* The Business of Software

A former community discussing the business of software, from the smallest shareware operation to Microsoft. A part of Joel on Software.

We're closed, folks!


» Business of Software FAQ
» The Business of Software Conference (held every fall, usually in Boston)
» Forum guidelines (Please read before posting!)


Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

Is piracy a bad thing?

Dear all,

Yesterday and today I found two warez websites distributing my software illegally.  I have a couple questions:

Those who have experienced piracy, how do you handle it?  How do you go about removing your software from these sites?

And, relating to my subject, is piracy such a bad thing?  Does anyone know if people who download the software illegally may like the software, and go ahead and purchase a legal copy for support, etc? 

Any info greatly appreciated.

Best Regards,
Jay Send private email
Tuesday, October 17, 2006
Piracy means other people are making money off your work, and you get nothing. Nobody who decides they like your fully functioning software they got for free will purchase a copy. Otherwise, the old shareware "model" of giving away software for free and asking to pay if they really liked it would have worked. But it failed. People don't send you money out of the goodness of their heart.
Tuesday, October 17, 2006
From what I know, most people who pirate rarely buy support licenses.  And many who pirate still expect free support.

You can release frequently with minor changes to your code structure to make the crackers work harder to break your app.

And put up some webpages on your site for searches related to "your program name + crack" and such.  Might draw in some extra traffic and convert one or two to a sale.  I've seen this work for other sites...
Eric D. Burdo Send private email
Tuesday, October 17, 2006
Without justification, without argument ... Yes. Piracy is a BadThing(tm).

End of story. No debate. It's your property and someone else is doing something you did not authorize. They are wrong. It is bad.
Tuesday, October 17, 2006
Without justification, without argument... homosexuality is a bad thing(tm).

Oh, yeah, that makes no sense.  You know it makes no sense and that's why you've tacked on a justification and an argument about property and authorization.
Tuesday, October 17, 2006
It has been suggested - but not proven - that a substantial number of pirated copies are for display purposes. That is, many crackers crack for the challenge of defeating your anti-piracy mechanism, not because they actually want to use your software day to day.

For example, there are plenty of people who download industrial strength CAD/CAM software just to play with it or complete an assignment, and it's dubious those people whould have paid for the software even if you offered it for $1.

Having said that, I think selling bootleg copies of the software is a serious problem. As far as I'm concerned, the real issue isn't so much that there are unauthorized copies of my software floating around out there; it's people selling copies of the software at prices substantially higher than the media, and not kicking back any of their profits to me. (Think SE Asian bazaars selling Windows XP for $1.)

When you factor in the economics of fighting piracy, it really depends on what kind of software you're selling, and where.
Tuesday, October 17, 2006
Piracy saves advertising money to software companies. People who used to purcahse legal copies won't download cracked programs and someone who need some program and don't want to pay it he won't buy it even if the price is 1$ no matter how much he needs it.

Andrew Hercules Send private email
Tuesday, October 17, 2006
"Nobody who decides they like your fully functioning software they got for free will purchase a copy"

That's not true. I had a pirated copy of a music dtp program. I like it, so recently I bought a fully licensed copy because I thought I should.

Tuesday, October 17, 2006
>"Nobody who decides they like your fully functioning software they got for free will purchase a copy"

That's not true. I had a pirated copy of a music dtp program. I like it, so recently I bought a fully licensed copy because I thought I should.

You sir/madam are truly the exception, not the rule.

To the OP. You can't undo what's been done. Work out how they''ve cracked you program and improve it so it doesn't happen so easilly again.
Neville Franks Send private email
Tuesday, October 17, 2006
Piracy is illegal.Period. It mast be prosecuted to the maximum extent possible.

This said, there's no doubt that MS Office and MS Windows become so popular even thanks to the huge number of illegal copies circulating.
These copies create buzzword and spread the knowledge of the software and, ultimately, may lead to legal sales and a beneficial grade of awareness.
I can not imagine a way to quantify the amount of money lost directly and later regained. IMHO this should be a good subject for a scientific research.
Sevenoaks Send private email
Tuesday, October 17, 2006
I am against piracy 100%. All the software I have has been paid for, or is freeware.

