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An argument is that those who would pirate aren't going to pay regardless. I think a software for a niche industry has a lot less flexibility for the customer t

An argument is that those who would pirate aren't going to pay regardless. I think a software for a niche industry has a lot less flexibility for the customer to do that than a piece of entertainment like game or movie. Piracy definitely has a negative effect on sale. But whether that effect is worth the effort to implement DRM solutions or not is a different issue.

wwweston 3y ago
Some of those who would pirate aren't going to pay regardless. This is unremarkable economically -- we're all used to the ideas of price points and elasticity. Every market for a good or service will segment into people whose demand is inelastic, people who register at somewhat elastic levels of demand / substitutability, and people whose demand is very elastic and substitutable. Piracy & other forms of uncompensated acquisition just invite us to think about segments where the price point is vanishing. DRM probably works best in situations where it's also paired with convenience and there are modest to high levels of inelastic demand (and in the realm of low-to-modest levels of inelasticity, convenience might be enough even w/o DRM) The other fact about piracy that's probably worth considering is that in some cases it can produce future sales. Not all people have an agreeable desire to contribute economically and understand that piracy means they haven't compensated the provider, which threatens their incentive/ability to provide more, but some do, and will eventually buy in when they're less price sensitive or more convinced of the value in a work by experience with it. (This last point, incidentally, is one reason why I think Spotify's narrative of having saved the industry from piracy is self-serving and wrong to the point it may even have done more damage than the piracy it replaced via convenience for many. Someone engaging in music piracy knows they aren't contributing to a musician economically but may well decide to make legit purchases once they're a fan with a relationship to the artist's work. Someone using Spotify is encouraged to believe they're engaged in a legitimate economic exchange with the artist and is less likely to feel a need for later fan buy-in... when in fact the economics of platforms are practically indistinguishable from piracy for many artists.)

wwweston 3y ago

Some of those who would pirate aren't going to pay regardless. This is unremarkable economically -- we're all used to the ideas of price points and elasticity. Every market for a good or service will segment into people whose demand is inelastic, people who register at somewhat elastic levels of demand / substitutability, and people whose demand is very elastic and substitutable. Piracy & other forms of uncompensated acquisition just invite us to think about segments where the price point is vanishing. DRM probably works best in situations where it's also paired with convenience and there are modest to high levels of inelastic demand (and in the realm of low-to-modest levels of inelasticity, convenience might be enough even w/o DRM) The other fact about piracy that's probably worth considering is that in some cases it can produce future sales. Not all people have an agreeable desire to contribute economically and understand that piracy means they haven't compensated the provider, which threatens their incentive/ability to provide more, but some do, and will eventually buy in when they're less price sensitive or more convinced of the value in a work by experience with it. (This last point, incidentally, is one reason why I think Spotify's narrative of having saved the industry from piracy is self-serving and wrong to the point it may even have done more damage than the piracy it replaced via convenience for many. Someone engaging in music piracy knows they aren't contributing to a musician economically but may well decide to make legit purchases once they're a fan with a relationship to the artist's work. Someone using Spotify is encouraged to believe they're engaged in a legitimate economic exchange with the artist and is less likely to feel a need for later fan buy-in... when in fact the economics of platforms are practically indistinguishable from piracy for many artists.)