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Can software piracy work in your business's favour?

Software piracy is rife in the developing world. But, rather than fighting it, maybe manufacturers should see it as a positive, argues Ben Hammersley
Software piracy: you might actually want to encourage your competition to keep stealing your ideas
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Industrial espionage, piracy and copyright infringement are all big news right now. The governments of the major economic powers have spent years working on treaties, laws and prosecutions, and, with China and other developing countries accused of shenanigans, the knowledge economy is rapidly developing its own knowledge-based Cold War. We are, if the theory is to be believed, under attack every day, and we must fight, perhaps for real, to protect our ideas.

But all this comes from an assumption that knowledge is 'stuff' and can be stolen or used up; and that ideas are an exhaustible resource in the same way that coal or iron ore is. That isn't true. So is industrial espionage actually something to defend against, at least in those terms?

Software piracy provides an interesting example. If you're dealing with a mature market, software piracy is something to be fought against. But find yourself in a developing market — you're a software manufacturer going into Africa, for example — and perhaps piracy isn't such a threat. To protect the possibility of profit from a sale today might, in that case, be to deny yourself a series of deeper profits in the future.

Here's how it works: if you're selling a suite of office applications in a country where the cost for a legitimate copy drives excessive piracy, the original vendor could allow this piracy to happen with the idea that after a few years the developing economic base of the country will find itself "locked in" to those applications. Once that happens, and they're rich enough to do so, businesses will be both forced to, and find themselves wanting to, buy legitimate copies of the latest version. Furthermore, every day they're using pirate versions of your applications is a day they're not using pirate, or paid, versions of your rivals' alternatives.

In other words, if people want to consume pirate versions of your stuff, it's because they want it but can't afford it. But it also means they're locking themselves into your eco-system, and assuming your originals are better than the copies, once those can be afforded, they will be bought.

You could say that there is a loss, in that you might have spent millions developing the new technology, and someone stealing it will have rendered that money wasted. But again this isn't true. Knowledge is a continuum. So research done today not only leads to today's product, but also to tomorrow's fresh research. For that you require an understanding of the process by which you got to today's product and not simply knowledge of that product as it stands alone. This understanding cannot be taken from you: people have to earn it.

Not having to earn knowledge, because you can just take it, is reminiscent of what economists call the resources trap. With that, countries who have vast amounts of natural resources — most notably oil — become utterly dependent on the cheap income it provides. A monoculture economy develops, which is fine until that market is challenged. At that point, not being able to do anything else, the economy collapses. So you might actually want to encourage your competition to keep stealing your ideas. The more they do that, the less they will retain the ability to have their own.

The secret to success in a knowledge economy, then, would be to make something that can be easily, but only badly, ripped off. And to allow people to keep doing it, so they can never do anything else. 

Ben Hammersley is a London-based technologist, author and broadcaster. His latest book is 64 Things You Need To Know Now For Then (£20, Hodder & Stoughton).

Ben Hammersley

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