Massive Research Report On 'Piracy' In Emerging Economies Released; Debunks Entire Foundation Of US Foreign IP Policy
from the nicely-done dept
Joe Karaganis, from the Social Science Research Council was kind enough to reach out to me last week and send me an advance copy of the (somewhat epic) report that SSRC just released this week, exploring "Media Piracy in Emerging Economies." It's a rather massive 440 pages of research into a variety of issues having to do with infringement, specifically focused on emerging markets. While it was nice of Karaganis to send it to me, I was a bit disappointed to find out that they're not releasing the report for free (for most). Instead, it's released under a "Consumer's Dilemma" license, where they want people in developed countries to pay $8 for the report, but will offer it for free to those in less developed countries (though, it looks like Canadians can get it for free). Though, to their credit, at the end of the license info, they do note:For those who must have it for free anyway, you probably know where to look.Unfortunately, that's right under the warning that "non-compliance" with the license in the US could subject you to five years in prison and $250,000 in fines. That's an unfortunate exaggeration, as most non-compliance wouldn't result in criminal copyright infringement. For a report on the subject that seems so insightful in many points, it's disappointing that this report chose to reinforce this type of thinking. Update: Clearly, I missed that this is pure satire by the report's authors. Such is life when I'm so used to seeing such things that are real.
That said, much in the report is extremely forward-looking and thinking. It goes into great detail how fascinating and innovative new business models are appearing around the globe where "piracy" is rampant, and suggests that we really need to rethink the idea of "piracy" in those markets. It highlights how almost all of the policy discussions in the west concerning infringement focuses on "enforcement," but that may be the wrong way to go about it. The research, instead, points out that a better focus may be on setting up the structures for successful business models to emerge -- which include local firms who can compete on price:
Invariably, industry groups invoke similar arguments on behalf of stronger enforcement: lower piracy will lead to greater investment in legal markets, and greater investment will lead to economic growth, jobs, innovation, and expanded access. This is the logic that has made intellectual property a central subject of trade negotiations since the 1980s. But while we see this mechanism operating in some contexts in emerging markets, we think that other forces play a far larger role.It also points out that focusing just on enforcement is a key mistake by western nations, when they might be much better served in enabling these markets to emerge to "compete" with infringement:
The factor common to successful low-cost models, our work suggests, is neither strong enforcement against pirates nor the creative use of digital distribution, but rather the presence of firms that actively compete on price and services for local customers. Such competition is endemic in some media sectors in the United States and Europe, where digital distribution is reshaping media access around lower price points. It is widespread in India, where large domestic film and music industries dominate the national market, set prices to attract mass audiences, and in some cases compete directly with pirate distribution. And it is a small but persistent factor in the business software sector, where open-source software alternatives (and increasingly, Google and other free online services) limit the market power of commercial vendors.
The centrality of pricing problems to this dynamic is obvious, yet strikingly absent from policy discussions. When it comes to piracy, the boundaries of domestic and international policy conversation are exceedingly narrow. The structure of the licit media economy is almost never discussed. Instead, policy conversations focus on enforcement--on strengthening police powers, streamlining judicial procedures, increasing criminal penalties, and extending surveillance and punitive measures to the Internet. Although new thinking is visible in many corners of the media sector, as companies adapt to the realities of the digital media environment, it is hard to see much impact of these developments on IP policy--and most particularly on US trade policy, which has been the main channel for the international dialogue on enforcement.That last paragraph is a key point that our current policy makers seem to miss entirely. On top of that, the report notes that nowhere in the discussions about enforcement is any discussion found of connecting enforcement to figuring out "how to foster rich, accessible, legal cultural markets in developing countries." Of course, that's because most policy makers don't care about that.
In our view, this narrowness is increasingly counterproductive for all parties, from developing-country governments, to consumers, to the copyright interests that drive the global enforcement debate. The failure to ask broader questions about the structural determinants of piracy and the larger purposes of enforcement imposes intellectual, policy, and ultimately social costs. These are particularly high, we would argue, in the context of ambitious new proposals for national and international enforcement--notably ACTA, the Anti-Counterfeiting Trade Agreement recently finalized by the United States, the European Commission, and a handful of other countries.
To be more concrete about these limitations, we have seen little evidence--and indeed few claims--that enforcement efforts to date have had any impact whatsoever on the overall supply of pirated goods. Our work suggests, rather, that piracy has grown dramatically by most measures in the past decade, driven by the exogenous factors described above--high media prices, low local incomes, technological diffusion, and fast-changing consumer and cultural practices.
