What is Piracy

What is Piracy? by Ron J. Goodman

Am I a software pirate? The people at Lotus would claim I am. I disagree. In fact, I think the term "software piracy" needs a new definition. So let's talk about that first.

Okay. Just what is a pirate? The audio, video, and film industries know. They have real pirates. These are people who make and package duplicates of records, tapes, and films; for distribution and mass sale. They are offered to the public via apparently normal outlets at heavily cut prices, and the original artists get nothing. There's no doubt whatsoever that this is illegal. The equivalent would be to make duplicates of the Lotus disks and documentation (probably minus the copy protection), and sell the package on the open market for 10 % of Lotus's price. I've read that there are shops in China and Japan which do exactly that. I don't; I never have, and my intention is that I never will. Neither do I know anyone else who does it, has done it, or intends to do it. And I've yet to hear anyone deny that piracy of that sort is out-and-out theft, as illegal and immoral as any other form of theft.

What I do do, without hesitation or qualm, is make as many copies as I like of any software I buy, and use them in any way I choose on any machine I happen to be using. After all, I paid for the damn thing. I don't care what the so-called "shrink-wrap" license might say. It isn't worth its weight in horse manure. Any unbiased attorney will tell you there's no such thing under the Law as implicit agreement to a contract. Contractual obligations must be agreed to explicitly and specifically. Even then, they're not binding if they violate certain legal criteria. (For instance, the statements on the back of parking lot tickets that say the lot isn't responsible for loss or damage are meaningless. So are many of the clauses in rental leases and agreements.) I might use the software on any of several machines I have at home. Or I might take one or more of my computers to a job, and use the software there......I work on a contract basis, and do this fairly often. Or I might take just the software to work, and use it on a machine that belongs to the client company. None of these things is legally or morally wrong. Software is a tool for working on information; just as a drill is a tool for making holes. When I buy that tool, I'm not buying a "license" to use it only in vendor-specified ways. Once I buy it it's mine, and I have the right to use it any way I damn well please; with the single exception of making copies to sell at a profit. After all, Tektronix doesn't try to tell me I can't take one of their scopes with me to use at an on-site job assignment. Why should I let a software publisher tell me not to use a copy of a program I paid good money for in exactly the same way?

Of course, if the program happens to be Lotus 1-2-3, you "can't" make a copy to take to work. Which brings us to the issue of copy protection.

One of the reasons I despise Apple Computer and would love to see them go under is that, as far as I know, they originated the concept of selling copy protected software. This was (and still is) unheard of in the world of CP/M. The first time somebody mentioned copy protection to me, I thought the guy was kidding. Like many others, the first thing I do with a new software purchase is make backup copies, and I'm not about to knowingly spend money for software that tries not to let me do that.

The key word is "knowingly." Most of these outfits conveniently "forget" to mention in their ads that their software is copy protected, so it's possible I might buy such a package by mistake. It hasn't happened yet; but it could. So what could I do then?

A moralist might say, "Return it for a refund." But even if I agreed, it wouldn't work. The "shrink-wrap" license prevents it. While it wouldn't hold up in court; there's no way except going to court to force the company to refund your money, once you've opened the package. And you're not going to find out about the copy protection until you do that. A classic catch-22, right?

Wrong. Because there remains the sweetness of revenge. I figure that, if I get in an argument with someone who tries to gouge out my eyes, he has no legitimate beef when I block his attempt and ruin his future sex life with a well-placed foot. Copy protecting your software tells me that you feel no obligation to be concerned with the convenience of your customers. I therefore need feel no obligation to contribute to your profits. I'll make it stronger. Doing that puts you beyond the right to any consideration whatsoever......just like the dude who tries to take out my eye in a fight.

Normally, I'd simply refuse to buy your product. The only way I'd do so would be if I didn't know it was copy protected, because you "forgot" to mention that little fact in your ads. Then, as far as I'm concerned, you've added fraud to your previous sin, and you're really beyond the pale.

So the first thing I'd do would be break the copy protection. The second thing would be to disseminate the information on how to break the copy protection as widely as possible, and maybe even give away a few of the unprotected disks. In spite of popular belief, that last is not illegal. Notice: I said "give," not "sell." The same unbiased attorney will confirm that, for nonprofit purposes, you can legally give away quite a few copies of copyrighted material, such as software. For individuals, the limit is 100. (Beyond that point the Law figures that no one has that many close friends, so you must be making a profit of some sort.)

