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%)

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

Brazil
$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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62 Comments

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Yep and in Africa it is given away for free. And what do they do with it. They use it in e-mail fraud to send you offers from nigeria to rip you off.

That is why we here, wait for someone to travel to the US. The moment I hear a cousin to going to the US, he is tasked with bringing back at least a Laptop. The price works out to 50% of what it is in my country, primarily due to Taxes.

outspoken said,
That is why we here, wait for someone to travel to the US. The moment I hear a cousin to going to the US, he is tasked with bringing back at least a Laptop. The price works out to 50% of what it is in my country, primarily due to Taxes.

Well instead of trying to game the system and not pay taxes to the nation in which you live and expect benefits, how about you figure out why the disparity, and lobby for change?

dotf said,

Well instead of trying to game the system and not pay taxes to the nation in which you live and expect benefits, how about you figure out why the disparity, and lobby for change?

Don't even start on me with this mate. For mosts of the part, what you get for your taxes is not by a long shot related to what you pay. Get a better info on how taxation works and what is the money is used for.

And as for the disparity, you have as much chance as an ice cube in hell. Been there, done that, no effect. In the end, if I cannot get what I want at a comparable rate or at all (usually it is also an issue of availability as some thing cannot be sold here - iTunes, Amazon, etc), I use my
feet to vote and move to a cheaper location (read torrent). Their loss, not mine. And the most curious explanation on why some retailers won't sell here : piracy. Well, yes, they won's sell so we soldier on.

iIn NZ, Black ops is NZD$134.99 ($98.7647 USD)

I was looking into buying a AMD 6870 earlier,
Amazon: $314NZD (including shipping)
Local Source $379 NZD (but most places appear above $400)

Import all my games. Aussie game pricing is ridiculous and I think people use some voodoo economics to try and explain why we're expected to pay $85+ $110AUD for a new game yet I can import it for sometimes half of that. . . with free delivery.

This even sometimes extents to digital downloads. When I bought my copy of Mass Effect 2 for PS3 I paid $88 in store but on the PSN it was $99. Something is really wrong when you are paying more for a digital copy than a physical one.

Oh well, instead of stimulating my own reatail economy I'll help a foreign one.

I rememeber one time i sold a used game to someone in autralia on ebay. With shipping the price was the same as in retail store. I was wondering why the guy wanted to pay so much for a used game XD

piracy is not the problem so stop using it and instead, just go after the filthy rich people and charge them for something they do not have or bought and if they don't like it then tough luck and suck it up.

Excellent point.. Indeed its fact.. Come down to India and its rare to find a Pirated Kaspersky product.. Which is USD 60 (KIS 2011_ a year per user, but in India, the software is sold (Officially) in 3 user pack at price of USD 15 including tax, meaning effective price of USD 5 per user per year..

Matter of fact those who sales pirated software, now days they too push in the original kaspersky along with a pirated copy of the Win7 may be .. As the price of both (pirated and original) is almost the same..

Choto Cheeta said,
Excellent point.. Indeed its fact.. Come down to India and its rare to find a Pirated Kaspersky product.. Which is USD 60 (KIS 2011_ a year per user, but in India, the software is sold (Officially) in 3 user pack at price of USD 15 including tax, meaning effective price of USD 5 per user per year..

Matter of fact those who sales pirated software, now days they too push in the original kaspersky along with a pirated copy of the Win7 may be .. As the price of both (pirated and original) is almost the same..


+1
In my college hostel, people bought Kaspersky like crazy, people would buy one box, split price by 3 and share the licenses.
Of course, every other piece of software on those Laptops was pirated

I am no expert but I am assuming that these products being talked about are all being produced in the US.... so Lets look at it the other way. They aren't jacking up the prices for other countries, that's the price they want to charge BUT because US is the home country to those companies, they offer the product at a discounted rate. I am perfectly fine with these prices if this is the scenario....

Windows 7 costs too much in your country, guess you stay on XP.

can't pay half your monthly salary for the newest COD game.... go read a book (unequal education is an entirely different monster and I have spent my life fighting it. I would be outraged if books were priced like this).


capr said,
I am no expert but I am assuming that these products being talked about are all being produced in the US

Sort of the same thing I was going to say. If people in these other countries want cheaper prices for things, how about they get off their lazy asses and start producing something equivalent that people want to buy?