However, there are some troublesome programs I have spent a lot of money on which have draconian registration schemes that are always phoning home and demanding registration because I have plugged in my USB camera, and such things.

Several of these I have replaced my paid version with a cracked version that gives me less trouble.
Meghraj Reddy
Tuesday, October 17, 2006
"it's dubious those people whould have paid for the software even if you offered it for $1"

Complete horseshit. If someone is USING the software, it has value to them. Otherwise they wouldn't be using it. If there were no cracked or free versions available, you bet they would pay $1. Most lot of them would pay $30. Many of them would pay $100. Most would not pay retail of $20,000, no.

But each of those guys using top end CAD for free means that some ISV selling a nice CAD package for $100 is out of a sure fire sale.

Piracy helps the big players maintain their monopoly.
Meghraj Reddy
Tuesday, October 17, 2006
Google Sougata Poddar. He wrote a few economics papers about software piracy. Then follow the trail of bibliographic references to find other informative papers.

You're interested in what economists refer to as "network externalities" and the "free rider" problem.

I don't regard Poddar as the final word on this subject, just a place to begin your research. Here is one of his papers to get you started:

Tuesday, October 17, 2006
What else can be said? +++ to what Meghraj said.

Piracy is bad for Microsoft but much worse for any uISV.  As an axiom, you lose more money to people who would have bought your software (but didn't) than you gain from person A looking over person B's shoulder and noticing "hey, this guy has this cool piece of software, let me consider buying it!"

There is a line of thinking that says 'if A has a pirated copy of program X, he's more likely to buy it than if he never knew it existed", but I'm not convinced. Most people are almost broke just trying to keep up with taxes, housing and gas; software is _not_ an impulse/goodwill purchase.  Unless of course you price it at $7.99 and hope that you sell hundreds of thousands of copies. (Which you won't)
Kamen Lilov Send private email
Tuesday, October 17, 2006
if there is one single lesson to be learned from the successof the itunes store, it is that most people are willing to pay what they perceive as a fair price for a product even if it is available free elsewhere.

Products that have a large piracy problem tend to be those products that are hugely overpriced for what they are.

If you are producing a good product and selling it at a fair price, piracy will not be a big problem for you....in that situation it is far better to focus your energies on improving the service you provide your paying customers more than it is to ignore them so you can beat up on the rest.
OTOH if piracy _is_ a big problem for you, then you are very likely overpricing your software, or it is total crap anyway....and you are clearly already ignoring your customers, so why _not_ focus your energies on chasing pirates.
Tuesday, October 17, 2006
Our sales team once got an email from some South-East Asian company asking us for a free licence for our software... because if we didn't send them one, they'd just pirate it anyway.

Our response was predictable. :)

Another of our established customers sent an email informing us that they exceeded their licensed allocation of registered users, and wanted to purchase a licence upgrade. To keep the system running, they'd cracked it to support unlimited users, and they hoped we didn't mind?

We laughed, and told them it was OK.

We also occasionally find cracks and serials for our software online. This doesn't bother us greatly either, because we've always considered our licensing system's primary function was to be just enough of a conscience-prod to keep honest customers honest. Anything more and you hit nasty diminishing returns as you put more and more effort into fighting sophisticated attackers with lots of spare time, and you annoy your customers more and more in the process. (c.f. Windows Genuine Advantage)

I, like the majority of computer users, have occasionally pirated software. When I moved into a reasonably well-paying job, I found I could no longer justify this to myself. If I _really_ want most software, I can afford it. These days I even make sure all my Shareware is registered and up to date.

