or $.99 songs. Instead I listen to music I already have, or use Pandora, which for something like $3 a month (or whatever it is), I get all the music I want, lots of variety and no commercials. But if downloads were cheaper, say around 30% of what they are now, I would buy 10x what I do now.

• [Anonymous]

  Nooo! We really do it because we are very mean and we hate people who create stuff. If you live in Romania the only choice in music and cinema is, guess what, shit music and shit movies. Piracy is the only way we can stay connected to what is beautiful in the world. Just to get a little bit of an insight: my mom’s pension after 30 years of work is 130 EUR. A bottle of milk is 1.20 EUR.
  A DVD is 15 EUR. And these are the good times.

• [Rob]

  Perhaps our concern for intellectual property rights aren’t shared by the rest of the world? They are relatively new (in the last 500 years) and developed in European circles. Most cultures still have a deeper link to the idea of a commons, and despite what we might think, intellectual property is pretty counterintuitive. Given all of that, I don’t think piracy will end with higher wages.

  In fact, it will probably increase it… Higher wages mean more money for tech goodies to play/run/display your pirated media.

• [Anonymous]

  Well if people can’t buy original software they can download open source. Can’t afford Windows 7 they can use Ubuntu.

  The fact is that people don’t bother with open source because they have access to pirated software (at least in Venezuela).

  Yes, software prices are extremely high 1 month salary = 1 MS office, but the thing is, if you can’t afford you don’t have to buy it.

  There are tons of free software, off the top of my head, I can think of:

  - R open statistics software.
  - SAGA GIS and GRASS, both free GIS software that can be integrated with R and Python.
  - Libre Office, Open Office.
  - MySql.
  - gcc compiler collection.
  - from Cnet download, tons of free utilities, for spyware and general PC maintenance.
  - Buzz machines which is a free modular software based synthesizer.
  - Free programming languages: Perl, Python, Ruby, etc. the list is too long to write it out.

  You name it, and there’s probably an open source software for it.

• [tylerkaraszewski]

  I have no idea if any of the salaries mentioned in the comments are supposed to be per hour, day, week, month or year. No one has specified and they’re all in currencies I’m not familiar with. Someone says the minimum wage is “R$ 545 while an original copy of Windows 7 Ultimate costs R$ 699.”

  The first thing I thought of when reading that is that is costs just over an hour’s wage to buy windows 7 in Brazil, because here in the US, minimum wages are always stated per hour.

  I guess that can’t be right, though, and that must be either a daily or weekly wage. Which one? No idea.

  • [Anonymous]

    Here in Latin America wages are measured monthly.

  • [Calimecita]

    Just to clarify and confirm what others have explained, what I quoted was the average salary per month in Argentina. The minimum monthly salary is quite less: A$ 1,840 (plus many people are sub-employed and don’t make that much). To put it into perspective, a new CD is over A$35, a new DVD is A$ 50 or more, and MS Office Home&Student edition is A$600 (U$ 150).

  • [NakaharaL]

    Sorry by not mentioning this detail. The minimum wage here in Brazil is month salary. So, working 8h a day for 5 days a week, we have the equivalent of R$ 3,40 per hour before taxes! After the taxes, the minimum wage gets even less that R$ 545 and the worker receive only R$ 482, which is the equivalente of R$ 3,01 per hour of work.

  • [Niklas]

    The minimum wage stated is per month. So R$ 3,2 per hour in 2010.

  • [llazy8]

    In Argentina, that would be the monthly minimum wage. I assumed the same for Brazil. Yes, a month’s minimum wage, 6 days a week all day long, for one original Windows.

  • [penguinchris]

    In many places such as those being discussed here, it’s standard to quote wages per month. Except where stated otherwise, everyone who’s quoted a wage in the comments here means per month (I think).

    Anyway, I have a third-world piracy anecdote as well. In Thailand, you can find a “infringing” copy of just about anything, from CDs and DVDs (even blu-rays) to designer handbags and clothing. But while if you go in the fancy shopping malls to buy original designer clothing the price is essentially the same as anywhere else in the world (i.e. outrageously expensive for normal Thais), the pricing story is different for CDs and DVDs.

    There are a lot of places to buy legitimate CDs and DVDs. Imported and obscure stuff (if you can find it) is expensive for Thais, but is about the same price (or slightly less) than you would pay in the west for the same thing – you can get e.g. new western indie rock CDs for under $10 US. For popular stuff like western dance and rap music, you’re looking at maybe $5 for a CD if you shop around.