The report kicks off with a piece by Karaganis on the importance of "rethinking piracy." It notes that the industry claims on "piracy" are not exactly credible or trustworthy -- and not very productive towards coming up with solutions, since all they've done is "undermined confidence in the industry research enterprise." In fact, it goes through a rather complete debunking of the overall industry claims, suggesting that they're somewhat meaningless -- and then points out that all of these reports that count "ripple effects" seem to ignore the ripple effects in the other direction: the kind that benefit consumers, especially in developed nations:
But in extrapolating losses beyond the affected industries, these studies also introduce new problems. Fundamentally, they all misrepresent the relationship between piracy, national economies, and international trade. Consistently, none of them model the other side of the transaction--the consumer surplus--in describing overall economic impact. Two basic accounting problems have become emblematic of this approach.The report is chock full of other insightful points, such as noting that, "Predictably, raids scale more easily than due process." Later it goes through the various "education campaigns" that industry and governments have invested in, noting that they appear to have done "very little" to actually slow down the rate of piracy:
First, domestic piracy may well impose losses on specific industrial sectors, but these are not losses to the larger national economy. Within a given country, the piracy of domestic goods is a transfer of income, not a loss. Money saved by consumers or businesses on CDs, DVDs, or software will not disappear but rather be spent on other things--housing, food, other entertainment, other business expenses, and so on. These expenditures, in turn, will generate tax revenue, new jobs, infrastructural investments, and the range of other goods that are typically cited in the loss column of industry analyses.
Our inquiries (mixing survey, focus group, and interview methods) found a remarkably consistent cluster of attitudes on piracy: (1) that it is often regarded with ambivalence by consumers, (2) that pragmatic issues of price and availability nearly always win out over moral considerations, and (3) that consumers know what they are buying. The classic scene of developing-world piracy--the kiosk or street vendor selling DVDs--produces very little misunderstanding on the part of consumers about the nature of the transaction. Consumers weigh tradeoffs between price and expectations of quality, but within a context of explicit black-market negotiation in which notions of fraud or deception—often borrowed from anti-counterfeiting discourse—generally don’t apply. The price gap between licit and pirated media provides a clear signal of the origins of goods.On top of that, the report responds to the regular claims by the IFPI and others that piracy is linked to organized crime and terrorism, by noting that they could find "no evidence" of any such connection. Similarly, it mocks policy makers who conflate counterfeiting with media piracy.
And that's all just in the first chapter! From there it first looks at the ongoing effort -- mainly driven by the US and the USTR -- to "harmonize" enforcement efforts, followed by a country-by-country look at the state of "piracy" in various developing nations, highlighting many of these issues in a more localized fashion. The whole report is really fascinating, and an incredibly useful read for policy makers who are so focused on things like ACTA, enforcement and industry claims of "losses." It really is a huge contribution to the research on these topics -- and something that I hope gets delivered to policy makers. I'd send copies to various politicians myself... if it weren't for that license that tells me I could face five years in jail for doing so. So, as a final note, I'll just suggest that Karaganis and the others behind this really excellent research report reconsider their license choice on the document (see update above), and instead encourage sharing of the document -- and maybe take a page from what they're seeing themselves in setting up creative new business models to cover any costs.
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Filed Under: emerging countries, enforcement, markets, piracy, research, studies
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The entire foundation of US foreign UP policy rests on the idea that the wealthy and powerful status quo should be allowed to collect on an ever increasing growth of government granted monopoly rents. The idea exists because this status quo gives tons of money to those running the government, e.g., political donations and cushy industry jobs upon leaving office.
I highly doubt this foundation could ever be debunked.
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Re:
That should solve a few issues.
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i don't think it's senators who are the problem, but the vast complex of positions in government for which ex-corporate types occupy, such as regulators, which are appointed rather than elected positions.
the senator problem in my opinion has mostly to do with lobbying.
but rather than exclude someone from government based on previous employment, why not apply the restrictions that already apply to nonprofits with regards to private inurement?
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The members of Congress and other professional legislators have perfected the art of hiding things from the public, I doubt this would be any different.
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Licensing theater
Mike, I think you missed SSRC's point on the licensing. As I write over on Legally Sociable, this is "licensing theater".
If you doubt this read the SSRC's own characterization of the license:
In other words, SSRC has no intention of suing anyone over this -- they say so themselves. Indeed, the entire report is over on Scribd, posted by a user named "urprobablyapirate". Wink wink. Nudge nudge.
SSRC is just having fun with the copyright maximalists, but they are doing so in order to make a point:
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Re: Licensing theater
Fair enough. I just don't like anything that reinforces that basic concept of ridiculous fines.
