Let's talk some facts.
Copy protection is doomed. It attempts to solve the unsolvable. It takes one expert a lot of man hours to break and then everyone else can free-ride on that effort. Oddly, the people who "crack" software are so committed to the practice that they generally aren't paid for their labor. It's a labor of love, cracking. This is important to note because the economic cost of reverse engineering copy protection is willingly born by the cracker. You are NEVER going to defeat that kind of an incentive system. It's so established in the PC world and distribution is so effective that sometimes cracked software appears on the darknets before the legitimate version is even on shelves. Think about that. Corporate software giants have a distribution system on which they have spent millions of dollars and countless hours which is bested on a daily basis by a bunch of volunteers. Wow. Should be clear that, short of spying on all internet traffic and screening for copyrighted software, you just aren't going to solve the problem. So, that's what you are up against. Piracy is here to stay. What can you do?
Short circuit the distribution system of the pirates. Hard. The power of piracy is in the ease of cheap transmission of the product. You have to require some kind of physical connection to eliminate the advantage to the pirates. Ableton uses it's boxed set, the printed manual, the T-Shirt, etc. Ableton's problem is limited, however, I'll get to that in a minute.
Hardware dongles are about the best anyone will do in this regard and even then they are subject to emulation by sophisticated crackers. (There are several examples). The only time hardware protection works is with niche products for very specialized applications (seismic analysis software, or very high end CAD/CAM for example) that have little or no use outside of very specialized professional applications. You have to absolutely NEED the software to tolerate cumbersome hardware protection schemes. There better not be a competitor who doesn't bother with the hardware protection either, or you will get your lunch eaten. Also, if it's this specialized and, therefore, there are few users, then you need to charge huge sums. This makes it worth the extra expense of a hardware dongle and the additional development. And, frankly, your loss from pirates lower as few of them would buy the damn thing anyhow.
Then, there is the question of customer service. How do you handle a lost dongle? If, as most firms do, you just tell the user "tough luck" that's a customer you aren't going to have again. Ever. That's tough when you have a small customer base and are charging tens if not hundreds of thousands of dollars for the product. Lose one customer and you've hurt yourself. The same tool you use to defend the revenue can be a problem when it's a pain in the ass.
How damaging is piracy really?
The SPA takes the dim-witted view that every pirated version copied is lost revenue. This is, of course, daft. A 15 year old high schooler is not going to be buying the $5,000 SolidWorks CAD/CAM package no mater what the SPA says. She will happily, however, crack it, distribute it, play with it and learn what it does. Who knows, she might even discover she wants to be a mechanical engineer. Interestingly, there is a whole generation of software users that grew up learning to use programs without the benefit of manuals (since they pirated the things in the first place and never had the manual). Many firms tried to prevent piracy by offering only a print manual. This has the obvious effect of deterring casual pirates, but also prevents userbase from building. Here's how:
Let's say this high school student does go one to be a engineer. She learned on SolidWorks. She'll probably use SolidWorks. That's what she learned on. She couldn't get a copy of Pro-E however, because the copy protection used a hardware dongle and even when the emulator was released there was no manual. Forget it. She started playing with the dongle-less SolidWorks (with the PDF manual) instead. Who do you think is going to get her money when she's ready to buy? Or, more likely, when the company she works for buys something? If you know anything about engineers or designers you realize that they can actually make employment decisions based on what software package their employer has standardized on. Employers, in turn, screen for software skills and select those engineers that are experienced in a given package. Employers probably didn't make this decision lightly. They adopted the best product for which there were enough experienced users in the talent pool they are interviewing. User base is everything, and it is a self-reinforcing cycle. Note this, it's important. Note also that software firms realize this. They, quietly, maybe knowingly, maybe not, embrace piracy whenever they release manuals in PDF and allow them to be downloaded freely without serial number or even email registration. (Ableton: Good job guys and gals!) Why do this? User base.
