The best anti-piracy plan in my opinion is to simply not let the users have anything installed on the computer and no physical medium at all. Thats what one of the aims of cloud computing is supposed to be. Everything booted from and read from the cloud, even the OS in the future, with everything running in the cloud space and not the client space.
The second best anti-piracy plan is to simply not worry about it. HuH? (some people are thinking right now "is SFSxOI crazy!" )
Think about it, if you create something someone will use, it doesn't matter what methods you use to protect it. Given the opportunity, time, knowledge, skill, and resources, that is nothing physical or virtual mankind can create that mankind can't either un-create, break, crack, tear down, ignore, or circumvent in some way. All any anti-piracy scheme can hope to do is delay and for software, if its worth someones time to try and crack it then its going to be cracked and pirated plain and simple.
As for lost sales due to piracy; All these figures thrown around by these companies about how much pirating costs them is pure rubbish. None of them have ever been able to prove these figures to any dis-interested third party accountability and they refuse to release the basis upon which these figures are based. How these figures were arrived at, to go back to the beginning and discover how, we need to follow a kind of convoluted thread. The beginnings were with a magazine article in 1993 that had nothing to do at all with software piracy (IP theft) and the willingness of the industry to present incorrect information and manipulate the socio-economic-government environment for their own greed using what could be called a non-existant problem. This is how it happened;
(NOTE: The use of the term "software industry" or "industry" below also includes the entertainment industry as it relates to Intellectual Property. What i've written here is in relation to the U.S.)
There is a figure often thrown around in the $200 to $250 billion range. According to an FBI spokesperson Catherine Milhoan, the figure "was derived through our coordination with industry, trade associations, rights holders, and other law enforcement agencies" at a 2002 confab about intellectual property. But neither the Bureau nor the National Intellectual Property Rights Coordination Center could find, or reference, any record of how that number was arrived at. That figure dates back to 1993 and was actually derived from a short Forbes magazine article on merchandise counterfeiting, in which the reader is informed that "counterfeit merchandise" is "a $200 billion enterprise worldwide and growing faster than many of the industries it's preying on." No further source is given and that figure was only a very general and broad guess for the global effect. The article is talking about physical merchandise like purses and clothing knock offs for example, it does not include anything about software and does not even consider it, the article it wasn't about pirating software and only talked about physical merchandise like I mentioned above. The article appeared in the October 25, 1993 issue of Forbes magazine, an official citation given to the government is here from 1995: http://judiciary.house.gov/Legacy/475.htm
and its clear from that government link and the magazine article that the items are not software (Intellectual Property (IP) ), the figures the article talks about is for the entire global market for those physical knock-off type items. But how did this Forbes magazine figure get translated into a loss due to software piracy when the article wasn't even about software piracy to begin with?
