3. Consumer VS Producer

Ever wondered if we were to compare between the consumers and the producers, which category will be benefiting more in this world of digital piracy? This issue shall be discussed here.

In the market of music, movies and computer software programmes, both the consumers and the producers are competing to get their own gains. The producers are the ones who create the products in the aim of getting sales from the consumers; whereas the consumers are the ones building the size of the demand in the market while expecting for quality cum affordable products.

Categorization of Consumers   

There are two types of consumers.

1) The pirates paying less than their fair share for the digital content

2) The non-pirates paying more than their fair share.

These two type of differing behaviours results in an issue of unjust. Not only does it raise the issue of unjust among the consumers, such unjust is also cast upon the producer whereby their profits decrease. Piracy is commonly considered to be detrimental to firms’ profit unless there exist strong network effects in the product market.    

·        Producer at a loss

There have been people who claim that piracy damages producers' surplus because it causes decline of music sales.  All the companies spent significant time and energy creating and promoting new music/movie/software. It is unfair that all this hard work, the product of their efforts is subject to a free-for-all with no obvious flow of money back to the producers. What is the incentive of putting forth all that effort if you don’t reap any benefits? Because of the presence of digital piracy, the producer has suffered great lost from the drop in sales of their legal products.
 

·        Producer at benefit

On the other hand, there are those who claim that piracy, under certain conditions, has beneficial effects on production of digital products and increases profitability.  

Piracy attracts the most price sensitive consumers. It could be beneficial to firms in this case as it removes these consumers from the market whereby firms will have less incentive to engage in self-destructing price competition. 
 

·        Consumer at a loss

Consumers who are non pirates will end up paying more than their fair share compared to those who purchase it illegally.
 

·        Consumer at benefit

Consumers who are pirates will benefit as they are paying less than their fair share. The cost saved can be spent on other areas. To download illegally is as easy as turning the internet on and doing a quick search, many of such downloads can be effortlessly found online. To such consumers, the ability to get these entire download at such great convenience is a great deal to them.