Race to the bottom: a bit OT

I was just reading KVR and the head guy at Audio Damage was saying that he thought only 1 in 20 people who use their products pay for them and alluded that that is why they are starting to make hardware. Audio Damage use a similiar copy protection scheme to Cakewalk.
 
Do you guys think that there is an argument that piracy diminshes profits and that lack of profit drives talented people away from VST development. 
 
And also do you think that vicious competition is good for innovation? Where companies just produce really cheap products (and can't hire the top guys cos don't make any money) and hope they can outlast the competition and cannabilize the other company when it goes tits up. Why make super high quality stuff when you can't afford the talent to make it, and even if you did make it, people would download it for free.

uh yeah piracy hurts the small plugin producer more than it hurts bigger companies but it all hurts.
 
saw a video interviewing Moby a while back ago and he was talking about how easy it is to make music now with a laptop and plugins with a crack.  I was kinda disappointed that he said that.
 
DJ Steve Aoki was recently caught in a piracy controversy where he did a video and in the video you could see the cracked warez group in the video.  He later explained that his assistant had put the crack on and he didn't know it - showed his receipts etc.  still - a high profile DJ or a member of his team using a crack?!  come'on.
http://www.digitalmusicnews.com/permalink/2013/20130824aoki
 
Piracy is rampant, cheaper prices on plugins and software does help - but it hurts producers bottom line.
 
I also will not buy full price.  way too many sales and ultimately get it a cheaper price.
 
Nobody is ever going to stop piracy.  But if ya use it - buy it and don't give to your friends.

I think I see what you mean.
 
If I learned that one of my friends was stealing from Sean Costello I'd be really disappointed.
 
best regards,
mike

It is surprising how much of the top lines goes to theft - even brick and mortor stores.  Built-in costs, somewhere's around 10% or more.  I can see software being higher, the loss anyway.  A lot of people wouldn't use an effect etc. if it wasn't free.
 
A sad commentary.
 
@

I think it's funny that people debate theft.
 
1. The US was founded on theft and still does it.
2. We live in a capitalistic society so you have to accept that theft is a given. If you think it won't be, I have a few bridges I'd like to sell you.
3. I only wanted to put 3 down since I like counting.
 
You have to take the good with the bad. It's not fair to those who write the software but that's life in capitalism.

I agree with Bit, too.
 
Personally, I think piracy will always be a fact of life--even convenience/grocery stores factor in a certain percentage of their inventory being shoplifted. It's probably a better use of time for developers to release frequent product updates and new products rather than spending their time tracking down pirates and remove pirated software. The availability of pirated software spreads like wildfire--it would require at least a full-time job to constantly remove pirated software from file sharing websites, for example.
 
Like Bit said, it's group 2 that matters: the group that sometimes pays. Just as a sidenote, I think this group includes people who would pay if they could. PayPal, a common choice for payment processing among sample library developers, doesn't accept all types of credit/debit cards, and there are a bunch of countries that they flat out do not support. I've run into a bunch of instances where people were unable to pay for a product because PayPal wouldn't recognize their debit/credit card.

Greg's business is a perfect example of how to cope with software theft by ignoring it and concentrating on providing value. 177 folks are currently signed up for the group buy, every one of whom had the option of stealing his products and chose not do so.
 
It also occurred to me that Audio Damage's problems may partially be the result of their market focus. Many of their products are more likely to appeal to young people, which is to say people who a) have little money and b) have grown up with an everything's-free-on-the-net attitude. Think about who's lusting after a great flute or bass library versus MangleVerb, bitcrushers and beat slicers.

MakeShift
If you produce a great product, that folks really need and want, at a reasonable price....people will buy it.

And steal it too.
 
There are those that wont pay for anything. Its against their religion. For them its cool not to pay for stuff.    

bitflipper
Greg's business is a perfect example of how to cope with software theft by ignoring it and concentrating on providing value. 177 folks are currently signed up for the group buy, every one of whom had the option of stealing his products and chose not do so.
 
It also occurred to me that Audio Damage's problems may partially be the result of their market focus. Many of their products are more likely to appeal to young people, which is to say people who a) have little money and b) have grown up with an everything's-free-on-the-net attitude. Think about who's lusting after a great flute or bass library versus MangleVerb, bitcrushers and beat slicers.

I agree greatly with bitflipper and GregJazz. Pirates existed before the company in question started its business, it will be there if they go out of business. Gregjazz started his business in this environment too and it's done very well. In the early to mid-2000s I led digital marketing for a Fortune 500 that consulted to companies like Microsoft, Cisco, Motorola and others on piracy and counterfeiting and developed a friendship with our head of that business and largely developed my philosophy in this area from that experience. Anti-piracy efforts are important. I would never advocate it should be ignored. However, piracy of Microsoft software and other major devs is commonplace. Consequently, any business in the software world must take piracy into consideration. It's not new and it's not about to go away. I always try to persuade independent software developers to dedicate no more than 5% of their resources towards anti-piracy efforts. 
 