I wouldn't deliberately buy a copy protected software package for this purpose. I've got better ways to use my time than breaking copy protection. So as long as you clearly label it as such in your advertising, your copy protected software packages are safe from me. Though I'd like to see it, a consumer protection law banning the sale of copy protected software probably isn't in the cards. However, a law mandating that copy protected software must be unambiguously labeled as such in all advertising would be to the advantage of everyone in the field (except people who deliberately leave it out in order to sell to people like me). In the meantime, several companies are marketing programs such as CopyRight and Copy II PC, which are specifically written for the backup of protected software. This is carrying my inclination to disseminate the information as widely as possible to the ultimate degree. If I could control it, the place in Heaven for these people would be assured, with the mansions and palaces already prepared. While I devoutly hope that there's a special and very hot corner of Hell reserved, along with the exclusive attentions of the nastiest demons available, for people like Vault Corporation, who not only invent and market copy protection schemes, but even, (so I've read), have had the colossal gall to file a Lawsuit against some of the good guys (Quaid Software).

A reasonable definition of a software pirate would be someone who makes unauthorized copies for the purpose of creating illegal profits. The copying practices described above are unauthorized; but none of them involves either illegality or a profit motive. Therefore, I don't think they can honestly be described as piracy.

What about the recent flurry of lawsuits? Notice; these have all been against companies. The right to give away copies is only clear in a non-profit situation. A company that buys a single Lotus package and makes 50 copies of the disks and documentation for the use of 50 employees on 50 different machines is on much shakier legal ground, because the company exists for the purpose of making a profit. Even then; notice also that so far, none of these cases has gone to Court. Lotus et al have been careful to sue only companies that they were sure would settle without fighting them. This is because it's by no means certain that they'd win. Eventually, of course, someone is going to miscalculate and sue somebody who will make them prove it. The Court fight when that happens should be very interesting, and the results illuminating.

The remaining issue is pricing.

In scores or hundreds of stores and mail order outlets all over the country, double-sided five inch disks are available for less than a dollar apiece. The cost of manufacturing a software package for sale is simply the cost of the media used plus the cost of printing the documentation. Even adding the cost of packaging and mailing, it's pretty hard to get the total above $10 or so. Now, the standard for mail order pricing is for the price to be three to five times the cost of production. On that basis, the maximum legitimate price for a software package would be around $50. I'll admit that that might be a little over restrictive; though Borland International and some others are making a lot of money selling some very heavy duty software in that price range. But even granting that now and then it might be possible to justify as much as fifteen times the production cost, the $500 to $2000+ prices on some of this stuff remain outrageous. In fact, they are neither more nor less than a flat out attempt to rip off the customer.

This last is going to produce outraged screams of, "What about our development costs?" Well, what about them? That argument is a classic case of "Figures don't lie; but liars figure." The cost of writing your first program for sale, if any (it's zero if you write it yourself in spare time, which means in time you couldn't otherwise have gotten paid for), is part of your start-up cost; just like the cost of acquiring the computer to write it on. Once in operation, writing new programs and improving old ones becomes part of your overhead. Naturally, you have a right to recover these costs out of your profits. The 200 % to 400 % profit margin is designed to allow for that, if you've got a decent product and a well run operation. After all, few programs take more hours to write and debug than it takes to write a 100,000 word novel, and how many novels go for $50 a book? Never mind $2000+. The usual argument given at this point is, "Novels sell more copies than programs." Bull. WordStar, Lotus, Microsoft Basic, MSDOS, CP/M, and lots of others have sold in the hundreds of thousands to millions range. That's the best-seller range for a novel, and there isn't that big a percentage of best sellers out of all the novels published. Ask any author.