At the FBI conferance in 2002 the National Intellectual Property Rights Coordination Center was asked for a figure for software piracy, they could not provide one but one enterprising soul dug up the Forbes article and mistook the figure presented in the article as to include software also when it didn't and also failed to realize the figure in the article was a very gross over-estimation. The enterprising soul that dug up the article was a customs agent assigned to do the research but only had experience with merchandise counterfeiting and not IP theft, the person simply went to the area where he had the most experience, and needing to produce something that everyone could reference, incorrectly associated the magazine article with IP. So...the National Intellectual Property Rights Coordination Center gave the figure guess of "$200 to $250 billion range" to the FBI using the article as the basis and the FBI quoted it as fact in their reports and documents that the "$200 to $250 billion range" was for software piracy. the rest of the software industry read that FBI report and said "See, its official, the government says so, piracy costs us in the $200 to $250 billion range each year", and thats how that figure was arrived at. And even today thats exactly the figure used by the software industry lobby efforts in Washington. The figure in the article never had anything to do with software or IP at all, was just an imaginative guess for merchandise counterfitting based upon what the article preceived as a global effect and was not a figure for the U.S. alone, but it became the official "$200 to $250 billion range each year" for software piracy in the U.S. Although software piracy certainly existed in some form before this FBI confab in 2002, it was not until that point where the National Intellectual Property Rights Coordination Center gave that figure, incorrectly based on the Forbes article, that piracy officially existed as an ecomonic or profit threat. In effect, due to the blunder by the National Intellectual Property Rights Coordination Center, the issue of piracy was not even a blip on the software industries radar in terms of profit until that point. Piracy was not "affecting" profit until that point even though prior to that point there had been some efforts by the software industry to link piracy with theft but the software industry had never seriously even considered the profit angle for the most part simply because piracy had no effect on their profit they knew about. The only reason the industry until that point had done any study with piracy involving profit or loss was because they were trying to find out if the 'business model' of piracy could be used to increase their own profits. Thus the piracy problem didn't really become a profit/economic problem until that FBI confab in 2002. It might have been a theft problem before that, and the industry might have complained before that about piracy affecting their profits in some way, but there was never any figure before that which showed any profit loss at all recorded on the books of any part of the software industry. In the first quarter of 2003 the very first figures for software loss due to piracy started appearing on the books of big content and every one of them referenced the FBI report as a reason for their woes. A new corporate dumping ground and hiding place for mismanagement, waste, and fraud, and unreported profit, was created in the books and could now be used as a means to actually hide profit by disguising it as a loss, and all now officially referenced and excused by the U.S. Government thru the FBI report. So in effect that "$200 to $250 billion range' figure given to the FBI by the National Intellectual Property Rights Coordination Center had the effect of actually creating a non-taxable, and even a tax write off (because its listed as a loss), profit for the software industry in the "$200 to $250 billion range', with the tax payers actually loosing money because the taxes from these now hidden profits would not make it into the economy. The industry had been wanting something like this but could never produce any facts or reasons to support it because none existed and would have never dreamed this up by their selves. The industry had pushed the government for a few years to get everyone together so they could discuss the "issue' of beefing up U.S. laws to protect IP from theft and prosecute the offenders, but when the FBI came to the same "no facts" wall and needed a reason or facts to further enforcement against IP theft they turned to the industry, and the industry with not being able to produce any facts or figures incorrectly put forth the Forbes magazine article figure again siding with the National Intellectual Property Rights Coordination Center and said that "IP piracy costs us in the $200 to $250 billion range annually and the National Intellectual Property Rights Coordination Center says so" and at that point piracy became about profit for the industry its self. When the FBI in the 2002 confab asked for a figure, they were not asking for a dollar figure for loss they were asking for a figure for amounts of software pirated, the National Intellectual Property Rights Coordination Center turned the question around into a "whats the profit loss effect of piracy" question and gave the figure, now backed up by the industry, and thus shifted the FBI's focus in the meeting on 'protecting IP and persecuting the offenders/infringers and actually fighting crime' to a 'protecting the profit of the big content software industry' focus. The FBI had been earnestly looking for figures on the amount of software actually pirated for a few years so they could justify asking for funding to further enforcement against the offenders but the software industry could never give them the figures they requested, they saw this 2002 conference as their chance to do some good in this area. Unfortunately the National Intellectual Property Rights Coordination Center was able to take the lead in this from the FBI by using a magazine article. And you know the strange part in this, the National Intellectual Property Rights Coordination Center is a government agency (part of U.S. Customs and Immigration) (http://www.ice.gov/pi/cornerstone/ipr/
) that before 2001 had been actually sucessful in starting to crack down on infringers in the cyber-world of the internet in the form of the FBI's cyber crime division. After they came under control of the Department of Homeland Security their focus was shifted from IP to join U.S Customs which is (as their web page puts it) "As the largest investigative arm of the Department of Homeland Security, U.S. Immigration and Customs Enforcement (ICE) plays a leading role in targeting criminal organizations responsible for producing, smuggling and distributing counterfeit products. Some of these products, such as pharmaceuticals and counterfeit merchandise, are protected by Intellectual Property Rights (IPR). " In other words if its an actual physical item like a CD or DVD then they will do something maybe, the problem with this is almost 90% of IP infringement takes place in the cyber-world of the internet. What this in effect does is only account for infringement of IP only when an actual physical product is directly counterfitted and ignores the majority of IP infringement via the internet. To date there has not been one, or even collectively, significate find of IP physical material found entering, leaving, or produced in, the U.S. that accounts criminally for even 1% of the "$200 to $250 billion range", and a once promising agency effort that could have actually had a chance to fight piracy on a broad scale basis (the FBI) saw their efforts diluted into nothing.