With regards to market share being "stolen away" by software piracy, it's extremely difficult to make those projections for non-OS, non-essential software. In a lot of cases, I think small software developers will rationalize their business is being destroyed by piracy when the truth is, they are suffering from poor strategy, poor planning, poor targeting, poor product selection, poor pricing processes, a lack of good market and marketing research, poor marketing processes and a host of business issues that would harm their business even if piracy did not exist. There is also a reasonable argument that the piracy market can not steal market share away that never existed in the first place, which I somewhat subscribe to. The theory is that a good deal of those using pirated, non-essential (as described earlier, non OS, etc.) software would not otherwise be in the legitimate market anyhow. 
 
I'd also offer that over more than a decade, I've worked with more than two dozen sample and VST developers and found that whenever a truly talented developer implemented time tested product development, pricing and marketing processes it had very good results. Take Greg and Orange Tree Samples. I became a user in their first year. I let Greg know that I was a marketing professional and happy to help if he could use me. We ended up working together in the product ideation, pricing, product naming and promotion. I've watched that business grow more each year. And during that time, their libraries have become more popular among software pirates. But Greg has wisely stayed focused on making great products, not shifting to software that attempts to reduce piracy at the expense of the user experience (and disturbingly forces users to pay for anti-piracy measures directly that actually hamper the user experience). 
 
Kirk Hunter Studios, had their largest sale in their organization's history last year and every single product they sell has been pirated and easily available to those who use pirated software. So, my knowledge of piracy and Fortune 500 anti-piracy efforts and small, independent developers has made clear to me that if you make excellent products that fit a market need, if you price them right, if you are customer oriented and if you know how to promote those products and run a business, there are still a very good opportunities available in the DAW/VST/sample world in spite of piracy.  

Rain
I've even met a guy who installed and configured cracked software in studios for money. That's making money selling cracked software!

And here I thought that was our "little" secret.

bitflipper
I just have a hard time imagining anybody with half a brain allowing himself to become dependent on bootleg software to run a business, any kind of business.

Of course an honest person would say that. Think like a dishonest person (or one who wishes to do whatever it takes to maximize profits) and it's a whole lot easier to imagine.

I'm thinking of installing SONAR X3 on three machines. I'm sure that's what the 3 denotes.

bitflipper

The Bapu
Think like a dishonest person (or one who wishes to do whatever it takes to maximize profits) and it's a whole lot easier to imagine.

Yes, but the first step in maximizing profits is to stay in business!
 
Imagine...you're working on a major project that's going to pay your bills for the next month. The band's set up and ready to rock -- but your project won't open. Dollars tick away while you try to figure out why. Oh, it's a plugin you spent 4 hours automating last night. Too bad you can't call the vendor for help. No problem, though, since Google Search is your software support plan. You discover that the plugin has a bug. It was fixed months ago, but the new version also included better copy protection and there are no cracked versions available. The band is glaring at you through the glass...too bad you already spent the money they've paid in advance.

In all fairness, this can happen w/ an entirely legit DAW. I've also read and heard many accounts of cracked versions working better and being less of a hassle than the legit version (the recent iLok upgrade comes to mind - I'm sure that crack users didn't even notice the downtime).
 
And obviously, there is always the possibility that a faulty plug-in has not been fixed. Or that offering support is a fairly low priority. Or that your issue won't be solved for a few days.
 
I don't know. I'm trying to think of one plug-in I own which suddenly became unusable... The very few problematic ones like POD Farm were put on a restricted list from the start. 
 
I'm not advocating cracked software - every single piece of software on my computer is paid for. I've refused cracked copies of plug-ins countless times - even stuff I'd like, like Waves SSL - and dozens of GB worth of samples. But in a strictly pragmatic point of view, legit software isn't immune to ruining a session. Personally, if the clock was ticking, I'd probably try to find an alternative instead of spending time chatting w/ support for a fix.
 
 

Software protection - the suicide bombers of the recording world.  Nice bit.

I would have picked up a few more AD plugs if they were $25 each, but I only make $1000 a month, so my opinion may not count. Maybe an occasional sale would help generate revenue from people like me. But then most of the time its people who have the liquidity (richer people) who are able to take advantage of flash sales. Sometimes I see sale prices I could otherwise be able to afford but could not make it in 3 days. Groups buys like the current OTS that span for a few weeks are much better. But then I may not even belong to a market that worth considering from the start.