Piracy and poor countries: Big Content wants to have its cake and eat it too

My latest Guardian column, "Why poor countries lead the world in piracy," discusses the groundbreaking independent research presented in "Media Piracy in Emerging Economies," a 400+ page report that took 35 researchers three years to compile. The project's lead, Joe Karganis, is giving a free talk tomorrow in London:

So why do it at all? Karganis and co explain that the entertainment industry's dilemma comes, fundamentally, from wanting to have its cake and eat it too. The entertainment industry can't afford to set its price to locally appropriate equivalents. Not because it can't profitably sell software or games or other intangibles at much lower prices - after all, the incremental cost of a new copy of Windows or Toy Story or Spore is the pennies necessary to transfer it over the net or burn it onto a disc. But if you could fly to Sri Lanka or Morocco or Mexico and buy a legit, licensed copy of Windows for a few pounds, you might be tempted to pick up a couple of dozen copies for your friends, or for the local car-boot sale. The entertainment industry fears this kind of arbitrage, so it sells its commodity goods at luxury prices in countries full of starving people and acts alarmed and hurt when people choose not to pay full freight.

But by asking taxpayers - here in the rich world and also in the poor world - to foot the bill for trade sanctions, enforcement, new civil and criminal penalties, even global treaties like ACTA, the entertainment industry can still get a profit out of the poorest people in the world by externalising the costs and reaping whatever sliver of legit market they can drag out of the poor world by brute force.

As good a read as Media Piracy is, many people might find the idea of getting to grips with more than 400 pages of research at home. Luckily, there's an alternative: Karaganis is on tour with his report, heading to Brussels where he'll be presenting the work to the EU. On the way, he's stopping in London to give a free lecture on Wednesday morning, presented by the Open Rights Group and the LSE.

Why poor countries lead the world in piracy

• [manicbassman]

  this is why they love DRM and region codes and region specific unlock keys for software… it allows them to have local low prices and also to prevent grey imports as the imports can’t be activated/played (geo-location helps to prevent it being activated/played outside the region it was intended to be sold in).

  Microsoft pays lipservice to providing truly effective copy protection for their products though as what they really want is piracy to provide a local majority in keeping the free alternatives out… as far as icrosoft are concerned, a pirate copy of Windows and/or Office means someone isn’t using Linux or openoffice/libreoffice thus perpetuating the usage of their own proprietary formats.

• [Anonymous]

  I do not understand the logic of the comments(by some common western people): it’s honest to be the same price everywhere. In the same way that the same people have no problem when brought to fact that humans are living on the verge of subsistence in the countries which give(summed) the gross oil consumed by all the world. beats me why some insists that human are good by nature…

• [Anonymous]

  I’m Mexican i think it’s not fair that a lot of the content I want to purchase is way more expensive here than in more developed countries!! Take a music cd, or a movie, which we have to buy at “imported” prices, usually twice the original cost.
  Of course I wanted to try Itunes, to buy just the songs I wanted at everybody else’s price. But no matter what workarounds and hacks I tried and tried, Itunes just wouldn’t take my money because it didn’t come from an american address. I even lost money trying. So now that there’s Itunes in mexico, I can’t muster the energy to check it out…yet.

• [syncrotic]

  Playing devil’s advocate here: if you wanted to keep westerners from buying cheap legit copies of media and software, there’s a very simple solution: language. A Spanish copy of Windows or a Hollywood film with a Portugese soundtrack is completely useless to me. So why not take the English version off the disc and sell it at a cost that’s reasonable for a working-class family in the country in question?

  This doesn’t preclude the possibility of grey-market imports from a relatively poor country like Guatemala to a wealthier one like Mexico, but why would anyone bother? If you’re going to sell illegitimate copies, the black market is far more profitable than the grey one.

  • [Gag Halfrunt]

    Spanish and Portuguse are bad examples for your idea, since they’re both spoken in western European countries. Cheap legit software or DVDs sold in Latin America would be grey-imported into Spain and Portugal, exactly the outcome you want to avoid.

    Secondly, someone in Guatemala or wherever who speaks English well isn’t going to buy a DVD of an American movie that only has a dubbed Spanish soundtrack. They’ll buy an import copy if they can afford it, or a pirate copy if they can’t.