    Thai people who are interested in that stuff would not hesitate to pay those prices, for the most part. However, the interesting part is when it comes to Thai music and movies, which has a much larger audience. Depending on what it is, Thai stuff sells for quite cheaply, along the lines of $3 US or less for a CD or DVD. Yeah, you can find a pirated copy just down the block, but the pirate discount is only about 50%, which when the price is so small to begin with isn’t much. I would be surprised if this wasn’t the case in other poor countries, where local stuff is reasonably priced for locals. It’s just foreign stuff that’s expensive, either because of import costs and taxes or because the foreign corporations don’t get it.

    One thing I think a lot of comment-ers here are missing is that most people in these kinds of places don’t have regular access to computers and the internet. We’re not really talking about internet-based copyright infringement, I don’t think. That said, most people in Thailand anyway mostly only get music to play on their mp3-enabled cell phone these days. You can get the latest hits for quite cheap through the cell phone companies, I think; something like under 50 cents per song. But, the way most people get them is from their friends. They use bluetooth to share, and a single song file can ultimately reach to hundreds or thousands of different people that way. The original source probably is someone with a computer and internet access, but it could also have been someone who bought the CD and ripped it, or bought it digitally through legitimate means.

• [M]

  When Microsoft did this with Windows, they were being called thieves and opportunists who were charging rich countries more than necessary, but when some third party suggests it, it’s benevolent reasonableness towards the poor?

• [RBull]

  If you sell the product at a lower cost in other markets, oppourtunists will buy that product to sell to countries where the product costs more, turning a profit in the process and leaving insufficient stock for the original inhabitants. In the end, the companies lose profit and the oppourtunists gain profit from basically doing nothing but reselling.

• [NakaharaL]

  I agree with the article. Here in Brazil the minimum wage is fixed by the government on R$ 545 while an original copy of Windows 7 Ultimate costs R$ 699. So, how can the poor people, who happens to be able to buy a computer, if they buy it at all, afford a computer with an original OS? They pirate it! There’s no way someone with that kind of salary can afford such thing. And the price of a music CD? Original: R$ 29,00. Pirate: R$ 3,00.

  • [Niklas]

    Why not sell a Ubuntu DVD for R$1 (or something like R$3 of which R$1 is donated) and avoid giving Microsoft a firmer grip on the market?

    Piracy is what has helped corporation such as Microsoft to keep dominating the Office Applications space and Adobe the Graphics Applications space. This is because rather than choosing to pay less for the competition and in that inviting competition the piracy has helped cement the place of Office and Creative Suite as market dominators.

    • [NakaharaL]

      I agree with you. I was just trying to make my point and thought that comparing the price of an OS like Windows 7 and the minimum wage here in Brazil would make comparision easier. =D

• [anharmyenone]

  President Obama comes to the rescue. “On Tuesday, the Obama administration recommended that the Department of Homeland Security make streaming of copyrighted video a felony, and that it could use wiretaps in the investigation of those offenses.”

  http://www.pcmag.com/article2/0,2817,2382048,00.asp

• [Ugly Canuck]

  i am against Obama on this one.

• [Anonymous]

  it’s not being “benevolent”. The thing is very simple. You get it pirated on the internet, or you pay 2 or 3 of your monthly wages to buy a license. Or you use cheaper operating systems. So they rather give it for very low price and still be on that market, or get washed out. Brazil’s government uses Linux. Mr Gates had a personal meeting with Lula to try to convince him to use windows. He didnt achieved it.

• [VICTOR JIMENEZ]

  If people have no money they don´t buy superfluous things — report

  The headline alone resumes perfectly the essence of the problem. Enough said.

  • [Anonymous]

    I suspect you buy frivolous stuff you can’t always afford too. Just a suspicion. So the poor should never have any form of entertainment or anything even remotely nice as long as they are poor? How about this, all those companies stop advertising their crap to the poor if they can’t afford it. Stop creating demand and a sense of inferiority with marketing.

    Then there is the crazy alternative, sell it at a price they can afford.

• [silentbee]

  I live in South Africa. I pirate, not because of the price — I’m probably considered fairly wealthy here — but because there is just no viable alternative to it for me. There’s no competition among satellite providers here for TV shows / movies so the selection is dismal, and the there are no streaming options. I hire DVDs, but there’s almost no selection of Blu-Ray near me. And there’s a very poor selection of Blu-Ray to purchase. For music, I still buy CDS for lossless audio, but the selection is poor and I still use torrents to sample new music before trying to purchase it. I’d say it’s both price and a complete lack of access.

