Cost-benefit analysis of piracy
To begin, I want to analyze piracy free from any ethical or normative judgments. Piracy is an act, and like any other act, it has costs and benefits. A utility calculation or a cost-benefit analysis shows that the material benefits far outweigh the minimal material costs of piracy. Entertainment media usually has a monetary price that must be paid in order to consume it, like buying tickets to watch a movie at the theater. On the other hand, given that the individual possesses the technical knowledge, the individual can receive the same entertainment for free if he chooses to pirate the media instead of buying it. While some individuals who pirate are caught and do pay fees, the probability of these negative consequences are very small. Given no other external factors, this cost-benefit analysis indicates that the materialistic benefits outweigh the materialistic costs.
Additionally, from a behavioral perspective, piracy makes sense. When a person commits piracy, they are immediately presented with the benefit of entertainment or utility. The behavior is immediately rewarded and reinforced. The costs are not immediately evident, and can be easily overlooked, because the probability of being caught and punished for pirating is very small. In contrast to the act of physically stealing the DVD of a movie, the act of illegally downloading the movie is much less risky and only entails the seemingly innocent pressing of buttons. When contemplating whether to physically steal another DVD of a movie, the person would weigh whether the entertainment benefit is really worth suffering the stress and energy as well as the high risk of being caught and punished by the law. When contemplating whether to illegally download a movie, the person would only need to weigh whether the entertainment benefit is greater than pressing some buttons. With such low risks and such immediate gratification, the behavior of piracy is easily engrained.
This cost-benefit analysis in a vacuum free from any external forces like ethics, morality, and religion sufficiently shows why piracy is so prevalent. It is easy and rewarding. However, people do not live in a vacuum.
The ethical factor
If piracy is theft, then it is unethical, immoral, and wrong. And it is indeed theft. All digital media whether film, music, ebooks, or games are products of another's hard work. Just like a farmer's crops or an author's book, digital media would not exist but for the producer. Thus, similarly, the producer has taken ownership of digital media by production. Modern copyright and digital rights laws are evidence of this societal norm. So, if it is wrong, why do some people pirate digital media anyway?
When a person is given the choice between paying for the entertainment and consuming it for free, ethical principles clash with desire. In order to resolve cognitive dissonance, the discomfort caused by the clash of conflicting inner-beliefs, individuals will attempt to justify their actions and alter their beliefs (1). In the case of piracy, an individual might conclude that the producers of the entertainment media are already wealthy and do not need more money. Alternatively, the individual may decide that his financial circumstances do not allow him to pay for the products, forcing him to illegally obtain them. Ultimately, these justifications allow the individual to live more comfortably with their decision to pirate the product.
In addition to common justifications for any other ethical violations, piracy has a unique justification due to the unique nature of digital media. This unique justification is that the illegal downloading of digital media does not harm the producer, because it does not represent a loss of revenue for the producer of the game, movie, or song. Given the digital nature of entertainment media, a pirated copy of a game does not directly mean a loss of revenue equal to the price of the game. For example, when an item in the physical world, such as a watch, is stolen from a store, the store loses money that is equal to the sum of the cost of the watch and the profit from the sale of the watch. If the thief had not stolen the watch, the store could have sold it to someone else. In contrast, when an individual obtains a pirated copy of a digital media, the ability of the producer to sell a copy of the digital media to someone else is not inhibited in anyway. In other words, the benefits or entertainment experienced by the individual who chooses to pirate does not result in a loss for the producer. Those who have this justification would then conclude that piracy only has positive consequences.
This justification, unique to digital products, has two main deficiencies. First, piracy can lead to loss of revenue to the producer if a person who would have otherwise purchased the product chooses to pirate it. Aggregating all the individual acts of piracy can lead to a cumulative loss of revenue of many millions of dollars. Second, loss of revenue is not the only reason piracy is immoral. The primary reason why piracy is unethical is because it constitutes a taking of another property, violating another's fundamental property rights. If a producer chooses to share its property with only those who pay for it, then the taking of that property without paying for it is a violation of fundamental property rights. An independent showing of damage or loss of revenue is not necessary to prove its wrongness.
Another possible explanation for the prevalence of piracy is habit. Once an individual has committed piracy, despite ethical prescriptive to the contrary, the individual experiences the benefits and joys of that piece of entertainment. As previously mentioned, this immediate reward can lead to a cycle that constantly reinforces the behavior until it has become habitual. The case study of the video game, Proun, can provide some insight.
Proun, a low budget game, was released under the pay-what-you-want pricing method which allows consumers to legally obtain the product at whatever price they decide to pay including for zero dollars. In other words, people could legally get the game for free from the developer's official website. Essentially, the developer removed monetary concerns from the utility calculation. According to the released statistics, approximately 40% of used copies were pirated (2). Individuals chose to pirate the game, despite being able to obtain the game legally for free.
The implication of the Proun case study is that price may not be the sole determinant for pirating behavior. A possible explanation for the observed pirating behavior could be that obtaining entertainment media through illegal means has become habitual to a significant portion of the population. Due to the low risks associated with piracy, individuals who have chosen to pirate media experience no consequences that would deter their actions, making piracy their normal means of acquiring any form of software, irrelevant of whether or not the software is free. In other words, habitual piracy has become legitimate in their eyes. After the initial act, the individual no longer considers the ethicality of their actions. Every subsequent act merely reinforces the habit.
1. See also Yerli, Selnur Hatice. "Cognitive Dissonance and the Psychology of Sin." The Fountain 80, March-April 2011.
2. van Dongen, Joost. "Proun sales data revealed: Proun is a big success! Pay What You Want is not!."