Every time I hear people from outside the US bitching about their prices on products from US companies, all I want to do is ask them why companies in their country aren't producing similar items? Where is their equivalent of Microsoft? Where is their equivalent of Apple? Where is their equivalent of Dell? Where is their equivalent of HP?

People here love to scream about how US companies tend to favor the US on pricing or release dates. How about they start bitching to companies in their own country to start producing competing products?

roadwarrior said,
....

I hope you actually do some research and cure yourself of this sort of ignorance.

I don't even want to waste the time doing it for you.

dotf said,

I hope you actually do some research and cure yourself of this sort of ignorance.

I don't even want to waste the time doing it for you.


I make a very valid point. I'm sorry if it hurts the feelings of people outside the US, but quite honestly, if they want to bitch about prices of products from companies that are based in the US, then they need to encourage companies in their own countries to produce products that compete with the US based products.

Don't like the price of Windows in your country? Make your own OS and sell it for whatever price you like.

Don't like the fact that Microsoft doesn't sell the Zune HD in your country? Make your own media player and sell it wherever you like.

Don't like Apple's prices on computers, media players, and software? Form your own company to produce competing products and price them however you like.

Until you are willing to do that, then shut the **** up about the pricing and availability of US-based products in YOUR country.

capr said,
I am no expert but I am assuming that these products being talked about are all being produced in the US.... so Lets look at it the other way. They aren't jacking up the prices for other countries, that's the price they want to charge BUT because US is the home country to those companies, they offer the product at a discounted rate. I am perfectly fine with these prices if this is the scenario....

Windows 7 costs too much in your country, guess you stay on XP.

can't pay half your monthly salary for the newest COD game.... go read a book (unequal education is an entirely different monster and I have spent my life fighting it. I would be outraged if books were priced like this).


Going by the fact that nearly all hardware is made in China, by your logic, they should throw away the Hardware to Chinese people from Airplanes for free.

roadwarrior said,
.....

You do not make a valid point. All you did there was put your fat american foot in your mouth making yourself look the fool.

There are a plethora of reasons for different pricing in different nations.
There's government regulations, tarrifs, etc.
There's exchange rate differences.
There's transportation concerns.

and that's only the beginning....

Yes nations are welcome to go ahead and build their own operating systems, and build their own games. In fact some do.

Many of todays greatest PC games do indeed come from the countries listed in the article.
Assassin's creed comes from UbiSoft (worldwide offices in the UK, Italy, Canada).

The best EA games are developed in Canada.

At the end of the day, it's just your fat ass greedy culture that wants to rape the rest of the world.

dotf said,

You do not make a valid point. All you did there was put your fat american foot in your mouth making yourself look the fool.

Totally agree with you dot, I am always sorry that people like this are on my side of the argument. half the time their reason for agreeing with me is completely ignorant.

roadwarrior said,
Sort of the same thing I was going to say. If people in these other countries want cheaper prices for things, how about they get off their lazy asses and start producing something equivalent that people want to buy?
You fail at understanding economics / globalisation. The point here isn't that the US is getting better prices, it's that comparatively the people of 'poorer' countries are getting excluded from products that they should have access to.

Sure, it frustrates me that I pay up to twice as much for software - but then I live in a country where the average person earns enough to allow for that. Some people in some countries can't afford that.

dotf said,

There are a plethora of reasons for different pricing in different nations.
There's government regulations, tarrifs, etc.
There's exchange rate differences.
There's transportation concerns.

Yes, I agree with that as well, and have pointed this out numerous times in the past. None of those would be an issue for people if companies in their own country produced equivalent products.

At the end of the day, it's just your fat ass greedy culture that wants to rape the rest of the world.

OK, so which is it? Is the reason what you said at the top of your post, or what you said at the bottom of your post?

Edited by roadwarrior, Mar 17 2011, 12:08pm :

I call bull**** on music being more expensive everywhere outside the U.S. There is regional pricing for music from at least the big record companies. Often the included booklet is smaller than that found in a disc sold in the US/Canada/EU. I have first-hand experience with regional pricing that is less than that in the afore mentioned countries in the non-EU parts of eastern Europe (discs are often pressed in Bulgaria), South America (Brazil being the most common pressing country), and SE Asia. And yes, I know there are pirated version that are difficult to spot for the uninitiated; I am not referring to these.

