Software piracy is a problem. It has been an issue from the day one. As soon as people started selling software, others started copying it illegally. It’s funny, but we have built computers in a way that makes software easy to copy and easy to tamper with. Anyone can launch a debugger and observe how running program modifies memory. Anyone can launch a hex editor and modify a binary file using the knowledge gained from the debugger output. No matter what you do, to prevent people from copying software, you will fail. There is just no amount of money or time you can spend to make un-crackable DRM. At least not with the technology we have today, and will have tomorrow.
We have been trying to stop piracy for almost 30 years now. Millions of dollars were spent on copy protection software, hundreds of people made careers out of building DRM systems. And yet, we are not much better off today, than we were in the “don’t copy that floppy era”. In fact, we are worse off, because of the internet which has proven to be excellent at assisting people in distributing illicit, cracked copies of commercial software. Every time there is a hot new release, it always ends up on torrent sites within a few days. Attacking this problem with technology has failed consistently for years. The only glimmer of hope DRM proponents have is trusted computing which will bring hardware into the equation.
But trusted computing is still far off, and it won’t eradicate piracy. It will only make it a bit harder – for example, aspiring scene members may have to pick up some soldering skills. As long as there is a way to run custom made software on your computer, software piracy will continue to thrive.
Should we stop trying to sell software then? Is there no hope? Of course not. You just need to find an angle that makes piracy irrelevant. The most successful software makers found a way to sell software without actually having to worry that much about pirates. And I’m not talking about Microsoft here because they are in a league of their own. If you are as big as Microsoft and you have an effective monopoly racket going on you can just force people to buy your stuff by making backroom deals with computer manufacturers. For example, did you notice that is is usually cheaper to buy a Dell computer with Windows than without it? This is the kind of stuff you can do once you corner the market.
Short of becoming a monopolistic giant however, there are other things you can do. One of these things is to attach a subscription service to your software, and then sell that. How do Anti-virus companies make money? They charge you a monthly fee for the privilege of receiving timely updates. Without these updates your AV software becomes useless. You can technically pirate an AV suite but it would be pointless as their main value is in the continuous updates that modifies not only the virus definition list, but also tweaks the detection routines and the application itself.
MMO makers are playing a similar game. Do you think these guys worry about piracy? Of course not. You are not really paying them for the software, but for keeping your account open. And since your account restrictions are stored on their servers, you can’t really make them go away with a crack or a patch.
If you can find a way to sell a service of some sort, rather than the software itself, then you are set for life. You will never have to worry about pirates again.
Barring that, you can probably fare pretty well if you find yourself a good niche. You want to target your software at a group which is big enough to support your operation, but small enough to generate little or no interest in the scene circles. A good example here is the Army Builder. It is a tool that allows you to build and print army rosters for tabletop games such as Wahammer and Warhammer 40k. People keep asking me where to find a cracked copy of the newest version roughly once a month, and they are always baffled when I inform them that no such thing exists. At least not that I know of. It just haven’t been cracked.
Army Builder doesn’t even use a complex, advanced DRM. I believe that all they use are unique license keys combined with online activation. They also have a subscription service going on. When they update their software, they sometimes change the format for the army list files (most of which are community built). Anyone running older version may eventually be unable to use the most up-to-date army list files that are targeted at the most recent release. For obvious reasons, these format changes don’t happen often so their subscription is not as crucial as that of a AV suite or MMO.
Still, there is no crack. Why? Probably no one cared enough about their software to make the effort. Their copy protection is crackable, but no one with the skill to do it can be bothered. There are bigger fish to catch out there – brand name games, and popular applications that have much larger user base. Thus, Army Builder has remained un-cracked fro several years now. I don’t know how well they are doing financially, but they can’t be hurting. Every Warhammer player that I ever talked to knows about this tool, and has used it in the past (probably back when cracked version was available). Nowadays, they either have to shell out few bucks for a legal copy, go without this very useful, but not-essential tool, or use the outdated version and rely on community effort to back-port the new army lists to the old format. Chances are that their sales have picked up a bit because of this. With such a small customer base, this may mean a decent chunk of change going their way.
But what if you are a big company which releases blockbuster games, or sought after applications? What should you do then? Obviously, the niche approach won’t work for you. Cracking your products is actually meaningful and worthwhile endeavor so you can count yourself lucky if all your products are not zero-day releases.
Here is a crazy idea: ignore it. Yep, your solution to piracy is to fucking ignore the shit out of it. Implement some rudimentary level of protection that you think will prevent users “lending” their copy to friends and family, and then stop. Your software will be cracked no matter what you do. Every dollar you spend developing or licensing DRM is a dollar lost. I am deathly serious – instead of hiring someone to write DRM for you, hire an intern and have him feed $1 bills into a paper shredder all day for 4-5 months. The net result will be the same.
Army Builder folks invested in DRM and likely picked up sales because no one sans Warhammer players to lazy to write army rosters by had gives a flying fuck about their products. You on the other hand are a big target. There is an army of people out there who itch to make a reputation for themselves by being the first to circumvent the same copy protection you spent thousands of dollars developing. And they have a leg up on you. You know why?
You actually paid someone to write this shit. You had bunch of dudes, sit in their cubicles in some crappy office hacking away on this thing 8 hours a day. They probably hated every minute of it, and they were probably cutting corners to meet crazy short deadlines.
The folks cracking your software on the other hand, do it for fun. They run on pure passion, energy drinks and ingenuity. They will take turns pulling all-nighters if that’s what it takes to accomplish their goal. They will get so into it, that they will forget to eat or drink while they are disemboweling your software. They will take their laptop to the bathroom with them, so they can keep cracking while they take a shit! You just can’t buy that level of devotion, and personal investment in the project. These people live to crack your software. They can’t wait to do it.
So the best thing you can do is to cut your losses. If you don’t waste money on DRM, your bottom line goes up and your sales remain the same cause it would get cracked on release day anyway. Ignore piracy and it becomes irrelevant. Pirates are not your customers. They will likely never be your customers. If you could design a perfect, un-crackable DRM you could probably convert 5-10% of them to customers. And that is a very optimistic estimate. For Army Builder folks this might actually be a huge sales increase since they don’t have that many customers to begin with. For you, this is chump change. But this is a moot point because you won’t design perfect DRM. It’s impossible. If it was possible, someone would have don it by now.
The lost sales doctrine is bullshit and you know that. Ignoring the problem is hardly ever a solution – but in this case it is. It is a social problem, so the only way you can gain customers is to convince people that buying your software gives them more value than pirating it. How do you do that? I wrote about this before. Capitalize on as many of Kevin Kelly’s 8 generatives as possible (not surprisingly, subscription service is one of them). If you do that, you will offer people something more than they could get from a torrent site. Piracy will become irrelevant for you.
You just can’t sell software the way you sell cars or cupcakes – that’s really what all of this boils down to. If you want to make money on software, you need to figure out a way to take piracy out of the equation.