The Impact of Piracy on Business Profitability

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What Does Piracy Mean?

Piracy refers to the unauthorized or illegal reproduction of copyrighted content which is then sold at very low prices in the 'grey' market. Over the years, as the ease of access to technology increased, piracy has become more frequent. For instance, CD writers are very much available off the shelf at extremely low prices thus increasing the level of piracy in the music industry. Several laws have been created to stop this criminal act. Internationally, many strict and punitive laws have been established for punishing this illegal act in developed countries. The IT and music industry has taken strong interest in stopping this act.

Piracy can be done in several ways such as video piracy, cable piracy and CD piracy. For instance, there is a video piracy when a movie is produced in the form of a video cassette without the right authorization from the right holder, that is, the producer. Movie producers often sell video rights to another party (mostly after five weeks or more of release in theatres), which makes video cassettes for available selling, or lending. Cable piracy is the illegal transmission of movies through cable network. Newly released movies are oftentimes shown through the cable without obtaining permission from the right holder.

Types of Piracy

There are five major types of software piracy.

Counterfeiting

This involves the illegal reproduction, distribution and sales of copyright product with the intention of copying the copyrighted material. It is very rampant to find counterfeit copies of compact discs incorporating the software programs in the case of packaged software.

Internet Piracy

This type of piracy involves downloading software from the Internet. The same purchasing rules for online software purchases are applicable to compact disc format purchases. Some of the common internet piracy techniques are:

  • Websites that creates the availability of software for free download
  • Internet auction sites that gives platform for the distribution of counterfeit or out-of- channel software
  • Social networks that enable unauthorized distribution of copyrighted programs

End User Privacy

This involves illegal reproduction of copies of software without authorization.

These include:

  • Installation of a program on many computers
  • Copying discs for installation or distribution
  • Taking advantage of upgrade offers with no legal copy of the upgraded version

Overuse of Client-Server

This type occurs when there are many users on a network making use of a central copy of a program at the same moment. For you to install programs on the server for many people to use on your local-area network, you must ensure you have a license that entitles you to do so. If there are more than the allowed number of users on your license, that’s an overuse.

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Loading of Hard Disk

This type of piracy occurs when a business sells new computers with hard disks loaded with illegal copies of software to make the buying more attractive.

How Piracy Can Affect Your Business

Piracy has been on its peak especially with the advanced evolution of technology. Piracy has become less difficult and at the same time, more rampant. Many protected music can now be obtained on the internet without being bought. This illegal reproduction is also seen in how cheap workers illegally copy designs behind original software. Many people do not fully understand the effect of software piracy although they have heard about it. Therefore, in this article, I’d be explaining the impacts of piracy on different aspects of a business.

The Means of Distribution

There are two ways by which cheap workers distribute pirated materials. The first way involves distribution to ignorant consumers who are oblivious of the fact that they purchased pirated items. Another way is the distribution to those who buy pirated products knowing full well that they are pirated. According to the Business Software Alliance, software piracy costs the Industry $51 billion in the year 2009.

Income Diversion

This illegal reproduction creates a diversion of money from the producers and distributors of products such as audio recordings, making companies that invest in production and distribution gain less.

Evasion of Tax Revenues

Pirated materials are taxed only when they are sold through retail channels. If not, no tax revenue is gotten from pirated items. For instance, in the case when video was downloaded with no tax charged when it ought to be, as dictated by standard tax laws, no revenue will be generated. Funds available by the taxing government to spend are reduced by loss in tax revenue.

Piracy and Intellectual Property

Electronic piracy involves a person downloading intellectual property from the Internet and then engaging in illegal redistributions to other individuals at zero cost to the downloading party.

This form of piracy reduces the value of the product by increasing the level of supply. Though the real value of the product has dropped, the absolute cost to the copyright isn’t altered. However, the relative cost has increased. This leads to a lost revenue for the copyright holder, who might not have much resources to produce extra products.

Piracy And The Law

Piracy, of any form, is an intellectual property theft which is a crime. If a person is charged by the Federal Bureau of Investigation with one of the different forms of piracy at the request of the copyright holder, the indictment will be taken in a court of law. If you notice an illegal reproduction of your products, you should employ an attorney who can help file a lawsuit and thus stop the criminal act.

How Can Piracy Be Reduced?

Firstly, you can utilize methods to discourage software piracy, such as changes to how you distribute software to make it more difficult to download by cheap workers. Businesses need to develop techniques to discover and enforce intellectual property rights in software. Also, several law firms proffer services that include an effective analysis of infringements and assist establishments to enforce efficient enforcement strategies, which include litigation and raid.

Conclusion

Hire an intellectual property attorney or software piracy attorney that can successfully resolve software and information technology disputes and who also has significant experience in litigating software, information technology and consulting-related cases.

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