When it comes to software, there is a much wider variation between countries. When buying software from companies that e-deliver software and have a presence in Russia, I always check to see if the price is less. Sometimes it is, and it isn't. The most recent example was that I bought the e-delivered version of Abbyy Fine Reader Professional v10 from their Russian site for $125 vs. the $399 U.S. price. Fortunately I happen to be fluent in Russian, so I am able to easily avail myself of opportunities such as this. Frankly, pricing like this makes sense; one charges what the market will bear, and these countries have a significantly lower per-capita income that the U.S./Canada/EU.

LazLong said,
I call bull**** on music being more expensive everywhere outside the U.S. There is regional pricing for music from at least the big record companies.

As an Aussie I disagree with this statement. For you guys you pay 99c for 1 downloaded song from iTunes. The US dollar is 1:1 the Aussie dollar. We have to pay 1.69cAUD for the same song, downloaded from the same servers. There is no shipping or import tax on downloads. Explain that one.

(If you are talking about physical copies, who still buys physical?)
Which I might as well add, the music CD's that come out here from the US are about $30-40 depending on the artist, we can still buy the album online for $19-25.

I think thoses figer are based on two people working measure which are just above minimum wage a round 11/12$ USA dallor a hour.
And figer refer to a average gross amount that before any deduction, which may vary from one country to another.

It doesn't help that some companies, like Adobe, charge significantly higher prices even for the same software downloaded from their web store, just from the European market version! There's about a 500 euro discrepancy vs the US price of Photoshop CS5 even after you remove things like VAT, import taxes etc. That's usually a significant chunk of money for freelancers and small companies.

It doesn't help that Adobe charges too much in USA toe begin with. 700$ for photo editing software ? right ...

Bern@rd said,
Commercial piracy isn't lucrative? Have you BEEN to Mexico?
Haha, that was my thought when reading the report - but I think they mean 'in general'. I can't see it being big in Mexico in the future, unless they trick consumers into thinking they're getting the real thing on the cheap.

Bern@rd said,
Commercial piracy isn't lucrative? Have you BEEN to Mexico?
Being from another 3rd world country (Argentina) I thought the same thing. Sure, downloading is free but most people don't have super fast connections or just aren't tech savvy. They would rather pay less than a dollar for a movie (which is either a copy of the original DVD including extras or a screener if it's a new title that hasn't been released yet).

No wonder why...

Here in Mexico the minimum wage (based on 8-hours a day measure) is around US$4.5 and the average movie ticket costs US$4.8. Around 60% of the working population earns the minimum wage. A new movie release on DVD or Blu-ray costs US$20...

I have never bought a pirated movie (I've downloaded several, though ) but the price is US$ 0.8. There is no doubt about what the average people will choose to watch a movie.

The pricing needs to change accordingly to the country/region companies are selling their products or services in order to fight piracy and gain a greater consumer base.

ajua said,
The pricing needs to change accordingly to the country/region companies are selling their products or services in order to fight piracy and gain a greater consumer base.

Than you'll get a reimport (if we are talking about US companies - but it's a true in most cases)

well until they can do global equal pricing of course nobody unless they're stupid is going to pay more for something that can be obtained cheaper over the net or whatever.

they blame it on consumers we blame it on them and you look at articles like this then wonder who's right... rape and pillage companies who exploit smaller or different global markets or consumers who just want a fair deal....

Bogdan Calapod said,
Greed. The number one problem of the world.

Retards. The number one problem of the internets.

Australian citizen here

The aussie dollar right now is 1:1 to the US dollar. Why would I pay $80AU when I could pay $60AU for the same game (played on the same servers, with higher latency)?

Not only that, but this report is quite true. I'm an avid amateur video editor, but I don't want to fork out up to $1000 for my video editing software. Hence why I downloaded and am creating some really great and fun things on my video channel.

Tidus4eva said,
Australian citizen here

The aussie dollar right now is 1:1 to the US dollar. Why would I pay $80AU when I could pay $60AU for the same game (played on the same servers, with higher latency)?

Not only that, but this report is quite true. I'm an avid amateur video editor, but I don't want to fork out up to $1000 for my video editing software. Hence why I downloaded and am creating some really great and fun things on my video channel.

