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Protecting from
Piracy
"Typically expect that your
losses due to piracy for unprotected products will be equal to your
current (or projected) turnover of unprotected products. I.e.
50% of your sales are typically lost to piracy. Losses are likely to
be much higher (i.e. sales lower) if your products become available
in Kazaa, eDonkey, Overnet etc."
The table below is based on typical
figures from a large number of companies of these sizes who have
come to us over the last few years with plans to sell digital
content.
| |
Income
from unprotected products |
All
costs including staffing, advertising and overheads |
Additional
income from protecting products |
Typical
additional cost of protecting products |
Effect
of DRM/Anti Piracy measures |
| Corporate
- scenario 1 (optimistic): Established
(typically public) company or large new brand or web
site selling (or planning to sell) with 20,000 subscribers at
$10 per month. |
$2,000,000
p.a. |
$1,000,000
p.a. |
$2,000,000
p.a. |
$100,000
p.a. |
Increases
profits from $100,000 p.a. to $290,000 p.a. |
| Corporate
- scenario 2 (realistic): Small
web site selling (or planning to sell) 10000 downloads a month
of 99c product (or 1000 subscriptions for $20 service). Again
this is a very typical scenario for digital content where
the seller is waiting for a profit before deciding to protect
the content and instead goes bust or closes down the web
operation and rights off the investment. |
$2,500,000
p.a. |
$3,000,000
p.a. |
$2,500,000
p.a. |
$500,000
p.a. |
Increases
profits from $500,000 p.a. losses
to $1,500,000 p.a. profit. |
"Piracy protection is a major
factor that determines profitability. Case studies from literally
dozens of companies show clearly that waiting to be profitable
before protecting content will make your project fail."
"Intelligent shareholders,
investors and managers are now fully aware of this factor and will
make additional budgets available to prevent this waste of time and
resources due to poor implementation and understanding of market
dynamics."
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