Piracy is one of those weird issues, because it's an attempt to map the values of real property onto intellectual property. If I steal a car, you don't have a car any more. If I steal a copy of Photoshop, nobody's actually lost anything concrete. It doesn't directly hurt Adobe, who wouldn't have received any money from me anyway, the only thing stopping me is the whole "Protestant work ethic" feeling that I'd be getting something I don't deserve.

Photoshop is, in fact, the application I'm most tempted to pirate. I find I need to use it about once every six months, which just isn't enough to justify the price tag. It'd be really cool if I could pay a couple of bucks to rent it for a day like it was a DVD.

On the other hand, if Kevin, a 20-something self-taught graphic designer pirates Photoshop, then you know exactly what software he's going to demand a legal copy of a couple of years later when he gets himself a real job. Which leads to the previously mentioned problem for people trying to sell budget software: the BSA would say that Kevin's piracy hurts Adobe, when it in fact does the exact opposite.
Charles Miller Send private email
Tuesday, October 17, 2006
If giving some copies of your software away for free ended up in more profit for the company at the end of the day, companies would already do it.  They do, actually.  I give away plenty of copies of Bingo Card Creator for free.  (Both the limited trial version and, in some limited circumstances, the full version.)  Microsoft gives away Visual Studio, with the same caveats.  (Academic pricing, Visual Studio Express, etc)  Ditto Adobe.

But some people want it for free when they can't get it legitimately, so they steal it.  Then they justify it by saying "Well, I'm really free advertising and $COMPANY stands to make more money off of me anyhow".  What can I say -- I trust Microsoft to know the best way to maximize profits on Visual Studio a heck of a lot more than I trust $PIRATE.
Patrick McKenzie Send private email
Tuesday, October 17, 2006
In answer to your original question, by the way, there are a variety of responses.  You won't succeed in getting your software off the site, period.  Typically, you try to break the patch against your executable and/or make the posted serial number not operate in your next version. 

I have a loooooong primer on software registration/protection/piracy here.  Feel free to read up. 

Patrick McKenzie Send private email
Tuesday, October 17, 2006
Great summary Patrick :-)
Li-fan Chen Send private email
Wednesday, October 18, 2006
It is interesting how most people seem to think in terms of linear "marketing" when discussing software piracy. They think "pirated copy -> no sale -> loss". But that completely ignores the actual market in which competition may exist - and in most cases does exist, unless you are making software for vending machines or such, which no one is going to bother pirating anyway. So the real choice is not legal license or pirated copy. It is a legal license, or pirated copy, or a competitor's legal license, or a competitor's pirated copy, (repeat until you run out of competitors), or freeware/open source alternative, (repeat until you run out of freeware/open source alternatives). In many cases people will see a commercial program and look for freeware or cheaper alternatives, so you lose a sale anyway. (It gets worse if your product actually gets pop0ular and some fun-loving open source enthusiasts decide to replicate it and offer the result for free.)

In these days of the Internet it is very easy to test out two dozen alternatives before making the choice - availability of both products and information allows that cheaply; and people who seek free alternatives will be reluctant to buy your product anyway, so the sale is lost to you long before a copy is pirated. All you can get from it is some market penetration, if the copy is actually pirated - but that you get for free, without spending money on promotion.

So, automatic dismissal of the value of customer awareness and market penetration does not seem logical to me. Any freeware copies given away voluntarily or not (including pirated ones) increase market penetration at cost of potential sales, but at no other cost.

It seems logical to me that software companies should actually give some copies away, or at least offer a simplified freeware version of the product, just to increase their presence on the market. Did anyone conduct any research on how market penetration affects sales?
Wednesday, October 18, 2006
Companies actually do give copies away, or nearly so, in the form of extremely cheap academic editions.  That's to make sure that students will keep using the company's program when they get a job and pay for their software.

Piracy among students therefore does not hurt THESE companies at all -- it merely hurts their competitors whose products are NOT pirated, just like Charles said.
Chris Nahr Send private email
Wednesday, October 18, 2006
Piracy only has a positive effect when you are already dominant in the market. And even then it is questionable whether the benefits outweigh the lost sales.

