Report: Piracy the product of 'global pricing'

It’s no secret that software, music and video prices vary around the world. It doesn’t matter if you’re shopping for a new copy of Windows or the latest variation of Angry Birds – if you’re outside of the US, you’ll likely be paying inflated prices. We’re all aware of the price differences, and although companies can try to explain away their pricing differences, it’s still a frustration for many.

For some, global pricing is more than just a frustration – it’s a deterrent. A recent report by the Social Science Research Council (via Engadget) claims that the inflated prices seen in smaller markets, encourages piracy in those markets. Let’s take a look at the price of Call of Duty: Black Ops (Xbox 360) in the USA, UK, Australia and Brazil in US dollars, and compare that to each country’s GDP per capita:

USA (tax excluded)
$54-$60 / $46,000 (0.12%-0.13%)

United Kingdom
$52-$60 / $36,400 (0.14%-0.17%)

$80-$115 / $53,300 (0.15%-0.22%)

$96 / $8,950 (1.07%)

The report raises a good point. If you lived in Brazil, would you pay that much for Call of Duty: Black Ops? According to the report, the price of software like Microsoft Office in non-US/European markets can be up to 10x higher. This leaves this author wondering – why?

The likely reason for all of this is that companies simply price everything at a global level, and then add costs associated with trading in a country to the prices or that country. But as software doesn’t actually ‘cost’ anything to produce (after initial investment), surely it would make more sense to set prices based on what people can afford to pay in that country, rather than what people in wealthier nations can afford to pay. There are obviously gray import issues with that scenario, but that’s one of the reasons that DRM exists.

The report also states that piracy rings are no longer making money. It argues that “criminals can’t compete with free” – an obvious reference to the effect the Internet has had on piracy. Commercial piracy is no longer a viable business, unless your customer is unsuspecting and believes they’re purchasing legitimate goods.

Note: the author recognizes that GDP per capita is not a measurement of average income per capita, but that it is related. All data was accurate at the time of publishing. Prices were sourced from multiple online stores for each country, shipping included.

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