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WALTER RUSSELL MEAD
http://blogs.the-american-interest.com/wrm/2010/12/08/the-crisis-of-the-american-intellectua l/
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Re: The Crisis of the American Intellectual
Instead of opportunities they see threats; instead of hope they see danger; instead of the possibility of progress they see the unraveling of everything beautiful and true.
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RE: wrong
One more thing, FUD.
:-)
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Re: RE: wrong
Soon, you'll be in jail with the other free loading hippies. You don't need due process! Your 1st amendment rights ended with the copyright clause!
YOU. WILL. BE. PUNISHED.
And your jail sentence shall pay for my new Lamborghini!
-------------
Brought to you in part, and paid for, by Fail Shill Industries. Copyrighted 2011.
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Launching, presenting and discussing the report at NYU
Five of the report's authors will present and discuss the results: Joe Karaganis (SSRC), Lawrence Liang (ALF India), Pedro Mizukami (FGV Brazil). Ronaldo Lemos (FGV Brazil), and Sean Flynn (PIJIP).
More info: http://www.nyu.edu/ipk/events/154
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etc etc
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Also, this study is "Reticulatng Splines"....
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so how much for a license for congress?
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And you head-in-the-sand neoluddites will pretend it's not, as your failing business model continues it's downward spiral.
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The Consumer's Dilemma
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Re: The Consumer's Dilemma
Agreed. I clearly missed the satire here. But perhaps that's because I'm so used to seeing these types of "licenses" and warnings that aren't satire. And, in general, I just dislike presenting things with a false claim that you could risk jail for passing it along.
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Re: Re: The Consumer's Dilemma
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Re: Re: Re: Re: The Consumer's Dilemma
However, in take 2, you might remove the Consumer's Dilemma for the majority of us.
For example, allow people to come up with ideas to profit off this report and state you are willing to endorse those who contribute a little ka-ching back to help cover past costs and fund future efforts.
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Re: Re: Re: Re: The Consumer's Dilemma
I'll be reading this shortly. I'd love to get the book.
*whistles innocently*
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Re: Re: Re: Re: The Consumer's Dilemma
barely relevant, i know, but still.
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Re: The Consumer's Dilemma
I'm confused. Are you selling your report for $8 or not? Because you seem to be unable to decide. Instead, you confuse, inveigle, and obfuscate the issue as much as possible, which is a real turnoff for your potential customers.
If you want people in first-world countries to donate $8 to your cause, then just say: "people in developing countries: suggested donation, $8." You might even get more money that way. And at least you're not obfuscating whether you're actually selling a report - you're being honest enough to admit that you're running a charity. That is, your donors (not customers) are getting warm fuzzies from donating money to you, they are not buying a report for $8.
If you really are selling the report, but you're explicitly going to ensure there are no practical consequences for taking it without paying, then please provide rationale for why anyone, in any country, should buy your report.
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Re: Re: The Consumer's Dilemma
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Re: Re: Re: The Consumer's Dilemma
Let's say I come across two gas stations, each across the street from the other. Both have pumps that go into the same underground tank full of gas. One is selling gas for $8/gal, the other is giving it away for free, no strings attached.
1. Why should anybody pay $8 for the gas?
2. What would you call the person who would actually pay $8 for gas in that situation?
3. If somebody does give the guy $8 and then pumps gas, is he really buying the gas?
4. What would you call the owner of the gas station that is "charging?"
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Re: Re: Re: Re: The Consumer's Dilemma
Well, not so good for the government, which will take a big hit to the checkbook.
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Re: Re: Re: Re: Re: The Consumer's Dilemma
If those small businesses let you take the stuff, or have another business operating in the same exact location giving away the exact same stuff, then they're not selling stuff, they are giving stuff away for an expected donation.
Why is it so necessary for these new business models to involve deceiving the customer/donor as to what they're actually getting in exchange for their money? What are people using them ashamed of?
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Re: Re: Re: Re: Re: Re: The Consumer's Dilemma
No one is being deceived and the intent is not to deceive anyone. If someone gives money to a charity they're not being deceived. If they buy something, they're not being deceived. If they get something for free with the option of paying for it, they're not being deceived. Or if they take something for free and donate to the entity that is freely offering it, again, no one is being deceived. How the heck did you come up with the idea that anyone is being deceived? I guess it's one of those catch words that you hope can be used to confuse people.
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Re: Re: Re: Re: The Consumer's Dilemma
Another analogy comparing intangible material (information) with scarce physical products (gasoline).
Immediately, this means you will miss much of what techdirt argues because it will be meaningless to talk about adding tangible means to .. already tangible gasoline .. or allowing unlimited copying of the gasoline to instead sell scarce goods.
