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‘The 2007 Digital Music Survey’ by Entertainment Media Research, which was conductedin association with leading law firm Olswang, reports that worldwide piracy is on the rise.Do IT experts agree? If so, does this mean security experts are fighting a losing battle?Or is there a way out?

We brought in Dr Prem Chand, vice president, E Security Services, Tech Mahindra; RajeshMani, practice head - Media & Entertainment DRM, Tech Mahindra; Nikhil Donde, principalconsultant, PricewaterhouseCoopers; Deepak Prasad, general manager, SafeNet India; andAravind T S, software engineer, Infosys, to discuss this seemingly ‘forever hot’ issue, and foundthat they all agreed that piracy is on the rise.

That privacy continues to prevail—nay, grow!—is not really surprising. As Donde points out, theInternet, although a technological boon, has simultaneously proved to be a bane, insofar as theproliferation and transfer of pirated content has been made very easy by way of downloads, andtransmission across peer-to-peer networks, often traversing borders. Separately, barriers to themovement of pirated media have faded away as travel restrictions are lifted to encourage globaltravel, implying that master copies move easily from one country to another.

In fact, Prasad goes so far as to opine, “Piracy will worsen, as the exchange of information willbecome easier with further progress in technology. Better broadband speeds,” he says, “willallow the transfer of 500 MB of software or content in minutes.” Aravind too, predicts the worst,“The development of more software products translates into more piracy.” Undoubtedly, wewould all like to avail of a still greater range of digital wares and content, but at what cost?

Too little of the right thing

Shockingly, this gloomy scenario prevails despite the millions of dollars being spent bycompanies around the world to devise better ways to protect digital products. These outlayshave even spawned a lucrative anti-piracy specialist segment that draws some of the bestminds of the IT industry. Imagine—Internet sources reveal that every month, Universal Musicostensibly spends US$ 4000 to protect a single album, and US$ 2000 to protect a single track.But, sadly, even such generous budgets have only managed to partially solve the problem.Piracy has still not been rooted out.

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But why?

Is it a case of misplaced objectives? Or are companies doing too little of the right thing? Maniexplains how the typical anti-piracy ‘job’ “is outsourced to specialist companies known as mediadefender services, who trawl the Web to determine, and then jam sites from where songs arebeing downloaded. Other digital protection technologies like encryption, watermarking andfinger-printing solutions are also being applied, but more with the aim of determining areaswhere content is misused, and to determine the point of leakage, than as investigative andpreventive mechanisms.”

Apparently then, current solutions are limited to one part of the piracy problem. Forinstance—consider that some music companies track the online purchases of music with thehelp of information included in the media content headers. These help determine say, if I’veinappropriately shared music I’ve bought. But companies are still using such information only tosuppress piracy—or as Donde says, “…to stifle the exchange process within the hackercommunity”—and take no direct legal action on offenders.

Borderless pirates

Could one reason for this supposed lack of follow-up action, as it were, be that offenders aresituated across the world, and hence legal action would be both an expensive and confusingproposition? After all, as Aravind points out, “Piracy is a universal issue, even though volumesmay differ from region to region, depending on how strict the local laws are.”

On the other hand, Dr Chand rues, “Piracy is definitely a universal issue, as prevalent in the USmarkets as in India. Check out any railway platform. You will see a plethora of pirated techproducts being sold! Get to any torrent or P2P sites, where you get a varied list of contentposted from different parts of the world.”

These insights highlight the fact that pirates and piracy are everywhere. Even so, legal action iseasier in countries where anti-piracy laws have evolved, and hence are swifter to implement. In

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this regard, Prasad practically opines, “Though piracy is largely a universal issue, it is morerampant in developing economies where economically, software (and other digital content) isperceived as an unnecessary expense, specially where the price of the product is high.”

Are pirates born or made?

Prasad’s statement brings into focus a vital question—is piracy driven by careless, disrespectfulattitudes, or is it a result of economic compulsions?

Donde feels that piracy has not reduced because awareness has not increased the way itshould have. At the same time, he segregates those patronising pirated products into three setsof people, in terms of their different attitudes towards piracy. “One set,” he says, “is genuinelyunaware of the problem and its illegal nature, and hence uses pirated CDs—containing softwareor entertainment content. Another set consists of people who are aware of the piracy menace,yet who nevertheless get taken in. Consider a manufacturer who uses software that is partiallybuilt on pirated code as exemplifying this category. The last set of people includes those whoresort to piracy because they have no choice—say an SME that would like to use genuinesoftware but cannot afford it. So the third set faces a practical obstacle to conducting business.Even though I agree it can opt for open source software, sometimes business persons are notof a technical background, or they perceive software or IT as a mere support function to theircore business; so they don’t spend too much time or energy on this problem.”

