Why don't students buy legal copies of software? And in today's capitalist society, how should people "consume" these fruits of intellectual endeavor?
"Quick noodles from NT$200"; "The Investigation Bureau is to blame for tonics going up in price"; "Urgent warning to all poor folk: on 1 February instant noodles will go up from NT$200 to NT$300 a disc." These are examples of Internet newsgroup messages from people with "noodles" for sale.
What they mean by "noodles" or "tonics" is in fact illegally copied computer software on CD-ROM. With the growing popularity of the Internet, it has naturally become a new venue for the trade in pirated software-after all, Internet users are computer buffs almost by definition.
Publicity vans from the Ministry of the Interior's Copyright Committee have repeatedly gone into Taipei City's Kuanghua Market area, where hawkers of "tonics" have been most active, to promote the principle of not buying or selling products which infringe copyrights. The sellers can no longer be seen blatantly spreading out lists and descriptions of CD-ROM software on top of large cardboard boxes. Today, they offer their catalogues furtively. The "goods" are kept at a safe distance, and they demand money up front before handing them over.
While in Hong Kong on a business trip a few months ago, Eric Lee, president of Softstar Information, a Taiwanese games software development company, took a stroll around the shopping malls of Shamshuipo and Repulse Bay. He came back with over 30 CD-ROMs of pirated software on which Softstar's games Rich Man 4 and Legend of Sword and Fairy were included. Printed on the packages were slogans such as: "Over 650 MB of software, more than 100 different games." The CD-ROMs were openly on sale in shops at just HK$100 for four.
Too much tonic
Why is there such a ready market for "tonic"? When one realizes just how "effective" it is, the answer becomes a little clearer.
Most people who have never bought pirated software imagine that one CD-ROM contains just one set of software. This betrays their ignorance of the market.
A CD-ROM writing machine costs close to NT$20,000, and a blank CD costs only a few tens of NT dollars. A single CD-ROM disc can contain several dozen sets of software, with a total value of NT$30-40,000. If the pirates sell the discs for NT$1000 each, they can earn back their costs with the first 10 to 20, and from then on earn high profits. This is a business in which both buyers and sellers feel they have much to gain.
Thanks to the efforts of the Information Product Anti-Piracy Alliance of the ROC (IPAPA), last year 189 cases of software piracy were prosecuted, involving over 80,000 sets of illegally copied software with a value of over NT$20 billion.
According to press reports, a fourth-year student at a private university, who was arrested late last year for selling pirated software, sought to justify his actions by asserting that since the computer software on the market was very expensive and new versions were always appearing, ordinary students could not afford it; by selling software to fellow students he was not in it for the money, but to help them out.
Software piracy exists because it has a market. Original software does indeed not come cheap: most games programs cost around NT$1000; the most popular operating system, Windows 95, costs NT$7000; and animation programs, which have grown popular with the rise of the Internet, cost around NT$30,000. Even white collar workers wince at shelling out such sums, never mind students who are not yet economically independent.
One college lecturer who teaches desktop publishing and multimedia production admits she has a lot of sympathy for students who buy pirated software. She says that from typesetting, graphics and film editing to sound production, she uses seven or eight kinds of software in class. To buy them all would cost well over NT$100,000. The college's computing center is only open for limited hours, and software upgrades are frequent. "Legally speaking, for students to use 'tonics' is an offense, but emotionally and rationally it's hard to blame them," she says.
Forced to revolt?
Thus it would seem that it is software companies' own pricing policies which "force the people to revolt." But software industry insiders do not subscribe to this view.
"When Microsoft products are launched in Taiwan, we release educational editions which are available to students at half to one-sixth of the normal price," says Chang Cheng-hsiu, business development manager at Microsoft Taiwan. By way of comparison, she observes that a car thief will gain no sympathy by claiming that he steals because he cannot afford to buy a Mercedes.
Tu Tze-chen, president of Acer TWP Corporation, also disagrees that the widespread trade in pirated software is necessarily related to high software prices. For instance, he says, last year Acer TWP released 98 games, but the best sellers among them were the most expensive, such as the strategy game Red Alert (NT$2000, 110,000 copies sold) and the latest version of the historical game Three Kingdoms (NT$1800, 40,000 copies sold).
In fact, one of the main reasons pirated software is so ubiquitous is that copies are so easy to make. Softstar Information president Eric Lee notes that when the video market was at its height, illegal copying of video tapes was also very common. However, repeated copying caused sound and picture quality to deteriorate. But computer data is stored in digital form, so copies of copies can be made without degradation of quality.
