The imaginary cost of piracy.

A Canadian panel suggests that if it weren’t for people stealing music, then songs would be cheaper:

Upside Software, a company that creates contract management software, has the same problem. Some 35 per cent of its revenues are spent on R&D, so if revenues go down due to pirating, the company has less to spend on it, said Ashif Mawji, president and CEO of Upside Software in Edmonton.

"There’s a direct impact," he said. "If you don’t support the company, they don’t get the full revenue potential – think about the tax impact." It also means the cost of piracy is factored into product pricing. If everyone paid for songs off the Internet, for example, competitive pressure would force prices down (from say, 99 cents a song to 25 cents).

He neglects the fact that in Canada people pay for the downloading of music through levies on blank media. It is unlikely that competitive pressure would force these prices down when record companies are already complaining that 99 cents per song is far too low, even though there are none of the costs associated with the manufacture and distribution of a physical product.

Typical of software companies, he also assumes that every pirated copy equates to a lost sale, and throws in the red herring of lost tax revenue on sales that were never made, and probably never would have been.

Via Digital Copyright Canada.

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