Introduction
The complaints about "piracy" by industries are numerous. To be clear, we are not referring here to illegal mass-copying and commercial mass-distribution but to "piracy" at the individual level, and we refer first of all to "software piracy". Little research has been done to find out, who and what is behind the behaviour called "piracy". Therefore I welcome very much a study commissioned by Microsoft and carried out by the "Institut für Strategieentwicklung" (2004), which presented its results last year. This small consultancy firm is a spin-off company of the University of Witten/Herdecke (Germany), and the study was performed in close cooperation with the university, namely with Dirk Baecker, a well-known sociologist. As the study was written in German, I will translate all quotes as well as I can asking for apologies if I have not found an exact translation for each concept.

The study is titled "Digital Mentalities". It is mainly based on two empirical research activities: On the one hand an online-survey was carried out in April 2004 with a final 126 questionnaires for analysis (cf. p. 12). Following the authors, the selected sample of German Internet users is characterised among others by a relatively high educational level. On the other hand the authors performed 16 expert interviews (cf. p.36). Both sources informed their study.

Problem definition
What is the problem with "piracy"? First, the problem is not that the Internet users do not know that making "pirate copies" of software is illegal. The problem is that users don't intuitively comprehend or accept the legal situation and thus have no moral problem with making illegal copies. In other words, there is a mismatch between the legal status quo and a feeling of not-doing-wrong when breaking the written law. The main purpose of the study is to reflect on this discrepancy and to think about measures the software industry could adopt to make the gap smaller.

Main general findings
In my opinion eight items from the survey are worth highlighting here, because of their importance for the further reasoning of the authors. The findings from the survey are:

  • 95 % of respondents state that protection of investment for software producers is needed (p. 32),
  • 74 % state that each illegal copy means financial damage for software producers (p.15),
  • 95 % state that the use of illegal copies in companies is wrong and should be prosecuted (p.13),
  • 86 % state that making illegal copies for commercial purposes is bad and deserves prosecution (p.13),
  • 22 % state that making illegal copies for private purposes should be prosecuted and punished (p.13),
  • 66 % regard illegal copying of software less severe than shoplifting (p.15),
  • 25 % don't use illegal copies themselves (p.16),
  • < 2 % regard software as "free" information (p.16).

The authors conclude that there is general awareness of what's right and wrong (commercial use, use in enterprises). However with respect to copies for private use most people don't accept the legal situation and behave accordingly. The authors assume that in most cases this behaviour is not motivated ideologically (hinting at the small percentage of 2 % regarding software as "free").

Findings related to four specified groups
In a second step the study distinguishes four groups of respondents by two parameters "computer expertise" and "level of illegal copying" (cf. p.16-20). The four groups are:

  • PC-freaks (high computer proficiency, high level of illegal copying; 10,3 % of the sample; average age 25);
  • hobby-users (low computer proficiency, high level of illegal copying, 33,6 % of the sample; average age 29);
  • pragmatists (low computer proficiency, low level of illegal copying, 49,5 % of the sample; average age 34);
  • PC-professionals (high computer proficiency, very low level of illegal copying, 6,5 % of the sample; average age 38).

If we assume that these data are reliable, we can conclude that all in all less than 50 % are heavy illegal copiers, and that illegal copying is related to age.

The investigators wanted to find out more about these groups, in particular about their attitude towards pirate copying. Therefore they introduce two further variables: "piracy mentality" ("Raubkopiermentalität", which means that people are aware of their illegal behaviour and deliberately pursue it) and "sense of justice" ("Rechtsbewusstsein", which means in this case that people are aware of the legal situation and combined with the conviction that copyright infringements are wrong). Following the authors, PC-freaks have the highest degree of "piracy mentality". As one may expect, many PC-freaks and hobby-users lack a "sense of justice", i.e. they don’t feel in the wrong when illegally copying, while PC-professionals and pragmatists in their majority have a higher or high "sense of justice" (cf. p. 22-25).

Interpretation and conclusions by the authors
Apparently consumers know what is right and wrong, but most of them behave contrarily from time to time. The authors argue that social gratifications for illegal behaviour from the family or friends are stronger than law. I will come back to this point in the discussion. If law is not accepted, then prosecution and punishment is one option. However this is not considered a promising strategy by the authors. Criminal law won’t help to turn "pirates" into paying customers. Intuitive comprehension of legal provisions would be required to change behaviour.

The missing intuitive comprehension is explained first of all by an underdeveloped understanding of the rationale of "intellectual property rights". The traditional understanding of "property" prevents from coming to an appropriate understanding of property rights with respect to digital goods, e.g. ownership and rights of disposal (licensing) would not be distinguished and the traditional meaning of theft as taking away would not work. Therefore the authors call for "digital honesty", understood as a new "culture of how to behave with respect to intellectual property in a digital world" (cf. 32). Education would be important, but also software industry would have its share and responsibility in building this new culture in order to change the mind-set of "pirates".

