The case for cheaper ‘knowledge goods’
Here’s a letter that appeared in today’s Straits Times. It makes a very neat argument for MNCs to drop their one-price-fits-all policy when selling their software, drugs or music in the developing world.
Beat piracy with cheaper software
I REFER to the article, ‘Illegal: 43% of software in PCs here are pirated copies’ (ST, July 8).
Piracy stunts the growth of the software industry and leads to lower-quality releases and fewer new programs. If software piracy were eradicated, more jobs would be created and prospects for wealth creation improved.
Except that the situation is not that simple. There’s no arguing against the fact that a lot of people, here and abroad, are using software they haven’t paid for.
Obviously, the software industry would make a lot more money if all those people handed software vendors the full retail price. Statistics about ‘lost’ revenues arising from piracy seem to be based on the assumption that if people couldn’t, or just didn’t, pirate the software, they would turn around and buy it from a legitimate source. This assumption is flawed.
The countries in which piracy is most rampant – Vietnam and China, for example – also happen to be poor. Does one really think that if the average computer user in these countries couldn’t get his hands on a pirated copy of a certain software, he would turn around and drop a year’s wages to buy one? More likely, he would just have to find a way to do without it.
It must, however, be stressed that software piracy is neither acceptable nor justified. Put simply, we live in a capitalist society where goods and services are exchanged for cold, hard cash. If a product is beyond your means, then it is beyond your means and you don’t have any ownership rights over it.
The real issue is that the one-size-fits-all pricing model of the software industry makes legitimate software simply too expensive for most. That is why pirated software is so popular in the developing world. And, not coincidental-ly, it’s also why open-source software is gaining popularity in these parts. It is heartening to note that software companies are beginning to see the value of cutting a deal for people in emerging econo-mies who want their software but can’t pay top dollar. Getting people to use their products has long-term bene-fits, even if they have to practically give them away for a while.
Take, for example, the costly drugs created to fight Aids. Expensive to develop but cheap to make, they are sold at premium prices in rich countries. But poor countries couldn’t afford them, so their citizens died.
Now the international community is rightly getting the drug companies to make these products available in developing nations at low prices. And enlightened drug companies are going along, partly for humanitarian reasons, but mainly because they realised they were never going to get the full retail price from these impoverished Central African nations – no matter how desperate the Aids victims were.
Let’s hope the software industry will see the economic benefit of following suit.ALVIN HARVEY KAM SIEW WAH (DR) [Straits Times]