Pricing, Not Piracy, Hurts Culture Trade (Part 3)

The conventional notion in the U.S. that stronger copyright laws can deter bootlegging of DVDs and the like is a fallacy. Unauthorized markets arise when demand for copyrighted works is created but not met. So the best way to prevent the sale of unauthorized goods is to flood the market with authorized goods. The vast unauthorized markets that exist around the world are not a sign of moral shortcomings among people in those countries; they’re simply the result of copyright owners clinging to failed business models.

Multinational corporations make the bulk of their profits in developed-country markets, and thus have little interest in serving other ones, especially when doing so means that they need to compete in terms of price...Where goods owned by multinational corporations are sold at all in developing countries, they are offered at the same prices as in developed countries, or at comparable prices that place the goods out of reach of all but the wealthiest consumers.

This pricing problem is strikingly absent from most discussions of intellectual property. Policy makers are still focused on enforcing tough copyright and trade regulations. Yet the Social Science Research Council found “no evidence -- and indeed no claims -- that enforcement efforts to date have had any impact on the overall supply of pirated goods.” In none of the nations studied was the comparative price -- the price that reflects cost-of-living differences --the same as in the U.S.

Consider the example of Microsoft’s Office 2007: In 2004, Marcelo D’Elia Branco, Brazil’s liaison between the open source community and the government, estimated that one license for Microsoft’s Office suite meant Brazil had to export 60 sacks of soybeans. As then-President Luiz Inacio Lula da Silva observed, “For the right to use one copy of Office plus Windows for one year or a year and a half, until the next upgrade, we have to till the earth, plant, harvest and export to international markets that much soy. When I explain this to the farmers, they go nuts.”...