With respect to "pirates" the authors recommend the software industry to employ differentiated communication. In short, PC-freaks should be treated as specialists and partners; hobby-users (and here DRM comes explicitly in) should be targeted by good service and DRMs; for pragmatists freeware or slim versions would be important; and for PC-professionals high quality and open communication would be the way to go (cf. p.33-35).

Discussion
Although I appreciate the study very much, in my view there are some shortcomings further studies might wish to avoid.

(1) Of course it is easy to ask for more differentiation, but I believe that some more distinctions would have improved the study: it makes a difference if I am talking of game software (almost a media type) or expensive business software like SAP. It also makes a difference if I talk about an illegal copy made from software purchased previously, or e.g. software obtained via P2P networks. I would also argue that making an illegal copy of the latest release is different from a copy of an old release which sells cheaply in any case.

(2) The authors don’t discuss that „piracy" is already part of the marketing strategy of the software industry. For the software industry the question is not whether tolerating „piracy" helps to develop markets, but which degree of piracy is best (see Givon et al. 1995 and Prasad and Mahajan 2003). "Piracy is just another way of boosting market share" says Bruce Schneier resuming a statement by Microsoft attributed to Steve Ballmer (quoted in INDICARE 2004, p. 85). Also the rather balanced report by the Committee for Economic development (CED 2004) tells us "The business software industry, for example, has assumed some level of unauthorized copying and, in particular (at times, as much as 40 %) and has moved forward, working against unauthorized copying and, in particular, mass commercial unauthorized physical duplication of their works offshore through education and enforcement by its trade associations. But they have also changed their business model to compensate for revenues lost from unauthorized use" (p. 20; emphasis added, KB).

(3) The strategic approach to "piracy" by the software industry makes the call for "digital honesty" sound rather idealistic. I would add that in fact consumers get quite different messages from industries. While the content and software industries tend to criminalize "pirates", network providers and device manufacturers are much more relaxed, as e.g. the advertisements for broadband reveal.

(4) Although the authors very briefly argue that the motivation for „piracy" is based on social recognition by family and friends, I would hold that the analysis of "digital mentalities" falls short in this point. Giesler and Pohlmann (2003a and b) have analysed filesharing on Napster rigorously and found that those consumers of "illegal" content are not the rational choice consumers but motivated by a sense of "subculture" in "virtual communities" and the ambition to be a different consumer. These findings can not simply be applied to "software pirates", but do cast some doubt on the result of the survey that sharing software is as "ideology-free", as the authors assume. Note also that "piracy" depends on age and the will to be different. A question about the use and attitudes towards open software might have helped to get a little bit deeper into the motivations of "software pirates". A more complete approach to "piracy" would also require investigating to what extent far "piracy" can be interpreted as a reaction to practices of software companies that are not accepted as fair (e.g. price policy, frequent updates, lack of service, lock-in strategies etc.), so that "piracy" appears as type of (illegal) "self-help measure".

This leads to the interesting question whether these results are meaningful for piracy in the media sector too. There are of course noteworthy differences: computer software often represents a higher value compared e.g. to a tune, the legal situation appears to be clearer (although not really clear) with respect to software as most people will assume a right to a backup copy but not a right to private copies as fair use. An interesting difference is also that normally software is regarded as a "tool" requiring certain training and skills to be used as opposed to e.g. a purely consumptive use of music (ignoring of course creative uses). As software users and consumers of digital content are in many cases the same population, I would guess that the basic problem that users don't intuitively grasp the legal situation and have no moral problem about making illegal copies will also be the same – influenced of course by many parameters. But instead of guessing we need empirical evidence.

Bottom line
The study reviewed does a good job in assessing the software piracy phenomenon. It could show that the kernel of the piracy problem is not a simple problem of illegal behaviour but of a type of cognitive dissonance between legal assumptions and everyday assumptions, or in other words a problem of consumer acceptability of legal provisions and business models. As every good study develops an appetite for more, I hope that the university Witten/Herdecke and its alumni (like Giesler now a professor at the Schulich School of Business of the York University, Toronto) will continue this line of consumer research.

About this issue
In this issue we start dealing with "piracy" one of the most controversial issues in the debate. One way to cool down the debate and to get a more realistic picture is to turn to empirical studies which seem to be gradually increasing in number. We have selected two empirical studies here, one about software piracy, the other about piracy of motion pictures, both trying to gain insights into the behaviour and the motivations of so called pirates. Despite limitations of both studies it becomes clear that a "consumer" is not an animal totally different from a "pirate": For a majority of approximately 75 % the Faustian saw seems to be true "two souls, alas! are lodg'd within my breast…".

The next two articles can be understood as critical comments on the current situation of rights management. Rik Lambers presents the US Digital Media Consumers’ Rights Act (DMCRA) as an attempt to re-establish the balance between rightsholders' and consumers' interests in copyright. He then asks if Europe should follow this transatlantic initiative, and concludes that an explicit incentive to label products, and an attempt to restore copyright limitations, might also be beneficial to consumers in the EU community, complementary to existing consumer protection provisions.