If you're not dominant, it is damaging.
Wednesday, October 18, 2006
Civilization depends upon the willingness of people to make certain short-term sacrifices in exchange for the possibility of longer term benefits.

Why do we hold doors for strangers that we will probably never see again? Because at some level we recognize that we're all in it together. There is a simple "economic" principle at work. In order to have a society in which people are treated with respect and dignity, the members of the society have to offer that respect and dignity to one another willingly. It's the wisdom of the Golden Rule.

Software publishers should endeavor to treat their legal customers with respect and dignity, and people who benefit frmo teh hard work of software publishers should treat those publishers with respect and dignity by paying for the goods.

Publishers and customers who fail to treat one another with respect and dignity diminish society by creating a "dog-eat-dog" mentality. Each person's willingness to play by the rules is affected by their perception of whether others are playing by the rules.

My MicroISV has been in business for 11 years. We sell direct to software developers. We continue to be amazed at the goodness of our customers. We have had *very* few payment problems. Customers calling for tech support are usually *very* courteous to us.

We do our best to reciprocate. At the end of a tech support call, if there is any doubt about whether the issue has been resolved, we always say "Please call us back if you have any additional problems. We want to make sure you're working productively.". If someone asks for a refund (this is very rare) we always process it immediately.

When we see cracks for our program on the web, it makes us sad. Some people just don't get it. I'm willing to admit that we may benefit from a free advertising effect. But I fear that the corrosive effects of the "dog-eat-dog" mentality are more costly to society than we can appreciate.

An orderly society that promotes and rewards entrepreneurship does not occur naturally. It only emerges when a critical mass of people are willing to believe in the Golden Rule. When people stop holding doors for one another and saying "Good Morning", then it's too late. People who pirate software, and software publishers who lock in customers and charge exorbitant fees move us closer to the dog-eat-dog world that I, for one, want no part of.
Wednesday, October 18, 2006
Smoothie -- great post here, thanks for summing it up. But I feel there is one critical thing missing there:

>> An orderly society that promotes and rewards
>> entrepreneurship does not occur naturally. It
>> only emerges when a critical mass of people are
>> willing to believe in the Golden Rule. When
>> people stop holding doors for one another and
>> saying "Good Morning", then it's too late

As you said, there has to be an "economic" incentive to following the rule. If you never hold doors for strangers or say 'good morning', at some point you're bound to get a negative reaction from your peers. For the same reason, you don't go into a $50-per-person restaurant, eat and drink all you can, and then argue that food wasn't good and you demand your money back.

If there was a strong social stigma associated with pirating software, fewer people would do it. Now, call me a pessimist, but (after years in the industry) I still fail to see such a predisposition. You pirate stuff, all your friends and half of your coworkers know it, and no negative reaction comes out of that whatsoever.
Kamen Lilov Send private email
Wednesday, October 18, 2006
"Piracy only has a positive effect when you are already dominant in the market."

On the face of it thats an insanely stupid thing to say, but I would be willing to give you the benefit of the doubt if you were able to make a more convincing case......?
Wednesday, October 18, 2006
workingHard -

"This said, there's no doubt that MS Office and MS Windows become so popular even thanks to the huge number of illegal copies circulating."

...said someone earlier. Photoshop is another good example. The companies started the momentum, piracy maintained it, to a certain degree.

And I'm not saying that as a justification for piracy, just that this is the only positive effect it could possibly have, and that it's tenuous, and that it won't work for most people on this forum.

Your argument about software being over-priced, however, is quite frankly, way more insane. By that logic, no-one would pirate <$20 apps that are half-decent. But they do.

People will pirate ANYTHING, if it's easy enough to do so.
Wednesday, October 18, 2006
Rampant piracy of computer games for the Commodore 64 and Atari destroyed many a software company.
Keith Wright Send private email
Friday, October 20, 2006

This topic is archived. No further replies will be accepted.

Other recent topics Other recent topics
Powered by FogBugz