• [Anonymous]

  … ooo! Another 400 page research paper.

  I find, frequently, if you save every one of these research papers on a backup external, you always have an excellent reference for later.

  I always end up needing them.

• [Apreche]

  This is what I really don’t understand.

  Let’s use Windows 7 Home Premium as an example. It’s $180. Even people in the US with jobs would hesitate at that price. They still make a killing from sales to big corporations, though.

  What if they lowered the price to $10? They would have to sell 18 times more copies to make the same money. Well, I know that at $10 I would buy at least 3 copies. That’s three more. Now add $10 for all the pirated copies in China, India, and Russia. I get the feeling that’s more than 18 times as many copies.

  Valve has shown through Steam that you make more money selling a video game to the entire world for $10 than to one region for $50. How come other people don’t learn this lesson? In a case like Microsoft they can still overcharge corporations, since they all buy site licenses anyway.

  How come some normal guy like me can see this obvious math, but CEOs and other people who do this for a living can’t?

  • [superdude]

    Other’s people’s jobs are always so much easier.

  • [turn_self_off]

    How many actually buy windows separate from a computer? Most non-geeks seems to treat the os like the firmware of a mobile phone, and leave it alone until they get a new computer.

• [phisrow]

  Not to worry. Your Friends at Big Content(tm) are fundamentally good and reasonable people. If we can simply hammer out an international treaty framework making Arbitrage Contrary to Our Interests(arbitrage in our interests, of course, is a noble example of comparative advantage, gains from trade, and anybody who is against it is just a nativist, protectionist, scumbag who doesn’t want developing nations to have access to the jobs they need…) a crime against humanity punishable by death, I’m sure we can agree to reduce the price of software and movies by ~50% in any country with a GDP per capita of less than $5,000…

• [turn_self_off]

  I suspect that this can also be expanded to the poorest sections of Europe and North America as well. And those are likely to be the people with the free time needed to scour the various sites and services that provide the downloads.

• [Anonymous]

  Seems to be an audio summary of the report from a Berkman event on Feb 3 2011 at http://blogs.law.harvard.edu/mediaberkman/2010/02/03/joe-karaganis-on-media-piracy-in-emerging-economies-audio/

• [jimboo]

  Picayune, perhaps, but the proper saying is “eat your cake and have it, too.” It’s no biggie to have cake and eat it. Eating it and still having it — that’s the trick. A grade school teacher 50 years ago once said to me “You can’t have your cake and eat it, too” and I got detention for asking, “What’s the point of having cake if you can’t eat it?”

  • [yosemite]

    While it’s true that the phrase originated with the arguments reversed, it’s not the order of the phrases that is ultimately the problem, but the incorrect interpretation that follows from the more common understanding of “having” cake in that context (i.e., when you ask someone if they like “having” cake, they undoubtedly interpret your question as asking them if they like eating cake). You can get a perfectly proper reading of “have your cake and eat it, too” provided that “have” is interpreted to mean possessing uneaten cake, and “and eat it, too” is interpreted to mean that the possessing and eating of cake may be simultaneously realized.

    That said, I vastly prefer the French and Italian versions (found in the Wikipedia entry for the English version):

    vouloir le beurre et l’argent du beurre (loosely: to want the butter and the money for the butter)

    vuoi la botte piena e la moglie ubriaca (loosely: to want the bottle full and the wife drunk)

  • [Anonymous]

    The proper saying is what people say, whether it makes sense or not. But in this case, I think it goes back far enough that “having” was understood as “keeping”.

• [musicman]

  I’ve not read the study, but having spent some time in Indonesia, the reason cited above is definitely a motivating factor. I’ve also seen theses that suggest that Indonesian culture doesn’t really recognise ownership in the same way that we do in the west – especially of knowledge culture – essentially anything that might have IP on it. Bugger about that, I guess :)

• [tinyinkling]

  I think of the media end of this argument as merely entertaining. But the same issues, laws, and pseudo-urgency for enforcement exist in the pharmaceutical sector too. Only in that case it’s better to let Africans die than take the chance that American AIDS patients get access to cheap copies.