Apparently Microsoft is starting some more
"antipiracy initiatives" in several countries. This makes me ticked off.
"But Vlad!", you might ask, "why does this make you mad? Isn't piracy, you know,
illegal and immoral? Aren't
you a software developer?"
In short, the reason it makes me mad is that you are paying for these "initiatives". Yes, you. When a software company goes on an anti-piracy kick,
its customers are paying to be treated like criminals. To explain this reason takes a little detour, but hopefully it will be enlightening.
As any businessperson knows, profit = income - costs. The traditional way to produce income is to sell something. If I leave software engineering to the high-paying world of oven-fired pottery, I might measure my profitability via this formula: pots sold * (price per pot - cost per pot). Thus, by calculating the cost per pot up front and estimating the number of pots I'll sell per month, I can set my prices accordingly.
However, if I use this formula I'll probably end up starving to death. You see, the cost per pot is a very complicated variable. I have to pay the gas bill for my oven, the electricity bill for my workshop, and the salary of my one employee, me. That makes the profitability formula actually look like this: pots sold * (price per pot - cost per pot) - expenses. Those expenses are not as directly associated with creating pots, but if they don't get paid no pots will be made. This means that the price of the pot is
more than just the price of the raw materials plus a markup to turn a profit.
The reason why software is such a great business is that the cost per unit is very nearly zero. Writing a program is an
investment: if people like it, it can keep making money without having to put much (if any) extra money and effort in after the initial cost and effort of creation. So when Microsoft sells you a copy of Microsoft Office, the money you pay is going entirely to pay salaries and electricity bills.
Now, when a company decides to fight piracy, whether it's through DRM or ad campaigns or by adding extra registration hoops and online activation steps to their software, the cost of all of that has to be made up somehow. Normal companies can't afford to make up those costs because the margins are so low (due to having to pay an incremental cost per unit) that there's no way to fit a 70-country public awareness campaign into the budget unless you can prove that it will
make up its own value in increased profits. Best Buy doesn't run commercials saying "don't steal DVDs from our stores" because they wouldn't work and they can't afford to fund something that doesn't work.
The reason that Microsoft (and the RIAA and MPAA, because as it turns out a lot of the stuff I wrote about software applies to those two industries as well) can afford to launch this sort of campaign is that they have much more flexibility in their pricing. They can afford to fund things that don't bring in any revenue. And they fund it by making their software cost more. These costs go to pay the salaries of people who tell you not to download software illegally, to pay the salaries of programmers to write systems that will check and see if you've downloaded software illegally, and to pay the salaries of lawyers to prosecute people who've downloaded software illegally.
Did you know that Mozilla is the name of a corporation? The Mozilla Foundation is a company that makes a decent amount of profit each year. If you're scratching your head saying "I know I've heard that name somewhere", it's because Mozilla wrote Firefox, the web browser you are possibly reading this post with right now. How much did you pay for that browser? Zero dollars. Yet Mozilla still turn a profit [1]. This isn't necessarily a straight comparison, but it is true that Microsoft's software would cost a lot less if they didn't have to pay for things like "antipiracy initiatives".
(This whole argument rests on the assertion that antipiracy initiatives cost more money than they gain. This assertion has been proven in the marketplace several times over. There are several reasons why these things don't work and it's beyond the scope of this rant to enumerate them all, but as an example of proof for this assertion is the fact that companies which stage these campaigns have similar piracy rates when compared with their competitors who don't run such campaigns).
Next time you buy a software package, think about the price. Ask yourself what exactly your dollars are paying for. And next time some software you install asks you to jump through hoops to register it and prove you're not a dastardly pirate, remember that
you paid for those hoops, so you better get to jumping.
[1] They mostly get their revenues from Google, who give them kickbacks for search referrals. If you search from the search bar, Mozilla get like two cents. This is sustainable because the cost per unit is zero.