When people started questioning the figure (which suprisingly was the FBI joined by a few software companies) the U.S. International Trade Commission (ITC) at last produced a (supposedly) reputable study yielding a definite figure for the cost of piracy to the U.S. economy: $60 billion annually. The figure was flawed. The number the ITC actually came up with, based on a survey of several hundred business selected for their likely reliance on IP for revenue, was $23.8 billion—the estimated losses to their respondents. That number was based on industry estimates that the authors of the study noted "could admittedly be biased and self-serving," since the firms had every incentive to paint the situation in the most dire terms as a means of spurring government action. But the figures at least appeared to be consistent and reasonable, both internally and across sectors, almost. There was a problem with the report, the ITC was not calculating losses from IP "theft," but rather "inadequate protection" of intellectual property. And "inadequate protection" was interpreted to mean protection falling short of the level provided by U.S. law. Even this report wasn't about IP theft, it was about inadequate protection by U.S. laws, yet DoH! here we have another report used by the software industry to support their stance. You would have thought that someone would have seen the obvious that all at once the cost of piracy fell from a FBI and National Intellectual Property Rights Coordination Center figure of "$200 to $250 billion range" annually to $60 billion annually and that the actual figure in the report was $23.8 billion, even as the software industry claimed that piracy was increasing at an astounding rate and the industry was blaming its woes on piracy. The software industry certainly read the report, its seems they were maybe the only ones and the software industry had found its self a new scape goat.
You would think that someone would actually research and read these things and understand what they are about and how these figures came about wouldn't you? Well, thats exactly what the software industry did not want to happen. They were slick about it, they did the research and knew what they were actually saying but they wern't going to say a word about it because if they played this right they could move into a position where they would be free of government intervention in their industry leaving them free to charge what they wanted and to invade a persons computer to control (with DRM still in the future then but present now) what they see and use and be able to move to a rent based model instead of the seller-buyer-ownership model they operated on. Think about it, the industry certainly did, they would no longer just sell the CD or DVD with the content, they could sell it, get the original price, then use DRM to "manage" the content so they could start charging on a per use basis, and they could justify it all by saying that piracy made them do it. This would not only increase revenues for them in the (then) future (as its beginning to now) but allow them a captive audience as well. The software industry, using these reports and not disclosing what they knew, started a massive lobby campaign in 2002 (that still continues today) to have the government support that piracy actually is a danger to the U.S. economy. And the government believing them to be the subject matter experts, and being backed up by the governments own reports, believed them and started giving them what they wanted. In other words, the software industry actually turned piracy into a future multi billion dollar revenue stream for them where none existed before, and all supported and protected by the U.S. Government and paid for by the tax payer. Using the power of the lobby, and the piracy figures in the reports, and inducing fear that piracy was rampant, one of their most recent advances was having the government change the Department of Justice (DOJ) focus on prosecuting crime to include prosecuting infringment as a crime (which up until this point was prosecuted as a civil case in federal courts in most cases and most notably with entertainment item infringement) and the tax payer pays for it and the software industry doesn't pay a dime, where as before the industry had to pony up the cost of attorney's and fees or costs. Prosecuting infringement as a crime also removes the possibility of the industry being counter sued (like before) and paying awards if they lost (like before). This move also means that the industry is still free to pursue a civil suit against the alledged infringer while the DOJ procedings are still on going and the alledged infringers capability of defense is also reduced at the same time by being burdened with decreasing financial capability to mount a defense on two fronts at the same time. This particular move with the DOJ in effect gave the software industry a defacto status as an an official government agency by having the DOJ at its beck and call.