Apparently, some users’ attitude is an outcome of their economic compulsions. In fact, so longas price is a criteria driving or preventing piracy, the attitude of digital content creators andowners is also part of this ‘issue’.

Content owners, it could be said, must get real when it comes to pricing, and change theirattitude too. For instance, a track that costs 1 USD cannot be priced at Rs 40 in India—thatsimply would not work. Pricing must be in consonance with the local market. For example, TataIndicom is distributing tracks for Rs 6 to 7 to its broadband customers—this works well in India.As Mani puts it, “The idea is to make the content so affordable that people would rather buy itthan pirate it.” Otherwise, even people who realise that piracy is wrong think twice about buyingoriginal content, and sometimes also veer towards piracy.

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Innovation should be aimed at reducing prices

One could reason that if digital content owners would only siphon some of their spending onanti-piracy-ware into the technical development of cheaper products, the prices of software andcontent would drop as a result of technical evolution. According to Aravind, “The creation ofproducts affordable to all would be the best solution.” He elucidates, “At present, way too manypeople want software for free and, in contrast, companies are not ready to cut down prices.Interestingly, both end up as losers. Those involved in piracy, either by pirating products or byusing pirated products, sacrifice the security of their PCs, leaving them vulnerable to worms,viruses and other infections. On the other hand, companies are spending more time and moneyto protect their products from pirates. It would be better if they had spent the same money andtime in making the product cheaper, and truly indispensable. A change in attitude has to bebrought about, for sure, but it should be driven by the cost-effectiveness of products. This isalso true in the case of emerging countries, where the US$-to-local currency ratio is high. I amnot sure if there is a final solution to this problem, since educated people also indulge in it.However, its magnitude can be reduced by lowering costs.”

That educated people also indulge in piracy comes as no surprise—we may all have used someform of pirated product at some point in our lives. But do educated users have any genuinecause for complaint against the sellers of content, which drives them to accept piracy?

Digital ‘rights’ or digital ‘restrictions’?

Insofar as piracy is a function of attitude, Mani opines, “I would like to point out that users todayperceive digital rights technology or management more as digital restriction technology ormanagement. The technology that drives anti-piracy measures is still evolving, and as long as itremains in a state of flux, the users lose out by not truly availing of the digital rights they havepurchased.”

For instance, if you buy music content, you would expect to be able to use it across all theplayers you own—perhaps a portable music player, laptop, a desktop, etc. As long as users areprevented from doing this because of certain technology restrictions (music playable on an iPodis not transferable) they tend to be less supportive of anti-piracy initiatives. They feel—‘I havebeen restricted from exercising my right, so why not resort to piracy now and then.’

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Donde also explains how “…branding has created a demand for products across countries.When users desire a product, and it is either not locally available, or available at a price that isunaffordable, they resort to procuring its pirated version. So pricing is another major factor thatneeds to be addressed by content owners.”

Combat piracy via innovating licensing methods

So—we travel a full circle and come back to pricing! Even as he agrees that piracy is definitely aquestion of attitude, Prasad affirms that price is a barrier in curbing piracy. “Price,” he says,“could be reduced, with innovative licensing models to control the menace of piracy. Softwareand content development organisations should come up with innovative licensing models.These low price models, very near the cost of pirated products, will help push the adoption oflicensed products by customers. Good licensing models, the option to pay per use, ‘n’ tiermodels, subscription and availability on mobile devices will all prove useful. The adoption ofstronger protection technology, coupled with the use of protection technology in licensing, suchas providing software or content for consumption at 10 per cent of the cost for a limited timeperiod, will ensure a win-win situation for both developers and customers.”

Regarding tech innovations, Donde seconds the need for a proper licensing mechanism forsolutions, as this will help change user attitudes. He cites the example of Microsoft coming upwith a digital rights management solution, which was countered by a similar open sourceproduct by the Open Mobile Alliance. What this practically does is to create choice for users.

“Buy me—I’m licensed to support you”!

Eventually, such competition will drive prices further down, to the extent where users will nolonger, in Prasad’s words, “…consider it worthwhile to own a pirated version. These low prices,coupled with a changing attitude towards piracy, whereby more users are keen to own authenticlicensed versions of products rather than compromise on future support, upgrades, etc, is whatwill finally change the scenario.”

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Aravind believes that customers may be encouraged to use genuine products by showing themhow much they stand to lose in terms of product support and updates. He explains why cuttingprices should never be an issue, as “…companies can still have back-end sales, charge forupdates and support, and think up other novel ways to monetise their products. They shouldnote that most of Google’s online services are free of cost. Here, perhaps, is a lesson for othercompanies—‘qualified customers are worth more than what you think’.”

Any solution will work—provided it is installed in time!