• [Milena]

  It all comes down to a very simple thing: give the customers what they want, at a reasonable price, and with a minimum of hassle, and they won’t pirate. Instead, we get geo-restrictions, ridiculous prices, and DRM that makes using legal content more complicated than using the illegal versions.

  And yes, “reasonable” price means a price people can actually afford. If the average salary in a country is the price of a piece of software, it won’t see many sales there. But if you put the price down to a price that people can afford without starving for a month, surprising numbers will actually go for the legal option.

  It’s very easy to say “don’t buy things you can’t afford”. But: if you live in a rich country and can’t afford something, you feel poor, and perhaps decide you can’t afford a movie or a book right now, and that’s the end of the story. If you live in a poor country, and you see that almost nobody can afford something, that price will not seem like something “you can’t afford” — it will simply seem stupid, and you’ll go around it. That’s why the attitude towards pirates (and I’m talking real pirates here, i.e. people who make money off stolen content, not Jenny Teenage who dl’s the latest episode of Vampire Diaries) is different in poor countries. They’re seen as people who provide something of a public service.

  • [Enormo]

    I have purchased U2’s The Unforgettable Fire four times.
    1) Cassette tape 2) Tape warped. Bought record 3) Bought CD for better portable sound 4) CD scratched, data lost. Years later bought MP3s
    Ostensibly, when I buy a full priced recording I’m paying for a few things. Marketing, the music itself, the physical medium. Well, the album is now about 25 years old and I’m already sold on it. Scratch marketing. Next, it doesn’t cost a dime extra for the artist to produce another copy of the album that I already purchased. The artist and the multinational conglomerate producing them have been paid for that. Scratch the music itself. Well, what about the physical medium (including electronic distribution of data)? Okay. I’ll be happy to pay for that convenience!

    But instead of progressively adapting their business to consumer needs and providing a reasonable service to a faithful customer, the record companies chose to maintain an unfair system that originally took advantage of a teenager making less than $300 a week.

    They can moralize all they want but it won’t change the reality that they are now paying for their greed, their sense of entitlement, and their poor grasp of the evolving landscape of capitalism.

• [Anonymous]

  Yep I think you Corry are against region lock? How can they make free or cheap software for poor countries then? Americans would buy the software in brazil and then sell the products here for cheap.

  Everybody being equal is unrealistic. If you can’t buy windows get Linux, see what venezula did today. government is adopting Linux. in brazil most bands give there music for free and then charge for concerts or cd of the concert they been at the end of the concert.

  hear what Alex de la iglesia Spanish director said in the Goya awards this year. if movie piracy is going up and Internet download is what’s new, then lets try to change our way of delivering movies and the way we make movies. It was very moving. I recommend you watch the hole awards. It really moved film director like me.

  Brazil is also working on a version of Linux to market , if all developers work for a single cause then we are more likely to get there. Selling cheap stuff to poor countries and getting them addicted like Microsoft opens a gap between the rich and the poor in those poor countries.

  What do you mean by anti pairacy education has failed? Do you mean share? software or anything should be created for the greater good not to make people filthy rich.
  North Americans have this war on drugs and piracy because these congress men are getting paid millions by the record companies and tabacco to fight them and in the process we are kissing out liberty.
  Why don’t Americans look how there pharmaceutical companies treat pacients and the high prices of medicines or the monopoly of certain companies like Verizon and AT&T in USA .
  Capitalism is flawed let other countries fix stuff there way.

• [EeyoreX]

  I saw “Poor countries” and “piracy” and thought this was about Somalia.
  Man, am I behind the times.

• [pjk]

  They had to do a study to figure this out? When the average wage is $800/mo and DVDs cost $18, and PIRATED DVDs cost $2, do the math. It’s not a question of pirated DVD or legal DVD, its pirated DVD or broadcast television. Aside from that, try buying streaming media or downloads from a small Latin American country. Sorry! They’re not even offered. Plus, if you rent a DVD, odds are it’s pirated anyway.

  Besides all that, rule of thumb in any urban area is that luxury items with low cost of making a copy and really large margins are ALWAYS going to be pirated (Rolex, perfume, fancy handbags, designer jeans, DVDs).

• [Atresica]

  I seem to recall that at one point, Ubisoft released their new games in China for 10 dollars per copy – exactly because of this reason. I don’t know whether they still do it.

