Pirates also get those sweet beards

I am now, officially, entirely in favour of the piracy of intangibles (i.e. movies, computer games, music and especially books).

This was a long time coming but what clinched it for me was when the local game suppliers announced that they were going to crank up the price of console games to R1000 each ($142)! Luckily there was a massive outcry so they back peddled and declared that the games will continue to be sold at the “reasonable” price of R800 (over $100) each.

And so I wondered: why is it that a top-of-the-line PC game only costs R400 ($50), and the exact same game for a console costs twice as much?

To find the answer one merely has to ask: what would happen if they started charging R800 for a PC game? The answer is of course that NO ONE WOULD BUY THEM. They would just pirate them, so the industry has to keep prices reasonable. Console games are a lot more difficult to pirate so they can charge whatever they want.

Piracy is keeping PC games cheap.

Now naturally industry mouthpieces will scream “Nooo! It is the other way around! If people didn’t pirate PC games then we wouldn’t have to make console games so expensive!”
To which we can only reply: “So you are saying that if piracy stopped you would actually DROP the prices of the game you are selling, and thus lower your potential profits?”
I’m sure I don’t have to call BOOOOOOLSHEEEEET, because you are already doing it.

In your minds.

See, the way that Capitalism is supposed to work is that companies compete for market share and so they are forced to offer a cheaper, and better service than their competitors, thus forcing a price war that benefits the consumer, and keeps products robust.
Now here is why this doesn’t happen. Let’s say there is a company called Widgetco, that makes ‘widgets’ and sells them for $100. After a few years Fidgetco comes along. They make ‘fidgets’ that are just as good as widgets and can be made alot cheaper.

Fidgetco has a choice to make:

1) Offer a superior product by selling fidgets for less than $100, force a price war and battle for market share.
2) Sell fidgets for $100 too, and spend millions on a marketing campaign that CONVINCES people that fidgets are a superior product, even if it isn’t true.
Now here’s the kicker: even if Fidgetco decides to go with option 1) they will STILL have to spend millions on a marketing campaign to convince people that fidgets are better than widgets.
So the only logical choice is 2).

And think about this: I know nothing about economics, and I would suck at it if I tried, and I figured this out, so you just know that the minds behind the business world probably already worked this crap out in the 70s.
See colluding between competing companies is a bad idea, because it’s obvious, and gets them into trouble. This is more subtle because it isn’t about co-operating, it’s about not-conflicting. The compaies aren’t working together, they just aren’t working against each other, or rather they are not working against the game. They will still battle tooth and nail for every piece of market share they can grab. But what they won’t do is lower their prices, ever.
This is the reason why when the story about South Africa’s ridiculously expensive banking sector broke all the banks announced they would drop their bank charges, except Standard Bank, who announced they would be INCREASING their bank charges.
Because, sadly, the hell-spawned fecal abomination that is Standard Fucking Bank does seem to possess the smartest guys in the room. If only they weren’t so evil :’(

But I am getting off topic now. My point is this: piracy is one of the few market forces that actually works in favour of the consumer. It is a good thing, and I am completely in favour of it. As long as the companies being targeted are the big ones.

One can’t even make the argument that it is hurting the industry. Piracy of computer games, music and movies is now total. You can get anything you want, easily, for free, within days of it being released. And still the gaming industry is experiencing massive growth, and record profits, even in a recession.

Now if we could just find an easy way to pirate books maybe they would get cheaper as well.

This is a wallpaper. Save it, use it.

[EDIT: since I originally wrote this in early 2009 I have discovered that the type of collusion I am talking about DOES exist. It is a solid part of economic theory, it even has it’s own name: Oligopoly.
Economists recognise that it is a serious problem, but no-one really seems to want to do anything about it. The US Healthcare industry is an oligopoly and the only way to get it to change was to reform the entire healthcare system!

Clearly businesses don’t want to intervene in oligopolies because they will lose money and clearly government lacks the balls to intervene.

Educate yourselves.

[Standard Disclaimer: this post was entirely my own opinion and was not paid for in any way, directly or otherwise, by anyone or anything that stands to gain in any way from the ideas expressed herein.]

Related Posts: