If your products are not the top brands, then you are competing directly against pirated versions. So, your prospective customers are always comparing your legitimate price against the pirated price of near-zero, and the risks of pirated content. With music and digital books, there’s practically no risk — with software there’s fear of malware to prod us to pay. So, the legitimate producer of content must now price his legit products so low that he’ll induce the customer to buy. Tally licences IMHO wouldn’t sell at all if they cost Rs.1 lakh or more, irrespective of how big the customer is. This drives down his margin, and forces him to drive towards much larger volumes to stay afloat. Only if your business model permits you to survive with the leanest margins will you survive.

This is a problem. Good technical innovation (as against business innovation) survives if there is a period of high margins which can fund further innovation. A low-market super-high-volume business makes technical innovation much less viable. Intel wouldn’t be able to fund making their newer CPUs unless they could charge very high prices for their newer models at high clock speeds. Their fat margins from their latest models funds their future innovation. A super-low-margin market forces the entrepreneur to choose only less innovative, low-risk businesses. Therefore, the only ones who will be able to fund further innovation will be the extremely cash-rich companies. This makes the market as a whole less efficient. This is bad for everyone.

Would love to hear what you think about this idea.

Very good points, and all are valid.

The idea of this post was to invoke almost a catharsis of what’s happening to stake holders across the business ecology – and sure, not be able to offer a ‘one size fits all solution’. Having said this, the moot and dark looming question is going to be – do we change our business thanks to piracy that will never go away?

I refer to the Sony/Microsoft guys whom I have used as an example in my piece – they ‘pooh pooh’d’ piracy in China, went after pirates with the police etc etc…

Quietly on the side, Vivendi and War of Warcraft took away all the business and the moneys…

Buddy, a good post, as usual

But, I agree to disagree with you on several counts. Piracy mostly affects the sectors where the final product is an intellectual property and comes without a touch-see-feel for the consumers, unlike physical products. In the case of manufacturing sectors and physical products, a pirated make is called “fake” which is a look-alike and may give similar end results. But, their durability and overall experience may be strong factors why fakes won’t work.

In creative and intellectual sectors, pirated products are carried on some media, including online, and those can have have some touch-see-feel. But, here, fakes or pirated stuff may work for the end consumer in the similar way as the original and, therefore, may harm the business interests of the promoters. It can be further categorized in two categories.

While piracy in a gaming product or a software can be checked, tolerated or even exploited by the promoters to a positive end result, as you’ve indicated, some products and companies are actually finished by the pirates. As, you’ve cited the example of InvisiAds, the pirates actually helped you. Then, taking it to level two, you can pull your game-lovers to play it online. Further, gaming is kind of addictive product, just like softwares. Gaming and software both have continued repeated usae several times by the same user. And, once a user, gets used to a particular software or game, s/he may have several reasons to upgrade himself to the original version of the game or software. They most likely will go on to purchase the original game/software, if not the present version, then the next version of the same, after their experience with pirated product vs. the love for the product. So, piracy may to some extent have a positive impact on the business in cases like yours.

At the same time, coming to piracy of mainstream films, books, publications and music etc., it has a lethal impact on the business to the extent of finishing the company forever. A good film, music or a book by a prominent author costs humongously to the producers and publishers. Now, the issue is, in 99 out of 100 times, these books and films have a one-time usage value. Implying that once you’ve watched a movie or read a book, the utility is over. Even a pirated music product gives almost similar experience as the original. The quality loss with portability in music is neglected by the common users and they do with the pirated stuff. At the same time, pirated films don’t come with the same experience. Yet, as it is just one-time watch and, if it’s not one of the mega movies, if you’ve watched the pirated video, you’re fine with it. In case of books, the experience is as good as the original as it has got to do with texts and images which is generally okay as long as you want to read a book and yet not spend for paying the efforts of the writer and publishers.

So, while piracy can be tolerated to some extent in your industry, I, as a film-maker, see it as the biggest threat. Yet, every industry and market work in tandem to make things happen and surmount these challenges, leading to continuous innovation. We just hope piracy doesn’t kill some industries.

Piracy can help a budding singer, actor or writer to showcase his/her potential and talent so that s/he can make it to the big league. But, when the big league itself is under threat, the budding ones may land in a “no man’s land” following a good following to their small-time showcases getting good notice.

Maybe we are then left only with small-time projects which may though be good in concept but weak in execution due to industry being under threat.

Not being pessimistic, just sharing my concerns. I remember, over a decade back, fashion giants like D&G, Lacoste and Lee all, in spite of their worry for fakes, voiced together that they could tolerate fake as it made them realize how popular they were so that they could take their product innovation and quality to next level, letting the gray market thrive on fakes of residuals.

Therefore, as a blanket, we may not say it’s equally tolerable for all the sectors and industries.

Thanks

Deepak
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Read MyBlogs:
“Aladin’t or Euthanasia?” http://passionforcinema.com/aladin%E2%80%99t-or-euthanasia/

“WHO IS TO BLAME?” Introspections by a young movie-maker. http://passionforcinema.com/%E2%80%9Cwho-is-to-blame%E2%80%9D-introspections-by-a-young-movie-maker/