Speaking of lessons, companies must also take timely steps to ensure they are not caught offguard. Donde elucidates, “Digital rights management has its own place, as it helps meet keysecurity objectives. Simultaneously, there are other measures intended to keep documentssafe, code secure, and digital media protected. There is room for many specific solutions, andthese are all useful, but sometimes people wake up only after they have suffered a loss topiracy. It is essential to bring in experts to assess the risk a company faces, not just once, butcontinuously at regular intervals. Sometimes, a company takes things lightly and gets caught atits weakest moment. Companies can only stay ahead of ‘pirates’ if they are actively involved inprotecting their content.”

Innovate at both software and hardware levels

Simultaneously, technologists must focus on innovations both at the software and hardwarelevels. Hardware level protection is by now well known. For instance, companies have devised asecure music path concept, whereby digital music files are protected by virtue of analogue(player) sound cards. If people try to record a song playing via an analogue source, they will notbe able to make a ‘digital’ quality recording. Other innovations happening at the hardware levelare by Microsoft in Vista; they had earlier come up with the Secure Audio Path technology in XPand ME.

New formats like DTH (Direct To Home) TV involve the use of set-top boxes incorporating bothsoftware and hardware to counter piracy. If these boxes are opened, a key that was burnt intothe hardware gets erased and the set-top box is rendered useless. Mani says, “This kind of

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software-hardware combo protective solution will succeed in limiting the access to a service orproduct—to those who possess hardware—as well as limit the range of services availed of—bycoding the hardware according to rights paid for. Basically, companies must realise thatconsumers must retain the rights they pay for.”

Aravind also favours a combination of both kinds of protection. “While hardware-level protectionmakes the product machine-dependent, protection at the software level could be relativelyeasier to crack. Both have their own set of pros and cons, and striking a balance may only be amatter of time,” he says.

A multi-pronged effort

A balance could well be the way out—as Prasad explains that both hardware and softwareprotection will co-exist due to the benefits each has to offer in varying scenarios. But holistictechnological evolution must be matched by a renewed focus on awareness, to result in apermanent attitudinal change—among common people and in legislation. Donde cites the“…efforts of governments of Third World countries to enforce policies to ensure they useauthorised software across departments. They are also waking up to the possibility of usingopen source licences. India is at the forefront of this awareness drive towards compliance, andis taking many steps in the right direction. People addressing the piracy problem must be veryclear about where there is the most non-compliance. Advisory bodies could help launch adcampaigns, and suggest policy level changes such as the now reasonably comprehensiveIndian IT Act,” he says.

At the end of the day, Dr Chand observes, “A mix of tech innovation and a change in attitudes,both at the user and corporate level, is what could solve piracy across the world. If technology isimplemented in a user-friendly way, it is only a matter of time before piracy is eradicated.” Fairenough—at least we have something to look forward to!

The Voice of the People

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In spite of all the rhetoric about containing (never mind eradicating) piracy, pirates andtheir wares abound. Why? Are the technological innovations coming out of small andlarge IT stables not useful, or lacking in genuine deterrents? Or are the masses justadamant about supporting piracy, for whatever reasons? On behalf of ‘i.t.’, Charu Bahrispoke to a few well-placed experts and consultants for their opinion on what would bethe best approach to abolish piracy.

Is the piracy menace getting better or worse, and why?

“Most of China runs on pirated software, and there is little that the affected companies can doabout it. Even Internet operating systems used in networking gear by companies like Ciscoseem to have been pirated by Chinese companies providing similar equipment at a fraction ofthe cost. At the same time, software like Windows has evolved to make piracy difficult, if notimpossible. Overall, piracy as an issue is moving to a different zone, with control and actionshifting from regulatory machinery to the market participants themselves.”

– Sanjay Negi

“Yes! It is getting worse, with disruptive and storage technologies becoming cheaper and newtechnologies arriving on the scene. A few examples…

- People can send content, images and software easily on Bluetooth, IR (Infrared), Wi-Fi orZigbee without realising the copyright violation. - Technologies like DRM (Digital Rights Management) are creating more opportunities forhackers and underground sites, which increase traffic to their sites by hosting cracks, patchesfor breaking DRM codes. - New technologies like wireless-USB (Universal Serial Bus)/UWB (ultra-wide band) andWiMAX will allow people to transmit gigabits of audio, video and other information in a jiffy to aninnocent and honest user. - Falling prices of storage technologies—SD (Secure Digital), MicroSD, etc allow people tostore, carry and transmit large amounts of data and trade information.”

