October 03, 2008, Of pricing and piracy, By Charles Miller

This week I am going to editorialize on the subject of illegally obtained software and a possible solution. It has long been my view that the software companies have created most of the piracy problem with their policies and pricing.

The language of most end user license agreements (EULA) includes a warning to the effect that lost disks or lost serial numbers will not be replaced. I can understand that when dealing with inexpensive products this is defensible, but when it concerns a software program that costs hundreds of dollars this policy is unreasonable.

As things stand today, if you pay several hundred dollars for a program and subsequently the CD gets scratched and it will no longer read, you may have to pay several hundred dollars again for a replacement. This is not reasonable. Software companies should change their policies to allow for replacing lost or damaged disks at a fair price. If you lose your serial number, proof of payment in the form of a credit card receipt or canceled check should be sufficient to get you a new activation number.

Another issue I have with the software companies is the high cost of software. Some software industry people try to justify high prices by saying that they have to charge a high price to make up for all the pirated copies that are not paid for.

For years some industry associations have identified China and Russia as “one-copy” countries, where piracy is so rampant that one legitimate copy of software could satisfy the whole country’s demand.

It is estimated that over 90 percent of software used in those countries is illegal. Mexico is probably not far behind. Software developers and publishers claim their losses are in the hundreds of millions of dollars. Personally, I think that those alleged “losses” are revenues the sellers would never see in any case.

Many years ago an old friend of mine told the story of how when he was younger he used to go to the barber to get a haircut every week. That was when haircuts were a dollar. When the barber raised his price to $1.25, my friend started skipping every fifth week. When the price went up to $1.50 he went to the barber four times every six weeks.

Years later, when the price had finally escalated to $4, my friend went to the barber only once a month. At this point he explained to the barber: “When you charged one dollar for a haircut, I came in here every week. Now that you’re charging four dollars I only come in once a month. You’re never gonna make any more money off me by raising your prices!”

The barber retorted, “That’s fine by me. I’m making the same money and doing one-fourth the work!” That guy’s attitude sums up the attitude many software makers seem to have.

I have long advocated that if the companies would halve the price of their products, they would see their sales triple or more. The software companies do not seem to want to do this, and their logic seems to be that if they sold more software they would just have to provide more support to more users.

By charging high prices, the software makers perpetuate the present situation as well as ensure continuation of their victim status.

I will continue to recommend to everyone that they should obtain their software legally, but the software industry also needs to look inward for the answer to the software piracy problem.

Next week, the perspective of the software industry.

Charles Miller is a freelance computer consultant, a frequent visitor to San Miguel since 1981 and now practically a full-time resident. He may be contacted at 044-415-101-8528 or email FAQ8@SMAguru.com.

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