In the first of a series of interviews with economics researchers at the Royal Economic Society Conference 2008, Romesh Vaitilingam talks to Karen Croxson about Promotional Piracy: Why some media and software companies turn a blind eye to illegal downloads.http://www.intute.ac.uk/socialsciences/blog/wp-content/files/croxson.mp3%5D
According to new research by Karen Croxson, they do this because while piracy may harm sales, it can also serve to provide free marketing, helping to create ‘buzz’ about a product.
The most high profile example of ‘buzz’ is the Arctic Monkeys, a British music group, which distributed its initial songs freely online. But firms in other industries may benefit from the same effect. Makers of office software such as Microsoft may enjoy a net benefit from piracy: business users are unlikely to copy the product, and others who copy it would not have bought it anyway. Thus, the main effect of piracy is extra cheap promotion, and this in turn may explain why copy protection applied to office software is relatively weak.