Revulytics Blog

Software Piracy Lemonade

July 16, 2010

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Most of you are probably familiar with the expression, "When life gives you lemons, make lemonade." Stated more simply: make something sweet out of something sour.

Even better, take a lesson from the kids in your neighborhood and sell the lemonade to increase your revenues from something sour.

Software Piracy Lemonade
Image Rights: http://www.flickr.com/photos/agizienski/3778965891

What (besides the summer heat here in Boston) is making me think about lemonade? And what does it have to do with the topics of software piracy that we regularly discuss on this blog? Two interesting articles I read recently: "Software Firms Praise IP Protection Plan" in Investor's Business Daily and "Why I Steal Movies… Even Ones I'm In" on Gizmodo.

The Investor's Business Daily article discusses the "White House's announcement of a new strategy to enforce intellectual property rights...[which] aims to reduce illegal use of music, movies, software, drugs and other products protected by U.S. patents and copyright laws."

One interesting - and surprising/not surprising - point raised in the article is that:

"One key focus will be policing U.S. government agencies to ensure they don't use illegal software. The report advocates setting an example for trading partners by having the U.S. government 'review its practices and policies to promote the use of only legal software by contractors.'

The main problem isn't outright stealing, the BSA's Holleyman says. In most cases government agencies have legal access to software licenses, but 'they are allowing many more employees to access that software than the license permits,' he said."

This really shouldn't be a surprise. We've heard from many vendors and industry analysts about the challenges end users face in trying to comply with license agreements. This is the problem of license overuse - when existing customers exceed the number of licenses they are entitled to use (intentionally or inadvertently).

The flip side of this, of course, is overt piracy - when someone has never paid for the right to use an application and is using the software unlicensed. Again, this can occur intentionally (when the user actually goes out and acquires the unlicensed software from any of the numerous outlets in the piracy channels) or unknowingly (for example, when an overzealous IT person downloads cracked software because the end user needs it "right away" and the normal procurement process might take too long).

This brings me back to the Gizmodo article written by actor Peter Serafinowicz. Although he discusses content piracy (movies, music, books, etc.), the concepts apply to software piracy as well. He notes that:

"With bandwidth and storage increasing exponentially, getting cheaper, and consumers becoming more tech-savvy, it's becoming easier every day to grab free copies of books, movies and albums. This is why Internet users are thrilled. Including me. This is why people in the entertainment industry are terrified. Including me. "

Serafinowicz goes on to describe the conflicts he faces:

"I live in London and many of my favo(u)rite TV shows are American. So if I want to see the latest episode of South Park or Friday Night Lights I'll head over to Pirate Bay or ez.tv and nab a torrent moments after broadcast. I once even downloaded Shaun of the Dead to use in my reel, because it was easier than ripping the DVD.

Torrenting is probably too hassle-y for the average viewer: Installing Transmission, VLC, perhaps re-encoding to watch on my TV—but I'm pretty techy (ok, a geek) and have been doing this for years. However, if a show is available on iTunes—as South Park is to me now I've set up a US iTunes account (yet another tech hassle I had to overcome…)—I'll click and buy. It's simple, quick, better quality, not to mention legal. It's also cheap. Graham Linehan (creator of The IT Crowd) described this situation to me as "better than free." Matt Stone and Trey Parker of South Park have always tolerated torrent sites hosting pirate versions of their show, as I imagine they see it as constant promotion. Also, they've realised there's nothing they can do about it.

The promotion argument makes sense. South Park for example makes money from from syndication, advertising, merchandising and DVD sales (although the latter market is dwindling) so perhaps the extra visibility helps.

The visibility argument certainly makes sense for my short-lived BBC show. I'm revamping my website right now and my web team asked me if I would like them to hunt down and put and end to the torrents and RapidShare links to The Peter Serafinowicz Show, which was recently released in the UK on DVD. I said no because the show is still relatively unknown and I'd like as many people to see it as possible. In fact, I've used the torrents myself when I haven't had a copy to hand."

Similar challenges face ISVs - cracked software is out there and is very easy to obtain. The difference is that ISVs can do something about software piracy. The first step is to understand your organizational readiness to deal with software piracy.

Phases of ISV Responses to Piracy (Click to Enlarge)

Once you realize that you have lemons (cracked software) and that they are everywhere (decentralized piracy distribution channels), you need to decide how you are going to deal with all of those lemons. "Enlightened" ISVs realize that they can turn their lemons into lemonade and recover revenue from the businesses that have been drinking their lemonade without paying for it.

Our CodeArmor Intelligence customers are doing just that - and have recovered millions of dollars in license revenue.

Are you ready to turn your lemons into software piracy lemonade? Drop me a line at mgoff@revulytics.com and we can help regardless of how your organization is reacting to piracy!

- Michael Goff

Software Firms Praise IP Protection Plan

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Michael Goff

Post written by Michael Goff

Marketing Director at Revulytics
Michael is Marketing Director at Revulytics where he is responsible for corporate marketing, content, and social media. He has helped to educate the industry on the benefits of software usage analytics for compliance and product management through the company's blog and contributed articles in trade publications. Michael was previously a marketing programs manager at The MathWorks and principal at Goff Communications. Michael earned a J.D. from Boston University School of Law and a B.A. from Colgate University.