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Piracy, Early Adoption, and Eventual Sale

After reading Boing Boing’s report on counterfeit bags, I realized Professor Gosline may be stumbling onto something with huge implications.

I think about piracy – a lot. I feel most people are honest and are willing to pay for good products. I don’t think this is necessarily a bad thing for business.

Early adoption is the key to market share. Some wise person (Will Shipley?) said you should give your software away to 90% of your users, and then sell it to the other 10% arrow

Gain market share, then sell it to the largest market possible. In the product life cycle, the trend starts with early adopters. I think this applies to and individual’s experience with a product as well.

People who cannot afford to comfortably buy a product are probably not going to buy it. They’re going to pirate it. Thus the company unknowingly and unwillingly gives the user something for free. The user is probably not going to feel good about this, so later on, when things improve for them financially, they’ll probably end up purchasing the real deal.

Possibly the worst thing you can do is sue your users, but you also don’t want to publicly approve of this strategy, because. Then you eliminate the guilt that leads to reciprocity. Pirates are very strong potential customers, and it’s cheaper, more practical, and possibly more profitable to NOT sue them and hope for a sale later.

Adobe PhotoshopAdobe’s products are a good example. Most students cannot afford them (even with a massive student discount), so they pirate the software instead (possibly for years). Most people I know have a good experience with Adobe’s products, economic issues aside. They know it’s great software, and they’ll eventually want to return the favor.

So if you have a good product that adds real value to peoples’ lives, quit worrying about pirates. They’ll come around.



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This entry was posted on Monday, December 7th, 2009 at 3:11 am and is filed under economics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

  • I completely agree, especially with your first paragraph. It's important to realize that everyone's different. Judging people is slippery slope, so I personally try to avoid it. Thanks for the comment!
  • I believe that lumping all users of counterfeit or copied products together as "pirates" is as foolish as grouping all controlled substance users as "druggies." The reality is that, as with drug users, pirates break down into very different social & economic groups. Ignoring these distinctions has allowed the creators of goods to vastly over inflate their losses and clouded debate around the issue.

    If we take your example of Photoshop. How many people with an illegal copy sitting on their drive actually use the product to anywhere close to it's potential. At best, to most of them, it's a tool to crop, filter & color correct, procedures that could just as easily be done on freeware such as Gimp. Are these users ever likely to spend $600 on PS4? Of course not, total revenue loss to Adobe is therefore zero.

    Software pirates in particular, seem drawn more to the challenge of cracking the software and the bragging rights to ownership of this hacked copy. Their interest in the actual tools themselves is very small, again a zero loss to the creator. Even hard-core movie & music copiers often seem more interested in the ownership than the actual product. I've regularly seen hard drives stuffed with content, never played. These are not sales lost to the industry.

    The best defense against piracy appears to be offering services tied to a product that could not easily be replicated. Combined with a competitive price point this would seem to be a combination that legitimate users would find hard to resist. Apple's Logic audio software included 30GB of samples alongside the actual software, all for $499. Certainly you could pirate those samples but is any real user going to bother with a 30GB torrent? Again, Apple's online document system, iWork gives users of their $80 office bundle a place to conveniently store and share documents in a variety of standard formats. A very attractive offer to the genuine customer.

    Copied works have been with us since mankind sold it's first piece of handiwork. The Greeks copied their own sculptures a century later and passed them off as earlier works. These pieces sit in the same museums as the "originals!" There's nothing new here.
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