• [DieFem]

  Agree with this. Here in Uruguay a copy of let´s say Call of Duty is US$ 50, the average salary is around US$ 500.

  You may think “Ok, so if you can´t pay it, don´t buy it”, but media is there saying “listen to Gaga, play Playstation, watch Justin Bieber and Robert Pattison”. Many people think “what´s the harm of watching a movie over the Internet?, I am not doing anything bad”, movie is there, connection is there, let´s do it.

  As I read many times, business model is old, they need to change. There´s a band here that with the original CD gives you a ticket for a very small live concert. That small concert is for the concert DVD edition, where many of the fans see themselves on the DVD later, and many fans are interviewed and they give merchandise to fans and all.

  I know that there are several ideas like that, the idea is that the industry should focus on “give me something that Internet is not able to give me for free”.

• [Anonymous]

  I live in Malaysia where if you work at a fast food chain, your pay would be somewhere around RM4 per hour. That’s around 1USD per hour.

  An original CD costs RM45-50, while a pirated one costs RM5 (free if you download). Lunch would probably cost around RM5 if you eat at food courts; at least RM7-12 if you eat at fast food chains. Who in their right minds will spend 10 days of lunch money on an original CD/DVD!

  Don’t even get me started on original DVDs. The choices we have are limited. You mostly only have a choice of movies a year old for exorbitant prices. Meanwhile, pirated DVD vendors are selling the latest blockbusters for 10% of the price of an original DVD. Guess who we buy our DVDs from?

• [Anonymous]

  It’s not just poor countries, there are regional discrepencies in the cost of DVD’s, games, music CD’s and esecially retail software:

  http://thenextweb.com/eu/2010/04/12/fury-adobe-creative-suite-5-international-pricing/

• [Rob]

  Perhaps our concern for intellectual property rights aren’t shared by the rest of the world? They are relatively new (in the last 500 years) and developed in European circles. Most cultures still have a deeper link to the idea of a commons, and despite what we might think, intellectual property is pretty counterintuitive. Given all of that, I don’t think piracy will end with higher wages.

  In fact, it will probably increase it… Higher wages mean more money for tech goodies to play/run/display your pirated media.

• [Anonymous]

  And in rich countries, people pirate because they are cheap.

  And feel entitled.

  Even in poor countries, the better off feel entitled…I use to sell soundware for a high end synthesizer…people would spend $5k on the synth and then steal the sounds I was putting out for it. I was told by several people that after spending $5k on an instrument they felt it was wrong for someone to charge then anything more. Only thing was, I didn’t work for the company that manufactured these things. These people could find $5k so that they could tour (honestly, at that price it was only for pros)…and yet they’d come up with any excuse why they pirated it.

  Luckily, I don’t make these things anymore. Neither do a lot of people I know that did…you have a whole host of people that have no skills putting out garbage these days…practically unusable and people keep asking me when I’m going to release something new, and I tell them never. The same people that bragged on mailing lists about distributing my work because they could are complaining about the lack of new material.

  The fact of the matter is, 99% of what is pirated is entertainment goods. It is not life sustaining, nor is it something they need. It is done on equipment that costs a great deal and yet, these people want to pay nothing. Dropping the price is only going to convince these people that your time is essentially worthless. Should the price be marketed to the community? Sure…then again, how many of these games and DVDs and musics could be bought used in a year…I am pretty well off these days, and I NEVER buy new…I legitimately buy everything I own, and I pay a little over what the pirated media costs (i.e., not the stuff you just download for free…the pirated DVDs in bodegas).

  It comes down to people feeling entitled to your hardwork.

  Honestly, I never cared about piracy when I did software and soundware. If someone asked me for a discount, I’d ask why…and if their argument was sound, I gave them one…often times I’d give these people it for free and tell them to talk about it (sans media…I’d just point them at an ISO and tell them to burn it). And I’d tell them not to give this to others. I knew a lot of independent vendors that did the same thing…and yet…the entitlement came down to I WANT IT, IT IS MINE AND I’LL DISTRIBUTE IT HOWEVER I WANT TO…

• [The Raven]

  In other news, water wet.

  • [Anonymous]

    And if you just say “water wet”, some idiot will say “[citation needed]“. Now you can cite this paper.

• [rebdav]

  Was in a similar discussion about Brazil and bicycles. It is cheaper to visit another country and buy a good bicycle there for a tour than to own one at home in Brazil. He is can only afford junk no-name Chinese bicycles and parts even though there is no high end manufacturer of bicycle parts in Brazil.