Report: piracy in emerging economies best countered with pricing strategies

Fighting piracy in emerging economies like Russia, India, China or Brazil, is best done with new pricing strategies for content. This concludes an international consortium of 35 researchers in a study recently published by the Social Science Research Council.

“High prices for media goods, low incomes, and cheap digital technologies are the main ingredients of global media piracy. If piracy is ubiquitous in most parts of the world, it is because these conditions are ubiquitous.”

When comparing the cost of entertainment to the average household income, media and entertainment cost about five to ten times as much as compared to Western economies. A movie, for example, cost about the same here as it does in Russia. But when considering that the average income in The Netherlands is about 4,5 times as high as it is in Russia, the movie therefore becomes 4,5 times as expensive. And that, the author say, is a gap that no amount of enforcement will bridge.

The researchers conclude that people in emerging economies, where piracy levels can run to over 90% or more of a market, do not suffer from poorly developed moral fibres, compared to us Westerners. The authors state, however, that when piracy is framed as a moral problem, the way forward would seem to include stronger enforcement strategies. At the same time, there is very little evidence that strong IP enforcement contributes significantly to combating piracy in emerging economies. As income is low and prices are high, resorting to piracy is simply too attractive.

Approaching piracy from a purely economical perspective, as the authors propose, raises issues as well. The authors suggest using business models that locally compete for the favour of customers, based on price and service. This model works fine as long as the media are local or localised. However, music, movies and games cross the entire world. Breaking up this global market into separated, local markets with differing prices and conditions, without having the media finds their way back to other markets in which prices are significantly higher (like The Netherlands, where we aren’t known to shy away from getting cheap access to media), raises an entirely new set of challenges. But if solving these challenges would result into more people getting access to legitimiate content, they are worth tking up!

The Social Schience Research Council practices what it preaches in distributing the report: people in emerging economies can download the report for free. Western consumers pay 8 dollar for access and companies with a yearly turnover of more that 1 million dollar pay 2000 dollar for it.