– Gurudev Goud

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“I would like to point out that software piracy has always been one of the foundations of India’sIT success, especially amongst the small and medium enterprises. In fact, I am aware ofcompanies of even 500 employees or nodes in the late nineties who maintained a 10 per centlicensing policy—for every 100 usage nodes, ten licences were the norm. Though there was atleast a single licence of every software in use, under-licensing has always been the norm. I amsure that has changed for every company listed on NASDAQ, due to the appropriatedeclarations required by US legislation. I still believe that the norm may have been increased forother companies, but we are still a long way from adopting the ‘full licensing’ paradigm.

From a financial perspective, I am personally sure that full licensing, if adopted by any small andmedium (less than Rs100 crores of turnover) technology enterprise will push its cost structuresbeyond competitive sustenance. And, as such, will serve to maintain the hegemony of the largeand multinational software companies. If I want to buy twenty licences, I am likely to pay a pricethat is more than ten times the price per licence paid by an MNC with 250 or 1000 licences. Ifthey will get the benefit of volume pricing, I, as an entrepreneur, am forced to take recourse topiracy to remain competitive.

Software piracy is not only about the rights of the vendor but also about the compulsions of thebuyer.”

– Jayant Tewari

“The piracy menace is definitely getting worse. People are looking for pirated software, as it’scheaper, and sometimes free of cost. I would say piracy is changing the attitude of peopletowards real products. Sometimes, piracy is introduced by ‘other’ parties to cause economicbreakdown. These may include competitors or other nations. Rules governing piracy are limited,and are sometimes applicable only in certain jurisdictions.”

– Amit Kumar S Mahajan

What will eradicate piracy – a tech innovation or a change in attitude? Why?

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“Piracy as practised today may become irrelevant before it can be eradicated. With the movetowards Web applications like Google Docs, and even Microsoft following suit in a limited way,much of the popular applications like word processing, spreadsheets and presentations wouldbe available over the Net, and the mass market for these products may shrink, if not disappearaltogether. Enterprise business applications and systems will of course continue to be licensed,and these do not suffer from much piracy in any case.”

– Sanjay Negi

“There are initiatives being taken to eradicate piracy. Definitely, it does not need techinnovations, as ‘pirates’ take up every tech innovation as a challenge and try to find solutions forit. Attitude is the only thing that will eradicate piracy. But attitudes present a dilemma – peoplemaking products should find a mid-way to kill piracy. For example, they can sell a low-qualityversion of their product at the same rate as the pirated copy. This is what will change theattitude of people, as they would prefer buying the original product instead of the pirated one.We know that this is happening in the entertainment media, and it’s working, which is a positivesign. The easy availability of products at moderate prices will definitely eradicate piracy.”

—Amit Kumar S Mahajan

“Piracy of all sorts is as old as humanity, and will be here to stay as long as humanity exists.While we all know piracy cannot be eradicated, a change in attitude and business models willaddress the issue of piracy to a huge extent. Technologies that try to address piracy directly willonly create more opportunities for pirates, and will actually aggravate the problem. Listed beloware a few examples of how a change in attitude and business models will address the problemof piracy to a large extent:

- Loyalty programs by content/music firms with user groups and customers and otherinnovative methods (like appointing hackers as a legal distributor). - Incentives for not sharing copyrighted content (e.g., if an iPod can track that no contentwas transferred through USB/IR or other means in one year, then you are entitled to aniPhone). - New laws that will allow copyright owners to own the copyright for a limited time period(like pharma-molecules patents). - Incentives to share content: e.g., an algorithm in a forthcoming music video by Shakira

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that will actually increase the Hi-Fi/HDTV (high-definition television) quality of the album or willallow bigger discounts on another volume every time it is shared. So users, in the pursuit ofbetter quality, will actually share the information with multiple users and increase the recordsales in return. - Technologies that help implement the above business models. For instance, KTwo hascreated an Intellectual Property Protection System (IPPS) that allows firms to transmit andshare their IP freely, but the moment a customer of the firm starts using the IP to make money,the IPPS system prompts or asks the user to register and pay for the extent the user wants toearn money through the IP.”

– Gurudev Goud

 

The respondents

  

Name

 

Designation / Organisation

Dr Prem Chand

 

Vice president—E Security Services, Tech Mahindra

Rajesh Mani

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Practice head—Media & Entertainment DRM, Tech Mahindra

 Nikhil Donde

 

Principal consultant, PricewaterhouseCoopers

 

Deepak Prasad

 

General manager, SafeNet India

 

Aravind T S

 

Software engineer, Infosys

Jayant Tewari

   

Independent outsourced CFO to small and medium technology companies,

http://OutSourcedCFO.GooglePages.Com

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Sanjay Negi

 

CEO, TBS: Technology for Business Solutions

 

Amit Kumar S Mahajan

 

Software engineer, Mastek Ltd.

 

Gurudev R Goud

 

Vice president—Business Development, KTwo Technology Solutions

 

 

 

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