Even knowing the figures are not right and based on something completely un-related to software and its piracy, the industry still throws around the "$200 to $250 billion range" as if it were the avenging sword of God making every effort to look like a victim. Suprisingly and strangely enough a few companies don't use this tactic like a well know operating system producer and a well known portable document software producer for example who choose to point out that piracy is actually theft (which it is) rather then base their own IP protection and anti-piracy efforts on a falsehood (and in 2002 it was these two who stood up with the FBI to question the figures and pointed out they were't true, but it was too late as their voices were drowned out by the majority who had a greedier view in mind). The software industry still uses it but they go further by adding to and subtracting from (with more adding then subtracting) the figure as the mood strikes them and depending on how much attention and money they want to get from government and if they want to raise prices or not. They refuse to let anyone see the records on the matter and none of their figures have ever been verified or proven in accuracy. In terms of raising prices, why is this figure important? Its important because the government tracks price increases accross industries, even the software industry. When the government sees sudden un-explained price increases it looks at that sector more closely to see if the consumer is being burdened improperly or un-necessarily or gouged on prices. With an official report now from the FBI, an agency of the U.S. Government, the software industry (the big companies) has been able to increase prices on software items as they wanted to without scrutinity from the government because they point to the reports and say "See, piracy is killing us, so we need to increase prices to make up the difference."
Lost sales? No I don't think so, you can't lose something you never had to begin with. If you have 10 items on a shelf, and you sell 5, you got sales for 5, instead what the software industry is doing is counting the 5 that didn't sale yet and calling it a loss due to piracy and adding that back to their already made up figures. Now put that together with the "$200 to $250 billion range" figure and the FBI report and you get "Our products on the shelf aren't selling and we are loosing $200 to $250 billion a year as a result of piracy, the governments own FBI report says so", and thats what the industry lobby groups tell the Washington crowd. And thats where the "lost sales due to piracy" myth comes in and is converted to the "truth and fact" that never was.
So you want to know why DRM came to be? I'll save that for another time, but it did not come about as a method to protect anything.
So what effect does piracy have? It enables the software industry to lobby for more regulations and enforcement (even if they are lying about it) and justifies them raising prices, it helps provide a reason the industry can use to write off profits as a loss and hide profits disguised as a loss, and it helps the industry get protection from the U.S. government, and it furthers the industry agenda of having a captive audience and more control for profit. Pretty neat huh. But in the end it comes back to, and hurts, the individual in terms of increased prices or increased taxes to pay for the enforcement, and lost taxes for the economy (because of the written off loss which is really profit), and it wasn't even at fault to begin with. So it could be more correctly said that the excuse of piracy manipulated by big content software industry is what has the effect. When someone torrents a $12 album or $50 game or other software that they would have otherwise purchased, the industry loses that money in the sense that its money they didn't get but its also money they never had. But that doesn't mean the money has magically vanished from the economy somewhere, and thats what the industry wants everyone to believe, that the money has vanished from and thus affected the economy. The money hasn't vanished from the economy because that money wasn't there to begin with. Is piracy wrong? yes, I believe its theft and is wrong and contray to the tone of what i've written I am not advocating piracy, or saying that piracy does not exist because it does exist. Its the software industry (the big companies, mostly entertainment and luxury software or IP items like games, music, movies) intentions which I think are or will do (and have done) more harm to the consumer then any piracy could ever do. So in the end, who is the real pirate...the software industry, or that person out there downloading something?