Thursday, July 24, 2008

The benefits of theft

Stealing somebody's property is illegal, but sometimes it has benefits and is tolerated. Within the increasing digital world copying software and other digital products is easy to do. The Economist of July 19th discusses some cases where one likes to benefit from piracy. For example, for each music track that is legally exchanged, 20 music tracks are illegally derived from peer-to-peer systems. The music industry starts now to adapt to the situation and start making use of data mining to figure out who is downloading what and where (see BigChampage) to improve the scheduling of concerts and other events.
Microsoft tolerates illegal copies of their software in China. The reason is to maintain a large share of users and get them locked in with Microsoft products. If they would enforce intellectual property seriously, Chinese customers may move to cheaper open source products and get locked in with those products. For the longer term allowing some stealing now would be beneficial.
The benefits of theft seems to be restricted to those products which benefits from lock-in effects or where during the process of illegal possession of the products information (on preferences) of the thieves could be derived. If your main gain of revenue depends on dominating the market, piracy is a good sign that there is demand for your product and contribute to the dominance of the market.