Cessna loses money on almost every single-engine plane they sell. The 172 is a deeply discounted single engine plane that's easy to fly, cheap and reliable. It's not the best, it's not the worst. But people learn to fly in Cessnas. That's because flight schools buy Cessnas because they are cheap and reliable. Instructors, therefore, better know Cessnas if they want to get a job. Result: It's damn hard to find a pilot who didn't learn on a Cessna. So where do you think they tend to go when they buy their own (more expensive and profitable) plane? When they are looking for jobs flying private jets...? Same effect.
Software piracy is a loss-leader. The thing is, often you aren't losing anything because your customer couldn't afford you when they discovered your program. But you need them as an addition to user base. User base is everything.
In the case of Ableton, a product with a fairly wide user base, I think the bottom line would hurt quite a bit if you eliminated all the users who were just screwing around with music software, found Ableton, and instead of growing bored with a demo after a few hours (who wants to spend much time with software that you can't save your work with?) Really start using the full functionality before they can pony up the $100s to buy it. Sure, they may not have paid for 4. They may not have paid for 5. But by the time 6 comes along they are an Ableton fangirl and, being older and having less time to spend surfing bittorrents and messing around with cracks and "phone home" issues, they just reach into their purse and shell out $600 to get the whole package. Why? Because $600 isn't 2 months salary anymore and it's just not worth the time and effort messing around. Plus, the T-Shirt is super sexy. See my post with poll, and please participate:
More importantly, with software bought in a corporate setting you can believe those licenses are in order. Most firms, though not all, are pretty careful about license issues. They have auditors who notice such things. And, they need the support that comes with legitimate licenses.
For the longest time Adobe didn't worry much about copy protection for Photoshop. This was intentional. They needed user base. They needed high schoolers playing with their very expensive software. They intentionally made it non-trivial but not highly difficult to circumvent their copy-protection, reasoning that what they gained in future user loyalty and user base would more than make up for the near-term loss (if you can even call it that given the pirates usually were 15-21 and unlikely to buy the software outright anyhow). They knew that professional users were most likely going to pay for the software because they had the budget. There was simply more money in making the program expensive for professional users but making it, well, sort of free for younger, less resourced experimenters. Adobe could have, instead, just charged $10 for Photoshop and attempted to just get everyone to pay. The reality is, however, that they just make more money with a phantom two-tier system where the corporates pay big bucks and new users who couldn't buy anyhow pay nearly nothing.
You know piracy works for software firms because they keep their price points high. They don't waste time aiming for the low end because high-end customers pay reliably and pay well and no amount of cost reduction is going to stop a determined pirate (who is most likely determined in the first place because her software desires far outstrip her software budget).
I believe that firms like Ableton must know their software is going to be pirated but realize that by putting together three tiers, they harness piracy, rather than fight it senselessly.
Tier 1: Outright purchase and license. The serious user/corporation with the budget to shell out and the need for stability, support and stickers and T-Shirts. (Whoo!)
Tier 2: Demo. The interested user with the budget to shell out and the need for stability but not necessarily the interest level to buy yet. The idea here is to give a highly cheap "teaser." There is, however, a gentle push towards Tier 1. Can't save files in the demo!
Tier 3: Gray Piracy. The interested or even casual/experimental user who simply can't afford the software, isn't yet committed enough to the software to buy.
Tier 4: Black Piracy: The girl who simply doesn't pay for software at all on principal. (We all know a few of these last ones).
The sophisticated software firm won't want to lose Tier 3 and would prefer to let Tier 3 free-ride until they shift into Tier 1. They don't fret about Tier 4 because those hardened pirates aren't ever going to buy anyhow. (Arrrrr!) Designing a cumbersome product to deal with Tier 4 is pointless because it is a losing battle and it pisses off the critical Tier 1 users who are as apt to switch to another product over copy protection issues as anything else.
Piracy is a no-no. But let's not be so daft to presume that it's the kind of evil you want to be prosecuting with jail terms. It's more like admitting to your girlfriends over Cosmopolitans that you took a magazine from the doctor's office. You know, the writing in there was pretty good though. Maybe you'll subscribe now.
- Allison Redhead (Happily licensed since 5.x).