Ars is running a story on a new report by IDC (that was funded by Microsoft) that states/shows that $1 of piracy = $5.50 in “lost opportunities”. Cheng argues that just because “every single dollar that…has been ‘lost’ to copyright infringement [can’t] be turned around into a dollar worth of sales” that we should “take this report with about $5.50 of salt.” Should it really matter if each dollar of piracy would actually be a dollar of sales though?

In my humble opinion I think it is foolish to disregard the effects of piracy with the argument that the people who share copy pirate (argh me maties!) wouldn’t pay anyway. This argument isn’t just used for Microsoft software either, it is a common argument used with pirated music and PC gaming as well.

Copyright

In each example it really boils down to copyright though. The dictionary defines copyright as “A grant of an exclusive right to produce or sell a book, motion picture, work of art, musical composition, software, or similar product during a specified period of time.” (emphasis added)

It is the copyright holder’s exclusive right to choose how their work is distributed. For some reason, whether it is Microsoft or Metallica there are people who think that these exclusive rights are somehow irrelevant because they already made their money. Copyright holders really shouldn’t have to prove that the piracy of their works (whether proprietary or open-source/GPL/etc) could have been turned into actual sales; that is beside the point.

A Different Kind of MSN

Without taking away from what I have already said, I don’t know why Microsoft chooses (it is their choice after all) to be so aggressive on their licensing enforcement and policies. For me, it all points towards Metcalf’s law on network effects. The value of the Microsoft “network” or ecosystem of software is arguably highest when everyone (paying customers and pirates) uses it.

There is a segment of users, especially in certain regions, who will never pay much or anything for their software; and not because they care about open-source or libre software. There could be many reasons why they don’t care to pay, but the reasons don’t really matter. As Microsoft really pushes their pricing and licensing enforcement, they will push these users toward free OSes like Ubuntu (or other Linux distros).

Ultimately this will diminish the value of the Microsoft “network” and increase the value of the alternatives. Indeed a big part of the reason why Linux (or even Mac to a lesser extent) isn’t more popular (i.e. valuable) on the desktop is that the network is too small.

Microsoft’s time and money could be better spent exploring reduced pricing in various regions; and no, a gimped “starter edition” doesn’t count. Yes, this would open up gray-market issues, but I’d rather deal with some people not paying the right price than some people not paying at all, or even worse, some not even using the software.

Note: I am not in any way condoning or justifying piracy.