And then you also fail to consider any services whatsoever and other value add-ons.
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Re: Re: Re: Re: Re: Re: Re: The Consumer's Dilemma
Way to be non-responsive and avoid the issue. I asked four very simple questions:
1. Why should anybody pay $8 for the gas?
2. What would you call the person who would actually pay $8 for gas in that situation?
3. If somebody does give the guy $8 and then pumps gas, is he really buying the gas?
4. What would you call the owner of the gas station that is "charging?"
Can you answer any of the four?
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Re: Re: Re: Re: Re: Re: Re: Re: The Consumer's Dilemma
2. Uninformed? Ha! Someone who is either in a bind or actually thinks 8 bucks is okay to pay for whatever reason. The person is a paying customer, though, and should be respected as such no matter what. S/he shouldn't be burdened by any post-purchase shenanigans like the gas will only work for 3 miles and then s/he needs to call the station owner for permission to drive one more mile on his/her own gas. Or s/he can't siphon off a gallon for a stranded motorist unless she wants to get a legal threat letter demanding a couple thousand bucks, or anything like that.
3. See 1.
4. Out of luck once people start using new technology to draw their own gas, unless he develops other services or scarce goods to sell, they are seen as worth the price charged, and there's an actual market for whatever he comes up with in the first place.
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Real world application, which also involves a gas station.
Here in San Diego, CA, gasoline is an average of $3.85 a gallon. Down the street from where I work, there are three gas stations. A Thrifty gas station with a price of $3.91/gallon, a 76-station with a price of $4.29/gallon, and an Arco with the price of $3.85/gallon. These gas stations are a block or two away from each other, and their prices are clearly marked on the road (I can see the prices for all three stations while driving down the street.)
I stop at the Arco station that sells gas for $3.85/gallon, and fill up my tank. The gas station is busy, and there is usually a line, but it has 12 pumps, so people usually get out in about 10-15 minutes. The Thrifty station has 8 pumps, and there is sometimes a line, but usually people can get out of there in 10 minutes. The 76-station has 6 pumps, and every single time I drive by there is someone at 4 or 5 of those pumps, and the people there can get out in 5 minutes.
Sure, any economics major can point to this being laws of capitalism in action, the guy with the cheapest gas is going to have the most users, but in your example, no one in their right mind would ever go to the expensive place. However, that is because you value money more than you value time, and those who are going to the expensive gas station value their time more than they value money.
Likewise, if gasoline was an infinite resource, you'd still find people paying $8 for it, because they wouldn't have to wait in a long line to get the free gas. To them, the time wasted in waiting for the free gas is more expensive than paying for it. The copyright maximalists view this as an argument against giving a product away for free, because nobody would ever buy it, but in reality, where the rest of us live, plenty of people would buy it even if there are free alternatives available, and usually for reasons that "freetards" (I cannot stand that term, but it is all the copyright maximalists understand) and copyright maximalists cannot fathem.
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Re: Re: Re: Re: The Consumer's Dilemma
1. Why should anybody pay $8 for the gas?
Perhaps the station that charges $8 provides more services than the one that is free. Perhaps the $8 gas station has high-octane gas or deisel, and the free one only offers standard. Perhaps the free gas station has a long line that requires a half-hour wait, and the other doesn't. Perhaps the free gas station has annoying advertisements that blare in your ear from the gas pump. Or perhaps they just want to support the owner of the $8 gas station.
There are all sorts of reasons.
2. What would you call the person who would actually pay $8 for gas in that situation?
A paying customer. Possibly a repeat customer. The kind you want to covet and hold on to, and not ban from your gas station every time they're short on cash and go to the guy across the street.
3. If somebody does give the guy $8 and then pumps gas, is he really buying the gas?
Unless he has to return it somehow, or unless it's designed to turn to water in a few days, then he's actually buying the gas. He may not be paying only for the gas itself (see #1), but he bought it.
4. What would you call the owner of the gas station that is "charging?
If he's turning a profit, you would call him a successful businessman.
At the moment, the situation is the reverse with media. Getting a paid version is more inconvenient, you have fewer choices of formats, DRM means you can't use it in all devices, and you don't own the media once you pay for it. On top of being free, the pirated version is simply a better product.
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Re: Re: The Consumer's Dilemma
In this respect, we operate very much like the software companies we describe in the report: strong assertion of rights, high toleration of piracy, and calibration of licenses to whatever the market will bear.
