Piracy: Demanding Innovation?

The problem of piracy is more likely to be present in emerging countries like India. If you walk though any major street in Bangalore you can see the obvious examples of piracy sales which include books, movie CDs, games and software.

Global organizations see this as a problem. On the other hand piracy is another opportunity which needs innovation to open up a new market. The problem of piracy is long debated and discussed one. Piracy has become a part of life in a country like India. When any bestseller book or a super hit movie is released the pirated version of the same can be bought off the streets at a throw away price. Copyright is taken for granted and there are no laws which can protect the content producer. Even though there are laws to prevent this issue, nobody takes them seriously. It might look simple, but piracy has become an organized industry in India which makes billions of dollars for their organizations. Piracy takes multiple forms which also include the refilling printer inks and toners, which are not approved by the device manufacturers.  

The software piracy rate is growing at double digit rate especially in the operating systems domain. Purchasing original version of Windows is almost unheard as PC vendors install a default pirated version. The security precautions and patch mechanism that Microsoft applies are overridden by even smarter ideas. There are multiple questions and arguments can be applied to this: Are we are not giving due importance to original versions? Is it the way we are wired? Should the regulatory systems be blamed? Are we bad people? Not necessarily. The answer is simple -- we are not ready to pay for anything upfront if it costs more than we can afford. In a country with per capitia income is about 35,000 rupees, how can we expect anyone to pay 10% extra to purchase the original version of Windows or 1% for the original version of a book? At the same time we cannot ask the educated elite of the urban population to buy the original version because they have more disposable income. They constitute only 2% population, who also tend to go with the trend. Even if they buy original versions, it cannot be a viable business proportion for companies.

If we take a different perspective piracy is another form of an opportunity, which needs innovative methods to address. More piracy means people want a particular product desperately. And because they cannot afford it, they take the piracy route. Innovation in terms of pricing, business model, offering and gradual recovery methods need to be applied. The focus should be given on how to make things easily affordable by taking ‘micro-consumers to micro-payments’ model. Let us take the example of Indian mobile service provides. They have pre-paid plans for as low as five rupees (micro-payment), which work out for a daily eager (micro-consumer). Now companies like Tata DoCoMo have innovated even further by offering one second pulse, which is much different from minute based rates. With the sheer scale in sales, mobile service provides are getting their profits. In fact India is the fastest growing mobile market in the world. If the rate plans are in thousands, it would have been used only by the elite resulting in a very smaller market.  

Similar approach should be taken for other businesses like book publishing (on-demand customized prints at affordable prices), software (subscription model with technical support tied with it) and digital movies (finding out alternative delivery and recovery models using upcoming technologies like DTH) and build sustainable models around it for making it a viable business proposition. Organizations need to develop deeper knowledge of the nature of customers than educating the customers about piracy. Understanding customers and their needs has been successfully done in some businesses (like mobile service providers mentioned above) but there is still a huge market waiting to be tapped across industries demanding ‘customer centric’  innovation.
Tags: books, movies, Innovation, Piracy, mobile services

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