REPORT: Solution to Piracy is Lower Prices

REPORT: Solution to Piracy is Lower Prices

Media Piracy in Emerging Economies argues that piracy can best be seen as a “failure of affordable access.” Says that in countries like Brazil, Russia, or South Africa retail price of a CD or DVD, relative to local incomes, is five to ten times higher than in the US or Europe.

Part of the problem with piracy is that it’s a marketplace solution to poor pricing points by legal manufacturers, and can’t be remedied unless their lowered to take into account geographic economic realities.

For example, Apple’s iTunes is a global digital music retailer, yet charges customers the same price for content regardless of where they live and what they can actually afford. The solution for some people around the world has been to either use unlicensed MP3 retailers or resort to the use of illicit P2P applications and services.

A song may only cost 99 cents, but in some countries 99 cents is a days wages.

The Social Science Research Council (SSRC), a U.S.-based independent nonprofit organization, has released a report entitled Media Piracy in Emerging Economies that it calls the “first independent, large-scale study of music, film and software piracy in emerging economies, with a focus on Brazil, India, Russia, South Africa, Mexico and Bolivia.”

The report was conducted over a three year period by some 35 researchers and came to some rather conventional conclusions.

1. Prices Too high.

The report says that high prices for media goods, combined with low incomes, and relatively 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,” it says. “Legal media markets are correspondingly tiny and underdeveloped.”

Some software developers have figured this out and have adjusted prices accordingly. Last year I mentioned how Microsoft and Autodesk had quietly dropped their retail prices in China after apparently realizing that it doesn;t make sense to charge nearly US-style prices in a country with a paltry per capita GDP of $6,600 compared to $46,000 in the US.

In both cases sales rose dramatically.

2. Anti-piracy Education a Failure

The authors discovered that there was “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.”

Can you blame them? If you’re making $1 per day and a company tries to charge you $20 for a legal DVD is anybody really going to criticize you for buying a bootleg version for pennies on the dollar?

3. Law Enforcement Won’t Work

This is where it gets really interesting. The report acknowledges that piracy, particularly noncommercial piracy, is a problem that can’t realistically be solved

“There is,” the authors argue, “no realistic way to reconcile mass enforcement and due process, especially in countries with severely overburdened legal systems.”

When it comes to noncommercial P2P even criminals that specialize in physical piracy can’t compete. In fact, contrary to copyright holder claims, the researchers found “no systematic links between media piracy and organized crime or terrorism in any of the countries examined.”

“Today, commercial pirates and transnational smugglers face the same dilemma as the legal industry: how to compete with free,” notes the report.

Moreover, the researchers found that despite a decades-worth of ramped up law enforcement efforts the overall supply of pirated goods has remained constant. Pirated goods are just as available as they were before.

Regional pricing has been a concern for countries for some time now. The year before last Brazil and Pakistan criticized the US for not realizing that each country has a different economic reality and that pricing should be adjusted accordingly.

“Quite clearly, business models are not adequately addressing the pricing-cost issues involved in selling products,” said Ali Asad Gilani, first secretary of Pakistan’s delegation, at a meeting of the World Intellectual Property Organization last November. “Unreasonably, higher costs along with barriers to access, do provide some justification to the consumers to use counterfeit and pirated goods.”

It seems the researchers behind Media Piracy in Emerging Economies would agree.

Stay tuned.

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