If you don't buy that argument; try this one. Compare the software manufacturer's situation with that of a hardware manufacturer. Take any one of the multitude of IBM PC add-on boards as an example. It takes at least as much in the way of skill, talent, and time to develop a sophisticated board for a modern microcomputer as it does to develop a large program, and a hell of a lot more in the way of capital investment. Not only do you need the computer it's going to be run on; you need a lab full of expensive test equipment to get the breadboard debugged and running, usually in wire wrap. Then you have to send it out to get a printed circuit card made; after which you have to go through the whole process again, because the PC card is always going to come up with some bugs that the wire wrap prototype didn't have. Of course, along with this you need a full scale software development project, because any such board is going to require some custom software to be useful and salable. Then, once you get debugged production prototypes, you have to invest another big chunk of cash to get into production. You have to set up to buy the parts (including having your PC boards made); set up an assembly line to put the cards together; hire assemblers to do the work; set up a test facility with another batch of expensive lab equipment to burn in and check out the assembled cards, and hire some good technicians to do the checkout and fix the bad cards. There'll be lots of bad cards; particularly at the beginning. At this point, you're finally ready to start shipping, and begin to get your investment back.

Contrast this with manufacturing software. Once you've written and debugged your program, you don't need to invest a penny in equipment to make duplicates for sale. All you need is the computer you already used to develop the software. Your local print shop will run off the documentation for you at a cost of one or two cents per page, depending on how many copies you get at a time. You merely place your advertising and wait. When the orders start coming in, it takes you five or ten minutes at the most, starting from scratch, to get each one ready to ship. That's why so many more people go into the software than the hardware business. It's orders of magnitude easier and cheaper to do.

And yet...try this. Sit down with a parts catalog, and the technical manual for any of your plug-in cards that includes a schematic or parts list. Add up what it would cost you to buy the parts to build that card on a standard wire wrap prototype board. You'll almost always come up with better than 50 % of the price for the board from a mail order house; sometimes more than 100 %. How can this be? Is the manufacturer a charitable institution which is losing money, as the software houses claim they would if they charged a reasonable markup over their production costs?

Not hardly. The manufacturer can buy the parts in quantity cheaper than you can in singles, and has invested a lot of time and money in reducing his labor cost per unit. He's pricing at a reasonable markup over his real costs (remember, the mail order house also makes a profit), and making lots of money. In short, he's basing the list price on a fair profit margin, rather than on G-R-E-E-D and "All the traffic will bear."

If this doesn't convince you that most software prices are set on a basis of greed and "All the traffic will bear," nothing will. Of course, not all the publishers do this. Borland International sells lots of heavy-duty software in the $50 to $100 range, Some for less. They have one of the biggest success stories in the industry. And how many unauthorized copies of Turbo Pascal have you ever seen? I've yet to run into one, and have passed up more than one opportunity to get a copy for free.

Some other software houses have followed suit. A couple of years ago, for instance, Eco-Soft dropped their full C language compiler to $49.50. At the time, I was working in an engineering department where four of us had been looking for C compilers. Now, if we'd decided on a compiler with ATTWB pricing, we might've pooled our money, bought a package in one name, and made copies for the other three. (The vendor isn't really hurt by something like that, because he's made a sale he wouldn't have made otherwise.) In this case, each of us bought the package individually, because we all agreed that the practice of offering non-copy protected, reasonably priced software deserved all the positive reinforcement we could give it. That's the mirror image of the revenge motive I discussed previously, which is at least partly to give negative reinforcement against the sale of overpriced copy protected software, unlabeled as protected in the ads.

That, I think, is the real answer to the "problem" of software "piracy." Just as I've yet to run into an unauthorized copy of Turbo Pascal among the dozens of times I've encountered the program in the last couple of years; I've yet to run into an authorized copy of certain useful, popular, but overpriced programs...which, for obvious reasons, I won't name here.

I think....at least, I hope...that people like Borland, Eco-Soft, and the others who sell solid, reasonably priced, non-copy protected software are going to take over. People like Lotus and Vault will either have to bow to the inevitable and go along, or wind up in Bankruptcy Court. Neither would break my heart. It seems as if the trend has already started. Should it go to completion, the "piracy problem" will be a thing of the past. There'll always be a few people who are simply out to get something for nothing, but the majority of "unauthorized" copies are made for motives which are quite different, as I've tried to show. If the shakeout I expect occurs, those motives will disappear. And I seriously doubt that the real pirates will ever make a noticeable dent in the industry, particularly under those conditions.

AFTERWORD

I wrote the above about two years ago. Since then, the shakeout I predicted has been happening. In fact, at this writing, Lotus seems to be almost the ONLY company clinging to copy-protection, though they're still a long way from bankruptcy. However, the virtually universal bad feelings created by their greed-motivated "look and feel" lawsuit might just accomplish that little thing.

Things do sometimes work out for the best.