The advance of technology has given the villains the edge, and although software vendors have anti-piracy strategies, they do not seem to be very effective. To counter the tendency in the market for "copying without paying," some vendors protect their products by adding "hardware keys" designed to ensure that a program can only be run on one computer at a time.
"Taiwanese tend to agree with [ancient Chinese thinker] Xunzi's assumption that people are basically bad by nature; Americans agree with Mencius that people are basically good." This is one computer engineer's gloss on software vendors' special treatment of users in Taiwan.
But has the problem been solved? Or do the pirates find ways around protective measures faster than vendors can devise them? With the worldwide access and anonymity of the Internet, many computer enthusiasts, perhaps to prove their own superior skill, disregard the possible illegality of their actions and post software passwords and "cracks" (codes to simulate hardware keys) on the net.
Paradoxically, although protection measures are rarely completely effective, the more "watertight" they are, the more likely they are to cause inconvenience to legitimate users, thus punishing the wrong people.
Chang Cheng-hsiu of Microsoft Taiwan compares this to what may happen if you fit your house with an elaborate security system: get one step wrong in the operating sequence, and you might find that you and your family can't even get in through the front door. It's the same with hardware keys-if they don't crash the computer, they may cause compatibility problems and operating difficulties. In the face of complaints from users, some vendors have removed the protection devices from their software.
Going after the big boys
Most in the software industry agree that piracy is impossible to eradicate completely because people are by nature apt to take advantage. Nonetheless, from the fact that you now have to "know the right people" to buy illegally copied software, Acer TWP president Tu Tze-chen surmises that the quantity of pirated software in circulation in Taiwan has gone down.
Chang Cheng-hsiu says that according to rough estimates by the US's Business Software Alliance (BSA), in countries such as the USA, France and Japan pirated software accounts for around 30% of the market; judging from this figure, the piracy rate of 63% in Taiwan in 1997 could be cut by half. The question is, just how can such a large improvement be achieved?
IPAPA executive secretary Chen Wen-chuan says that the alliance is aware which colleges the students selling "tonics" are from, and has long been considering whether to give lists of names to college authorities. But "although what they are doing is illegal, it is not something which causes great harm to society at large." And even when students engaging in piracy are caught and prosecuted, judges are likely to consider these young people's future careers, and treat them leniently.
One form of infringement of intellectual property rights is the unauthorized large-scale commercial reproduction and sale of copyright material. IPAPA sees the prime task in the fight against piracy as going after the big boys by investigating and closing down factory-scale copying operations. If this is done successfully, the level of piracy will be greatly reduced.
As for the individuals who buy pirated software, at present neither the software industry nor law enforcement agencies are willing to expend much effort on prosecuting and punishing them. This is mainly because there are difficulties with enforcement, which is why even in advanced countries it has not been possible to reduce the level of piracy below 20%. But Liu Ta-chuan, head of the networks section of the computing center at National Chiao Tung University, reminds individual infringers that if they are not getting caught, "it is because vendors are going after other people, not because they have relinquished their rights; once they have dealt with the others, they may come after you."
High prices
Although most vendors regard as exaggerated students' claims that they cannot afford legal software, software really does earn huge sums for some companies.
Last year, the annual ranking of the ten richest Americans published by a US financial magazine included not only Microsoft president Bill Gates, but also the president of Oracle and two other computer software makers. This trend shows that software really is a goose which lays golden eggs.
At an international book fair at the Taipei World Trade Center in January, a Ms. Chen, who works in the publishing industry, gritted her teeth and spent NT$7000 on two educational CD-ROMs about computers. But later she realized just how many books she could have bought for the same money. They too are the product of intellectual endeavor, so why should software be so expensive?
Many computer users, whose experience of a few years ago was that software was something that came free with the hardware, are surprised to find that it is no longer given away the way greengrocers throw in a few shallots with the vegetables. In fact, all those images and symbols, and the intangible "knowledge" which becomes invisible when the computer is switched off, can cost users a lot of money.
In terms of economic theory, the main factors affecting the price of a product are the costs of development and manufacture, and the size of the market. Is the high price of software due to a small market and high costs?
Software "tailor-made" for a small number of specialist users, for applications such as electrical circuit design, space station simulation or image processing, can cost anything from tens of thousands to millions of NT dollars.
But in the games market, with products aimed at young people, "our market isn't necessarily any smaller than Japan's," comments Tu Tze-chen. He says: "In Japan the top-selling computer games also sell around 40-50,000 copies, even though Japan's population is seven times ours."
