Sands

Let's use a hypothetical example:

You, EscortBiz, create and distribute a software called EscoDraw for $10.00 per copy. It's a promising graphics arts application that's quickly becoming popular because of some nifty features and ease of use. You distribute this product digitally, which means you don't have any overhead in terms of printing, packaging, and shipping physical discs. You set up a support center that verifies the legitimacy of a user's EscoDraw installation, and so you aren't spending any time or resources to provide support to freeloaders.

Now, let's say that 500,000 copies of EscoDraw have been installed on user's computers, but only 10% of these users actually paid for it. That would mean you generated $500,000 dollars. At first glance you would say, "but I lost 4.5 million dollars to piracy!" For the sake of this example, we'll assume (and it certainly is a flimsy assumption) that this pirated 4.5 million dollars is a measurable loss.

Let's fast forward two years. You've released another version of EscoDraw, and it's become the gold-standard in graphic arts applications. There are now "The Complete Idiots Guide to EscoDraw" and "Learn EscoDraw in 24 Hours" books. There are high school and college courses that teach EscoDraw, and now large media firms have adopted EscoDraw. Pirates and legitimate users alike have created unofficial support forums and tutorials for EscoDraw. Your software has become so popular that even if, still, only 10% of users actually paid for their EscoDraw copies, you now have 2,000,000 users. So for this new version of EscoDraw, you would rake in $2,000,000!

Let's rewind this example for a second and say that instead of allowing those original 450,000 users to pirate your software during its' initial release, your software came with killer DRM that was uncrackable, and so the only users with the first version of EscoDraw are those 50,000 users who paid. With a smaller user base you would not generate as much exposure, there probably won't be any "Complete Idiots Guide to EscoDraw" books, no unofficial support forums and tutorials (since all paid users have access to your support resources), and no high school/college courses that teach students how to use EscoDraw. In other words, your software would not be as accessible, would not be as popular, and therefore would not be as profitable. You may have saved yourself from that "loss" of profits from the freeloading 90%, but in the long-run you might not grow as prosperous due to a stale user base.

You ask, "who cares if they would or wouldn't buy it?", and I say, "anyone who understands that they can turn this negative aspect of digital distribution into a long-term positive."

Again, this is not an endorsement for software piracy. It's an endorsement for a forward-thinking mindset and long-term business strategy.