The Price of Piracy

"Psst, want to buy DVDs?" You turn around and see an unkempt looking youth-bright blond hair, faded tee and jeans with cigarettes in mouth. "Latest one also got, boss, "he coaxes further. You move closer to his shop and find the latest movie DVDs and music CDs. Take your pick. They're dirt-cheap. "Buy five, I give you one for free, " he tempts more. What are you going to do? If you're thinking of getting your wallet out, think again. Piracy hidesa very sinister tale of theft, crime and immorality. Strong words, but it is a strong crime. One that sees you shortchanging yourself, the economy and the industry. Cheap prices? They're more expensive than you think!

By Joshua Rayan

Piracy is the act of copying or duplicating someone else’s intellectual property (IP) – an idea, a brand, a technique, a product or a service and then profiting from it, without due acknowledgement or payment to the original creator. For instance, stealing copyrighted content such as songs, software or movies, and then creating copies to be sold for personal profit.

And since the copycat doesn’t have to pay for R&D, royalties and staff salaries, he is able to keep ‘costs’ to a minimum. It allows him to ‘generously’ sell his wares at a super low price. The actual spin on things: he’s just cheated the original creators of their rightful payments.

When royalties don’t go to the rightful owners, people are deprived of funds and recognition. They feel cheated, frustrated and believe the effort of creating content is not worth it. Poor sales due to piracy means they’ll have to burn big bucks to carry on with their projects – whether it’s to release a new album, produce a movie or develop software. Production houses, record labels and software houses will be forced to produce less or to close shop. Who wants to create if they’re going to get ripped off?

This means we will eventually have less content to choose from. When there are fewer pickings, there are fewer opportunities. Artists and producers struggle to make albums or movies. As a result, creative ideas – scripts and storylines, new bands and better software – will never reach the market. Imagine…no more games, movies, music and software. If piracy flourishes, creative industries can perish.

Not convinced? Well, this is what experts have to say about piracy:

“Dollar losses associated with software piracy in Asia Pacific rose to over US$5 billion last year,” stated Raymond Lee, South East Asia Group Manager of Adobe Systems. Statistics from IDC (a leading IT research specialist) indicate that a 10% drop in piracy over four years in Asia Pacific would add 1.1 million new high-tech jobs, US$170 billion in additional economic growth and more than US$15 billion in tax revenues. Asia Pacific’s IT sector could double in size in just four years - growing from US$175 billion to US$330 billion. Reducing software piracy by just 10 percentage points worldwide would generate 1.5 million jobs and add $400 billion to the world economy, according to a study released by the Business Software Alliance and IDC in the first quarter of 2005.

Shady dealing
After talking to ‘Chai’ and ‘King’, two former ‘underworld minions (not their real names as their former bosses are still looking for them after failed ‘aggressive negotiations’ on contractual disputes!), I learnt about another aspect of IP theft that many are not aware of.

Many of the ‘nice people’ who give you great discounts are from the underworld. A good number of DVD/VCD sellers are, in fact, foot soldiers for notorious secret societies such as Gang 18 and 24 in Malaysia (the numeric codes were given by the Malaysian police). The big ‘tai kohs’ (triad bosses) run the show from fancy hotels and karaoke lounges…you can imagine the cigar in hand and mafia don overcoat if you want.

These kingpins need a steady source of income to fund their other ‘projects’. This source of income has to be lucrative, easy to execute and very mobile (easy to set up and dismantle). IP piracy fits the bill perfectly. Just get a few original CDs, VCDs and the duplicating/burning machines. Print some simple inlays (if any). Then get your cell leaders to get the ‘boys’ to pack, distribute and sell the products. The public purchases the CD, they collect the revenue, and the money is used to fund riskier but more rewarding activities such as prostitution, loan sharking and drug dealing.

The links are there – it doesn’t take much to see the connections. Take note: the next time you pick up a pirated product, you could be paying for a pimp’s play pad instead.

Why do people patronise pirates?
Even though we preach against piracy, it’s worth considering why it remains so prevalent.

Pirated content is 50-80% cheaper than original stuff. In Asia, where income per capita remains relatively low, people will go cheap rather than steep. Inadvertently, pirated content provides exposure and access to products that would otherwise be out of reach to many people. This is especially true of computer software. It’s not hard to find people in the IT industry who would admit that they couldn’t have acquired their skills without access to cheap pirated software. With technology ensuring that pirated copies are almost as good as the real stuff…it’s show me the CDs.

So, piracy exists due to original material costing a bomb. Why do they cost so much? Technology has made it easy to duplicate content, so it ought to be a lot cheaper now to produce and distribute IP, right? Well, it’s not so simple. Take the music industry for example. Recording companies point to hefty royalty payments owed to artists. They further point out that only one in 10 artists would become commercially successful, so there is a need for each successful record to cover the production costs of other failed projects. And then there are the marketing and distribution costs, and so on.

Nonetheless, recording companies and big budget studios are still perceived to be highly profitable, so it remains difficult to convince consumers to buy original songs. The demand for cheaper content is there, so perhaps it’s time for the various media industries to find innovative ways of cutting costs. Rather than viewing emerging technologies as a threat, why not take advantage of them instead? Why can’t music be sold online? For instance, companies can opt for a pay per song download structure, where consumers pay a few cents for a particular song. This is not so far-fetched – the success of Apple’s iTunes, a portal for selling music in MP3 format, is just a small taste of how it can be done.

Spread the message: piracy ain't cool!
In the end, it comes down to personal responsibility. No matter how you try to rationalise it, buying pirated content isn’t cool. It’s illegal, and it’s harmful to the producers who had worked so hard to create the IP. You expect to be paid for your work – so do the dedicated professionals in the various media industries.

Every time you buy a pirated DVD, VCD or CD, you’ve become an accomplice of the syndicates that are robbing Singapore of money and much more.

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