In Tu's view, the price of software is not so much related to cost as to the value attached to it by users. The same is true of cosmetics: their manufacturing cost is very low, but they are sold at high prices.
Associate Professor Chen Pai-ling, who teaches communications technology in the journalism department at National Chengchi University, says that software vendors should not assume that responsibility for teaching students to use legal software lies with anyone but themselves. They should also consider students' economic situation, and offer discounts which encourage them to get into the habit of buying legal software, before asking them to pay the full whack once they are working.
To take the products of market leader Microsoft as an example, over 700,000 copies of its Windows 95 operating system have been sold in Taiwan, but some people wonder just how much of the price users pay is for the software's intellectual content.
In 1995, Microsoft launched Windows 95 in 40 cities around the world, spending an estimated US$200 million globally on advertising. At the time there was a debate as to whether this was a new page in the history of the personal computer, or merely a sales frenzy fed by advertizing hype.
In Chen Pai-ling's view, "If software is the product of intellectual endeavor, then what users really ought to be paying for is creativity and development." Noting Microsoft's huge market share, he calls into question whether they should still be using "big money marketing," for which the consumer ultimately foots the bill.
A "necessary evil" of capitalism
But for the commercial machine to fire on all cylinders, shouldn't all developed products be marketed?
Microsoft president Bill Gates, in his autobiography The Road Ahead, describes in detail Microsoft's strategy of licencing computer manufacturers to use its software at low cost, in order to "win by sheer force of numbers"-in the same way as the VHS video format won out over Betamax-grabbing market share and making Microsoft software the industry standard.
Hence computer games are nowadays virtually all written for the Windows operating system.
"People feel lost and helpless using anything else. You have to admit their marketing psychology has been a success," says Liu Ta-chuan. But, he continues, we can't take their successful marketing as an excuse if we can't afford their software; and even if a product has a very high market share and is unreasonably priced, this also has to do with lack of openness in the market.
"There's nothing indispensable in this world-do we have to use expensive software?" Liu likens people who carp about the price of software to someone who insists on eating abalone instead of plain noodles, yet complains that abalone is too expensive.
Unless users have unwittingly been "taken in" by the marketing, asks Liu Ta-chuan, how many really need newly developed programs such as Novell's networking software or Windows NT? Or is it just a question of wanting to keep up with the latest fashions?
In Liu's view, "Using Microsoft Word to write letters is just plain ridiculous-if you're only going to use a tiny fraction of its functions, do you really need to buy it?" Word 7.0 has to run under Windows 95, and needs a computer with at least 32 MB of memory to work well. So software leads people by the nose, for of course they feel that a 286 PC is inadequate, and they have to upgrade to a 586.
The pursuit of new products and the promotion of consumption are among the necessary evils of capitalism.
Moore's Law, a well-known principle in the computer world, states that every 18 months the speed at which microprocessors perform calculations doubles, and the price of hardware falls by half. This accelerates the rate at which computers become obsolete, and the life cycle of computer equipment, which was once as much as six years, has been growing ever shorter.
Also, when computer software is upgraded, be it to correct bugs or to add new functions, the difference between two successive versions may be tiny. Many users may not yet have fully mastered the functions of the old version when the next edition appears on the market. To encourage consumers to upgrade, most vendors offer discounts to existing customers. For instance, the price of Microsoft's Office software suite is NT$20,000 for new purchasers, but for previous buyers it is cheaper by almost half.
Ever-changing software brings with it a constant need to learn and relearn its operation, and the psychological pressure of keeping up with the Joneses. These are some of the costs of chasing fashions and new technology.
Why pay?
The concept of "the user pays" not only involves the questions of whether to pay and how much to pay, it is also mixed up with arguments over cultural differences.
According to BSA figures, software piracy causes US software vendors annual losses of US$10 billion, with Asia accounting for a third of this figure. The part of Asia where the problem is most severe is the area inhabited by Chinese: mainland China, Hong Kong and Taiwan.
In their book Road Warriors, US writers Daniel Burstein and David Kline assert that the biggest obstacle to information products entering the mainland Chinese market is not totalitarian government or censorship: the real problem is that the Chinese do not feel the need to spend money to buy them.
Software which has not yet formally gone on sale in the US is openly offered for sale on the streets of Guangzhou and in Hong Kong shops.
But Burstein and Kline maintain that the moral issues involved with the gigantic, well-organized piracy operations in mainland China and elsewhere in Asia are not as simple as people in the West imagine.
