25.Look For the Silver Lining

Look For the Silver Lining Piracy is generally bad for business. It can undermine sales of legitimate products, deprive a company of its valuable intellectual property and ruin its brand. Commercial piracy may not be as horrific as the seaborne version off the Horn of Africa. But stealing other people's R&D, artistic endeavor or even journalism is still theft. That principle is worth defending. Yet companies have to cope with the real world -and, despite the best efforts of recorded-music companies, luxury-goods firms and software-industry associations, piracy has proved very hard to stop. Given that a certain amount of stealing is going to happen anyway, some companies are turning it to their advantage. For example, around 20 times as many music tracks are exchanged over the Internet on "peer to peer" file-sharing networks as are legitimately sold online or in shops. Statistics about the traffic on file-sharing networks can be useful. They can reveal, for example, the countries where a new singer is most popular, even before his album has been released there. Having initially been reluctant to be seen exploiting this information, record companies are now making use of it. This month BigChampagne, the main music-data analyzer, is extending its monitoring service to pirated video, too. Knowing which TV programmes are being most widely passed around online can help broadcasters when negotiating with advertisers or planning schedules. In other industries, piracy can help to open up new markets. Take software, for instance. Microsoft's Windows operating system is used on 90% of PCs, but most copies are pirated. Officially, the software giant has taken a firm line against piracy. But unofficially, it admits that tolerating piracy of its products has given it huge market share and will boost revenues in the long term, because users stick with Microsoft's products when they go legit. Clamping down too hard on pirates may also encourage people to switch to free, open-source alternatives. "It's easier for our software to compete with Linux when there's piracy than when there's not," Microsoft's chairman, Bill Gates, told Fortune magazine last year. Another example, from agriculture, shows how piracy can literally seed a new market. Farmers in Brazil wanted to use genetically modified (GM) soyabean seeds that had been engineered by Monsanto to be herbicide-tolerant. The government, under pressure from green groups opposed to GM technology, held back. Unable to obtain the GM seeds legitimately, the farmers turned to pirated versions, many of them "Maradona" seeds brought in from Argentina. Eventually the pirated seeds accounted for over a third of Brazil's soyabean plantings.