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Re: Re: Re: The Consumer's Dilemma
Reposting since a 'less than' sign cut off part of the comment
To repeat: we are selling the report for $8 (or $2000) in high income countries. We take our rights (and the ability to successfully commercialize work) seriously, so we no reason to adopt a donation model. Whether this approach is a profitable strategy or not depends on a number of things, including the perceived value of the work, the collective conversation about what books should cost, and the willingness of high income and especially 'commercial' readers to honor the license.
There are no practical consequences to pirating it because (1) the cost/benefit ratio for enforcement is way too high; (2) we benefit from the network effects of widespread circulation through all channels, and so decided to take that process of diffusion into our own hands.
In this respect, we operate very much like the software companies we describe in the report: strong assertion of rights, high toleration of piracy, and calibration of licenses to whatever the market will bear.
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Re: Re: Re: The Consumer's Dilemma
I think if you were going to claim copyright and charge money for infinite goods, you should have just played it straight the whole way with the license.
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Free for Canadians
The study received funding from the Canada's International Development Research Centre, perhaps that is why Canadian's get it for free?
We don't get much for free up here so we'll take whatever we can get!
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Re: Free for Canadians
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Yeah, right...
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Re: Yeah, right...
More brilliant criticism from an anonymous troll.
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— William Patry, senior copyright counsel, Google
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Want more taxes? make a way that people on the bottom 95% of the population can earn more and for that to happen monopolistic rights have to go away.
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No, actually it doesn't.
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Lies, All Lies
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I didn't read the full report (sorry, I don't have $8 virtual to get it), but I have to ask:
Did anyone both to look at the incredible impediments in the legal system which make enforcement online extremely difficult and slow, when compared to the speed of the act itself?
I think that the anonymous nature of the internet and "internet speed" needs to be addressed in law. The current circumstance is untenable, and suggesting that throwing up our collective hands and walking away from business seems to be a very short sighted way to look at things.
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Heaven forbid business should do what it should and react to what the MARKET IS TELLING THEM IT WILL PAY FOR.
"The current circumstance is untenable" because instead of focusing on serving their market they are fixated on maintaining monoply rents - a status quo center that cannot hold.
The adage really is true: adapt or die. Failure to adapt to what will not change is all they've been doing. That is the blueprint for running a business onto the killing rocks.
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IF you whine on and on About the Drama llama, and when people give you advice, if you don't at least consider it, then what's the point in trying to help you help yourself?
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Till then, you all need to start living in the woods and survive by fishing with your bare hands and eat wild berries, fungi, and cacti.
True Christians (TM) don't need corporate necessities.
Amen.
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I was reading this and going, damn, one of these guys. Then I got to this line. You sir, are a god among men. You are a true troll worth worshiping.
I think Dark Helmet may have met his match.
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"To repeat: we are selling the report for $8 (or $2000) in high income countries. We take our rights (and the ability to successfully commercialize work) seriously, so we no reason to adopt a donation model."
With this statement:
"(1) If the $8 seems unreasonable, look for it elsewhere. We have gone to considerable lengths to make it easily available for free and have no enforcement mechanism (or intentions). You may violate the license in doing so, but the world is full of people violating dumb licenses to get something they want. Which is our point. (2) Policymakers fall into the non-commercial category, as do educational purposes of any kind, personal reading outside medium/large content shops, and the whole raft of usual exceptions and limitations. Think up a valid fair use case for yourself and indulge it. Send it to whomever you like."
And this statement:
"For my part, I see it as a 'pay what you want' model, with the 'pay nothing' option shifted into the illicit market"
So you take your rights seriously, but openly advise people that you won't enforce those rights and breaching the license will have no consequences. You say you saw no reason to adopt a donation model, but then characterize this as a pay what you want model, which IS a donation model.
Personally, I have no objection to any of those models, but you need to PICK ONE. You're seemingly talking out of both sides of your mouth here; either you take your rights seriously and at the very least don't encourage flagrant breach of those rights, or you waive the rights and say have at it. By saying you take these rights seriously but acting like you don't, you're sending seriously mixed and conflicting messages, which in turn undermines how seriously one can take this study.
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Re:
*Official stance:*
We are selling this report to people in high-income countries for $8. However, we feel the information is important to everyone, so it will be made available for free to people in low-income countries. Anyone expecting to use the report for a commercial reason will need to pay more.
*Unofficial stance:*
These kinds of licenses are ridiculous and essentially unenforceable on an individual basis due to economic impracticality. Furthermore, it is basically expected that we include one (and we wouldn't mind the money).
Because of this tiered structure, we expect that the market will illustrate what we are reporting---a) people will pay what they think it's worth, b) if you don't price something right and there's a free version floating around, most will probably flock to the free version instead of abstaining from the content.
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More Than Just Piracy
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Download the PDF
click the link for free upgrade.
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