They state that after all, the Chinese have never had the same concept of private property as the Americans, let alone of intellectual property. Furthermore, the Chinese would ask, when did Westerners ever pay a cent in royalties for the use of Chinese inventions such as gunpowder or paper? And when did Westerners ever ask about licencing fees for the treasures of Chinese porcelain which were stolen by foreign devils centuries ago and are now blatantly displayed in their museums?
In 1995, US trade representatives and mainland China's minister for overseas trade reached an agreement of symbolic importance, under which the PRC would give priority to controlling some of its most serious piracy problems, and would stop the production of counterfeit software by state-run enterprises.
On the Internet in Taiwan one can see the specious argument that it is "all right" to use pirated copies of foreign software, but one should use legal copies of local software.
The system of copyrights was developed in the 18th century by the bourgeoisie of Western countries in order to protect their private property. Over the past two centuries and more the concept has been developed, and now not only covers tangible works such as books and films, but also extends into the intangible "digital" domain.
"Of course we should respect copyrights," says Associate Professor Chen Pai-ling of National Chengchi University. Nevertheless, when he is explaining copyright to students, he asks them to recognize two facts: firstly, software development is the fruit of intellectual endeavor, and out of respect for authors and to protect them, they should be able to receive profit as individuals; but today we see capitalists who control the means of production acquiring copyrights through mergers. "The original purpose of intellectual property rights, to protect the authors of creative works, has been distorted."
Secondly, on the basis of historical experience, every invention in the history of mankind has been built on the efforts of those who went before. From this one can surmise that although the initial cost of developing a computer program may be very high, the cost of later developments gradually falls. Yet copyrights enable capitalists to reap enormous profits in an instant with little effort.
Point and click
However, raising high the flag of nationalism, as portrayed by Burstein and Kline, is not an effective response in a commercial war; better to be an intelligent user.
For software to be cheaper, there needs to be a large enough user base. To take purchases by educational establishments as an example, Chen Pai-ling says that with a limited budget, Chengchi University's journalism department does not buy 40 identical sets of software for the 40 computers in its computer lab. Instead they calculate how many computers are likely to be used at one time for a particular application, and buy, say, 20 copies of Microsoft Office and 20 suites of communications software, to install on different machines.
Many college computing centers also sign annual contracts with software vendors, and buy a certain number of sets of original software, under site licences which allow all faculty and students to use it. On the Internet there is also freeware (free software) available, which users should make the most of.
In fact, some people suggest that vendors ought to "use a long line to catch big fish"-they should give as large a discount as possible to educational establishments, because experience shows that once students have graduated, if they go into companies' purchasing departments or have the authority to suggest or decide the choice of software, they are sure to choose those programs they learned to use and became familiar with during their studies.
"Today, the computer market is still dominated by students and professionals," says Liu Ta-chuan of National Chiao Tung University's computing center. He predicts that just as has happened with cameras, specialist software will become more and more specialized. But most people prefer easy-to-use point-and-click cameras with adequate functions for their needs, and these are the products which are the most profitable.
Liu Ta-chuan predicts that as the home computer market grows, housewives who have barely got to grips with Windows 95 are sure to curse the software companies when Windows 98 comes on the scene, for how will they have time to learn to use it? "When the user base reaches a certain size, it will force vendors to develop more user-friendly and cheaper products."
All demand is generated by society. When considering whether we really want all kinds of software products with ever-improving functions, which force one to "upgrade or be left behind," we would do well to ask: "What do I need this for?"
p.94
As a group, students are the largest consumers of software products, but when weighing considerations of cost against respect for intellectual property rights, they reveal attitudes that are poles apart from those of software vendors.
p.96
Fed by enormous profits, software piracy has run rampant. A CD-ROM selling for only NT$1000 may contain illegal copies of software worth tens of thousands of NT dollars. As well as doing harm to software vendors' interests, this trade may sometimes also damage a country's image. Pictured here are hot-selling CD-ROMs of pirated programs, brought back from Hong Kong by the president of a Taiwanese software company.
p.97
As part of its efforts to stamp out the sale of "tonics," the Information Product Anti-Piracy Alliance of the ROC (IPAPA) seizes a group of computers on which pirated software is installed. (courtesy of IPAPA)
p.98
Software is a product of intellectual endeavor. From program design and imaging to sound production, it has become one of the most valuable assets for the 21st century.
p.100
The area around Kuanghua Market is Taipei City's largest market for the sale of computer products. It has also been a major target of efforts to eradicate software piracy.
The area around Kuanghua Market is Taipei City's largest market for the sale of computer products. It has also been a major target of efforts to eradicate software piracy.
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