This morning, Jeff Atwood wrote a blog post about software piracy entitled My Software Is Being Pirated where he talks about how companies can deal with the fact that the piracy rate among their users could be as high as 90%. He writes

Short of .. selling custom hardware that is required to run your software, like the Playstation 3 or Wii writing a completely server-side application like World of Warcraft or Mint .. you have no recourse. Software piracy is a fact of life, and there's very little you can do about it. The more DRM and anti-piracy devices you pile on, the more likely you are to harm and alienate your paying customers. Use a common third party protection system and it'll probably be cracked along with all the other customers of that system. Nobody wants to leave the front door to their house open, of course, but you should err on the side of simple protection whenever possible. Bear in mind that a certain percentage of the audience simply can't be reached; they'll never pay for your software at any price. Don't penalize the honest people to punish the incorrigible. As my friend Nathan Bowers so aptly noted: Every time DRM prevents legitimate playback, a pirate gets his wings. In fact, the most effective anti-piracy software development strategy is the simplest one of all: Have a great freaking product. Charge a fair price for it. (Or, more radically, choose an open source business model where piracy is no longer a problem but a benefit -- the world's most efficient and viral software distribution network. But that's a topic for a very different blog post.)

It is interesting to note that Jeff's recommendation for an effective anti-piracy solution is actually contradicted by the example game from his post; World of Goo. The game is an excellent product and is available for ~$15 yet it is still seeing a 90% piracy rate. In fact, the most effective anti-piracy strategy is simply to route around the problem as Jeff originally stated. Specifically

target custom hardware platforms such as the iPhone or XBox 360 which don't have a piracy problem

build Web-based software

However if you do decide to go down the shrinkwrapped software route, I'd suggest casting a critical eye on any claims that highlight the benefits of the "Open Source business model" to shrinkwrapped software developers. Open Source software companies have been around for over a decade (e.g. RedHat was founded in 1995) and we now have experience as an industry with regards to what works and what doesn't work as a business model for Open Source software.

There are basically three business models for companies that make money from Open Source software, they are

Selling support, consulting and related services for the "free" software (aka the professional open source business model ) – RedHat Dual license the code and then sell traditional software licenses to enterprise customers who are scared of the GPL – MySQL AB Build a proprietary Web application powered by Open Source software – Google

As you scan this list, it should be clear that none of these business models actually involves making money directly from selling only the software. This is problematic for developers of shrinkwrapped, consumer software such as games because none of the aforementioned business models actually works well for them.

For developers of shrinkwrapped software, Open Source only turns piracy from a problem into a benefit if you're willing to forego building consumer software and you have software that is either too complicated to use without handholding OR you can scare a large percentage of your customers into buying traditional software licenses by using the GPL instead of the BSDL.

Either way, the developers of World of Goo are still screwed.

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