Péter Benjamin Tóth, legal counsel at the Hungarian musical collecting society ARTISJUS, focuses on a conceptual confusion he claims to have detected even in EC documents like the Communication on „The Management of Copyright and Related Rights in the Internal Market". He argues that "Rights Management" needs to be understood as the exercise of rights based on copyright legislation with licensing as key action, while so-called DRM is based on technological protection measures (TPMs) with permission as key action. Not being based on legal regulations DRM would be a misnomer, and he proposes the term Digital Content Control Exercise (DCCE).

A particular technical issue of interoperability is dealt with by two standards experts, Niels Rump and Chris Barlas. They regard semantic interoperability as a fundamental problem of digital rights management. Special efforts are required to enable the flow of metadata describing content between domains e.g. the mobile domain, pay TV and PCs. The MPEG Rights Data Dictionary (ISO/IEC 21000-6: 2004), as part of the MPEG-21 group of specifications, is seen as a tool that should be able to solve the semantic interoperability problem.

INDICARE was present at the IST 2004 Event last year in The Hague, and Zoltán Hornák, SEARCH, reports about the two sessions on DRM. For businesses interoperability and security are the main concerns, while others still express their general scepticism and doubts about DRM solutions, and propose alternatives. Zoltán has also brought back from the conference a new acronym SPDC, i.e. Self Protecting Digital Content, which means that digital content will be transmitted as executable program and following execution on the user's authorized device, the protected content can be enjoyed. Cryptography Research promoting SPDC claims that if someone can break the protection of one particular good, he still is not able to break other items.

Finally we have included two reviews of the first INDICARE' State-Of-the-Art Report. The first reason is that these reviews are valuable contributions to the Informed Dialogue on DRM solutions per se. Secondly, critical feedback is most important for us to inform and improve the envisaged updates of the State-Of-the-Art Report. This time we present comments from Cory Doctorow, European Affairs Coordinator for the Electronic Frontier Foundation (EFF), and Philip Merrill, who writes for grammy.com and is an active contributor to the Digital Media Project (DMP, Geneva). We invite further reviews and would be happy to also receive comments from a much wider range of stakeholders including industries, collecting societies, legal experts, standards experts, consumer organisations, and policy makers.

Sources
  • CED (2004): Committee for Economic Development (CED), Digital Connections Council: Promoting Innovation and Economic Growth: The Special Problem of Digital Intellectual Property, Washington, D.C. 2004; http://www.ced.org/docs/report/report_dcc.pdf
  • Giesler, Markus and Pohlmann, Mali (2003a): The Anthropology of File Sharing: Consuming Napster as a Gift. Advances in Consumer Research, Volume 30, 2003, pp. 273-279
  • Giesler, Markus and Pohlmann, Mali (2003b): The Social Form of Napster: Cultivating the Paradox of Consumer Emancipation. Advances in Consumer Research, Volume. 30, 2003, pp. 94-100.
  • Givon, Moshe, Mahajan, Vijay; Muller, Eitan (1995): Software Piracy: Estimation of Lost Sales and the Impact on Software Diffusion. Journal of Marketing, 59(1995) January, p. 29-37
  • INDICARE (2004): Helberger Natali (ed.); Dufft Nicole; Gompel, Stef; Kerényi, Kristóf; Krings, Bettina; Lambers, Rik; Orwat, Carsten; Riehm, Ulrich: Digital rights management and consumer acceptability. A multi-disciplinary discussion of consumer concerns and expectations. State-of-the-art report, Amsterdam, December 2004; http://www.indicare.org/soareport
  • Institut für Strategieentwicklung (2004): Institut für Strategieentwicklung in Kooperation mit der Universität Witten/Herdecke: Digitale Mentalität, Witten 2004; http://www.ifse.de/studien/digitale_mentalitaet_-_Studie_des_Instituts_fuer_Strategieentwicklung.pdf.
  • Prasad, Ashutosh and Mahajan, Vijay (2003): How many pirates should a software firm tolerate? An analysis of piracy protection on the diffusion of software. International Journal of Research in Marketing, Volume 20, Issue 4 , December 2003, pp. 337-353

About the author: Knud Böhle is researcher at the Institute for Technology Assessment and Systems Analysis (ITAS) at Research Centre Karlsruhe since 1986. Between October 2000 and April 2002 he was visiting scientist at the European Commission's Joint Research Centre in Seville (IPTS). He is specialised in Technology Assessment and Foresight of ICT and has led various projects. Currently he is the editor of the INDICARE Monitor. Contact: + 49 7247 822989, knud.boehle@itas.fzk.de

Status: first posted 28.01.2005; licensed under Creative Commons
URL: http://www.indicare.org/tiki-read_article.php?articleId=74