Only the most popular games in Australia are $80 on release, and then for only 3-4 days. They are generally $90-$120, for instance Black Ops is $115 at JB Hi-Fi (large Aussie retailer) and $120 at Ebgames right now.

Also the GDP per capita appears to be off by at least $10,000 for Australia

Matt B said,

Only the most popular games in Australia are $80 on release, and then for only 3-4 days. They are generally $90-$120, for instance Black Ops is $115 at JB Hi-Fi (large Aussie retailer) and $120 at Ebgames right now.

Also the GDP per capita appears to be off by at least $10,000 for Australia

I agree with this, I'd love to know where they saw black ops for such a low price.

-T- said,

I agree with this, I'd love to know where they saw black ops for such a low price.

I also know how expensive the games are in Australia...

Game.com.au had Black Ops for $80 today and knowing that I couldn't write $120. All prices were online prices, as an FYI. I've amended the article slightly to make that clearer

Raa said,
Absolutely. That's why I choose to import or buy on Steam. Same product, better price.

right, would that still have the import fees, etc... that jack up the price in other countries?

Raa said,
Absolutely. That's why I choose to import or buy on Steam. Same product, better price.

you do know steam prices are exactly like global pricing, right?

this is why i get some neowins to buy me games on steam from the US store cause i can say way more money then buying it here in NZ. Looking at the MacBook pro in one model i can save 900NZD, all i have to do work out how to ship it to new zealand from the US

That's exactly the truth. For those who live in those economies like me, a PC may be your whole salary, and both software and hardware are between 6x-8x the dollar price and more. Also for example, an Xbox 360, PS3 or Wii are 10 times the price you pay so it's quite unusual to find any of those in LatinAmerica. Same with any modern smartphone.

Imagine what would you do if you had to pay like us $700 for Win7 Home Premium, $3500 for a below-average (relative to first world countries) laptop, $4500 for a unlocked Nokia N8 for example or $3000 for a PS3 Slim 160GB.
That's the economy in Argentina.

nub said,
No ****

Or do they inflate the price to cover the amount of piracy in those markets.. IMO I would rather they penalize the regions that are pirating then the regions that are not.. When Windows 7 is release in the US a higher ratio of people pay for it then in Brazil, for example, so they would need to raise the price of the product to gain lost revenue...

I am pretty sure that people would be really ****ed if they decided to charge 50% less for Windows 7 in Brazil to make it a viable option over illegal versions..

Lachlan said,
I am pretty sure that people would be really ****ed if they decided to charge 50% less for Windows 7 in Brazil to make it a viable option over illegal versions.
The point is, the Brazilian pirate is doing so because the cost of that product compared to his/her income is 10x that of yours. If the prices weren't crazy, piracy 'may' be lessened.

Brody McKee said,
The point is, the Brazilian pirate is doing so because the cost of that product compared to his/her income is 10x that of yours. If the prices weren't crazy, piracy 'may' be lessened.

I know what it is saying but its a problem of causation.. Is piracy causing the price to rise or is the price causing the piracy..

Lachlan said,

Or do they inflate the price to cover the amount of piracy in those markets.. IMO I would rather they penalize the regions that are pirating then the regions that are not.

It's not just software, places outside the US were paying inflated prices for things like Videos/ Music CD's before the people started copying such media.

Lachlan said,

I know what it is saying but its a problem of causation.. Is piracy causing the price to rise or is the price causing the piracy..

.... are you serious in asking that question?

Why the hell did MS China slash Windows prices at one point then?

Brody McKee said,
The point is, the Brazilian pirate is doing so because the cost of that product compared to his/her income is 10x that of yours. If the prices weren't crazy, piracy 'may' be lessened.

Living in Brazil, I can say that most of the price difference is due to taxes and not the greed of software shops. For instance, the CoD in the example, as it is imported, there is a 80% import tax, plus a sales tax (over the price+import tax) that can vary from 5-13% depending on the city you buy it. Then there are the employee taxes that make the salary of an employee cost twice the value for the employer. So, if the publisher sells it for $40 to a shop, it will arrive here at $80, then the seller will have to factor in his costs (employees, land tax, rent, utilities, etc) and add some profit on it and it will probably come close to the $96 dollars.

On a clear distortion on the rule, MS Office Home and Student costs less in Brazil than in the US (as in $110 vs. $149.99 in the US according to MS online shop).