Posted on 5-12-2002

In Marketing, Free = Black
By Alan Marston

The Logos of `free markets', taken to its natural conclusion is the black
market, where anything goes. The promoters of free markets, especially the
USA but certainly not confined to it, are finding that having pushed the
ideology down others throats free marketeers in Asia are giving the West a
major economic headache. If its not bad enough to copy toys, clothes,
electronics, now digital piracy, often thought of as the illicit trade in
music, office software and games, has moved into serious territory,
politics (and hence war).

A black market has emerged for scientific and engineering software which
can be used in a wide range of tasks like designing rockets or nuclear
reactors or predicting the path of a cloud of anthrax spores. Intellectual
property "isn't just Napster," and it "isn't just copying Madonna's songs,"
one US Justice Department official said, adding, "It's the software that
wares from 120
other companies. Many of those companies are also subject to more stringent
rules against exporting their technology to a broader list of countries
deemed a military risk by the United States government. The illicit copies
of the software from Intelligent Light, which in licensed versions
typically sells for $12,000, was being sold by Chinese entrepreneurs for
$200. The posted advertisement for the wares promised that a "step-by-step
install guide and crack file make it easy to install and use!" Which means
that anyone with a modem and a little cash can evade the export control
rules, even those that apply to prohibited countries. "All they need to do
is get a wire transfer, and they can get the software over the Internet,"
Mr. Legensky said.

But when companies want to take action against a breach of the export
controls, they often find themselves frustrated — more often because a
government is reluctant to crack down on emerging trade allies like China
and of second ran, because software piracy over the Internet is almost
impossible to stop, even when there are attempts to do so.

Free trade promoters have sown the wind and China has wipped up a
whirlwind. Black-market sales and violations of copyright are not new and
China has long been notoriously lax in its protection of international
copyright. The Business Software Alliance, an industry lobbying group with
a vigorous anti-piracy program, estimates that 92 percent of the business
software used in China is pirated. Robert M. Kruger, the group's vice
president for enforcement, said that despite small declines in the rate of
piracy, the dollar amount was growing as the nation developed.

Though the case against piracy is passionately argued by paid advocates for
the music and film industries and Silicon Valley, the Business Software
Alliance's own surveys show that most consumers find it hard to summon
outrage. They see the fight as a way to ensure that Bill Gates and Britney
Spears get every penny coming to them. Not all concerns about software
piracy, however, are about ensuring that the rich become richer, entire
industries and all the jobs, economica and environmental well-being
associated are on the line when a rogue nation is left to its own and
anyone elses devices they can copy.