& More Piracy

I haven't written about it as much on this blog as other places (instant messages, IRC, various forums, etc.), but I'm a huge opponent of both Digital Rights Management (also known as Content Restriction, Annulment and Protection) and draconian anti-piracy efforts like the RIAA's law suit campaign. This was based on the belief that regardless of the raw numbers (e.g. total P2P downloads of something vs. actual sales), the total number of lost sales due to piracy was low enough that it was better to just eat the losses as part of the cost of doing business than to expend the effort, cost, and public good will to try and fight piracy (which wouldn't work anyway). Specifically, I was guessing that the actual losses were in the 5-15% range - that is, if there were 0 piracy, producers could sell 5-15% more of whatever they make.

However, just now I came across some rather shocking statistics, complements of the makers of World of Goo (a game that shipped without DRM). According to their data collection, 82% of copies of the game played were pirated. That's higher than I expected, but that wasn't the shocking part: that the ratio of pirated copies to lost sales is about 1000:1. Crunching the numbers and rounding up a bit to err on the side of caution, this means that the actual losses of piracy are less than 0.6% of the revenue they make from legitimate sales. This is between 8 and 25 times lower than I thought it would be.

These numbers absolutely demolish the claims that

1. Internet piracy seriously hurts publishers (the actual damage is negligibly small)
   
2. That DRM does more help than harm by reducing piracy (with levels of losses that low, there isn't any room for DRM to help, yet it's clear that it does a substantial amount of harm)