Playing with pirates: how companies can win the endgame

Abstract

Purpose The purpose of this paper is to expose two mechanisms by which pirated firms that market cultural goods can strategically use piracy to increase their profits. Design/methodology/approach The authors interpret several world examples through the lens of behavioral economics to identify mechanisms that can make pirates’ initiatives profitable for the intellectual property rights holders. They also address two principal objections to “beneficial piracy”. Findings First, intrinsically motivated pirates can be in a better position to shape consumers’ preferences in a sense favorable to the firm profit. Second, pirates can generate strategic information that can help original producers to increase their profits. Research limitations/implications Fighting piracy can be perfectly justified from a legal viewpoint while constituting simultaneously a bad decision for a business viewpoint. Moreover, some pirates follow ethical rules that can lead to a symbiotic relationship with pirated businesses. Nevertheless, the generalization of our analysis must be undertaken with caution given that our arguments have been developed out of observations of particular institutional settings. Practical implications Distinguishing “good pirates” from “bad ones” can lead managers to reconsider the systematic disapproval of copyright infringement in favor of more nuanced approaches. Social implications Piracy can be useful under some circumstances for the pirated firm and even for the whole society, by increasing access to cultural goods. Originality/value The authors identify two mechanisms that can make piracy profitable for pirated firms. These insights can help managers to avoid a “one-size-fits-all” policy regarding piracy and to seek how to create conditions for a mutual and shared success.