Problem Observed
The piracy puzzle that exists in Eastern Europe is an
incredible challenge for software
producers. In Russia alone, with an
estimated 94% software piracy rate [1],
millions of dollars are lost each year.
Russia is embracing high technology at a
phenomenal rate. They need software, but
what will be their source?
In the last few years,
computer shops and open-air markets have
made computers readily available. Kiosks
are popping up on every corner. Besides
selling snacks, vodka and cigarettes,
they often offer other wares: software,
videos and music. One day, out of
curiosity, I bought a CD-ROM I saw
displayed in a kiosk. It contained the
full version of Win 95, Office 95, and
dozens of other software titles…all
for the wonderful price of $3. I already
owned the legal versions of the titles,
but I bought it to really see what was
available in the Russian market. People
pass around software at work and among
friends. With the increasing use of
CD-ROM, the problem will only escalate.
Adding to the dilemma,
the use of the Internet is growing
rapidly. ITAR-TASS reports that the
number of ISP's has increased five-fold
in Russia over the past two years to over
400 [2]. (A friend of mine is the
director of an ISP. She has told me that
business is booming!) Piracy via the
Internet is an ever-growing problem. It
is not just teenagers surfing around for
free games. Businessmen and professionals
learning of the plethora of
"free" software download
millions of dollars worth. Not only is
the piracy problem affecting the bottom
line investment of companies such as
Microsoft, it is hindering the growth of
the Russian domestic software industry.
Problem Roots
While the problems may
relate to illegal activities (from our
Western minds’ eye), the real causes
go much deeper. Several factors are often
ignored when people devise solutions for
Eastern European problems. Although there
is incredible potential in the
market, there are some major barriers
that must be considered: the
country’s economic conditions, the
political climate, the moral reference
point of the people, and their character
and culture.
Communism dealt a
horrible blow to the belly of the Russian
economy. A country rich in natural
reserves and human potential slumped to
the ground in pain from the impact of
economic mismanagement and narrow-minded
policies. This domestic financial crisis
reaches right into the pockets of
Russia’s "Alexanders" and
"Ekaterinas" of today who are
trying to earn a meager living. "We
have no money," says Alexander
Ostroumov, a professor of applied
mathematics at Moscow State University.
After purchasing a CD-ROM tutorial on an
advanced programming language for $5
(which legally retails for $400), he
said, "This is the only way to study
it (the language), this is the only way
to learn. [3]" Many of the
colleagues I worked with, some of them
University professors, are attempting to
live on $100-200 a month salary! The
present financial strain on Russia’s
population is a factor in software
pirating. Consider a Russian on a low
income: Will he buy a $50 CD drive and
get unlimited cheap software or buy
individual software titles for $250 each?
Politics certainly play
a role in the piracy problem. Watch any
news program and you can see that the
political climate in Russia and other
former Eastern bloc countries is
unpredictable. The operative word is
"unpredictable." Things change
quickly. The shifting sand is not only in
government. Business relationships change
frequently too. In trying to get things
accomplished, more often than not, it is
not what you know, but who you
know. In Russia, there is a huge
proportion of unqualified people doing
momentous functions. The job or power
that they hold was not obtained because
of their abilities, but rather, their
affiliation. Some people hold on to
positions simply by knowing whose back to
scratch. Knowing how to network with the
right people can bring about incredible
results in Russian business. For me,
knowing someone who knows someone has
opened previously impermeable corridors
in Russia. Furthermore, a clear
understanding of the rigid cultural class
system is essential. It is no wonder that
many Americans run into brick walls when
trying to work through the soviet
bureaucracy that is still alive and well.
Enforcement of laws and the cooperation
of officials are dependent much more on
relationship, power, and prestige than on
any laws actually written in a law book
somewhere. In fact, often there are
contradictory laws on the books. For
instance, the law that prohibits
possession of foreign currency is still
on the books, even though Yeltsin signed
a law that made it legal to own foreign
currency. A policeman can enforce the one
that he wishes, whichever one, at a given
time, benefits him most. You can
see why having a relationship with
someone in power is very important!
When working in any
international market, understanding the
culture is essential in effective sales.
Seventy years of communism has mired the
economic and financial playing field.
Like a football player who has trained on
a soggy field, the advantage is
significant if you know how to play in
unusual conditions. I never cease to be
amazed at how little investment American
companies make into helping their
employees understand target cultures.
Understanding culture is much more than
just speaking the native tongue; it is
understanding the motivation and mores of
the people and community. One important
aspect of working in the Russian culture
is the understanding of the moral
reference point within the people. It is
considerably different than our American
perspective.
Russians are much more
relational and connected than are most
Americans. They are accustomed to
community living. This is a major
challenge that is faced in piracy
prevention. It is hard to break through
the psychological barrier that all things
should be equally shared by the many. Why
shouldn’t a single CD be shared
among 50 friends and neighbours? [4]
Russian morality
morphs, depending on the relationship.
Moral requirements are different for
friends vs. business associates. Russians
value their personal friendships highly.
Generally their friendships last a
lifetime. During Soviet times, there was
little else to invest in. Friendships are
based on trust. Business relationships
are not. It is essential to know that the
word "businessman" has a
negative connotation in Russian culture.
Since Russians feel that businessmen are
conniving and deceptive, they feel
justified in exercising their own forms
of trickery and deception. This attitude
is coupled with the perception that all
Westerners carry around a million dollars
in their pocket; thus they feel
completely justified in passing around
software from one person to another.
"Microsoft makes enough off of
everyone else," is their thought.
Understanding Russian
ethics requires the understanding of the
Russian psyche. They hold the belief that
they were created to suffer. God is
punishing them. (Don’t ever think
that communism squelched the spiritual
mysticism of Russians. It only drove it
deeper.) They must simply learn to deal
with the hardships. You will never find a
more enduring people. We Americans cannot
possibly understand the experiences
Russians have undergone from wars,
communist oppression, and economic chaos.
When you consider these experiences, it
is no wonder that Russians’ chief
motivator is Fear. There is an innate
sense of fear and dread. The
fear-motivator must be a key
consideration in the piracy issue. [5]
Problem-Solving
Solutions to the
challenging piracy problem will take the
networking of individuals with
backgrounds in engineering, law, business
ethics, education and culture. The
incorporation of the following ideas, I
believe, can lead to much greater success
in preventing piracy, not only in Russia,
but throughout various areas in Europe
and perhaps worldwide.
Cultural understanding
cannot be over-emphasized! Americans have
a unique worldview. They also have a
tendency to lay their worldview upon
foreign societies. Although I am
convinced our culture has contributed
significantly to the successes we have
experienced in our relatively short
history, our slant does not always
translate to success in other cultures.
In fact, ignorance can correlate rather
well with disaster!
Having an economically
appropriate pricing of product is an
important consideration. When I priced
legal software in Moscow several months
ago, it was often priced as high or
higher than our prices in the USA.
Considering the average monthly income
for a family is around $100 a month, it
becomes obvious that income-related
pricing is essential to cut off the
pirating. Certainly it cannot be given
away, but as part of the re-education of
a nation, price-cuts in Russian-language
software may be in order.
Re-education goes
beyond just the price sticker. The nation
needs a new awareness of the effects of
piracy. Russians are smart. If they see
cause-effect relationships, it will
change their behaviour. Anti-piracy
education needs to happen on a national
scale. Certainly training of Russian
educators will be the start of helping
upcoming generations come to an awareness
of piracy impact on the future. But
publicity campaigns can impact the
problem now. In big cities, TV ads can
not only advertise, but also instruct. In
March, Emilia Knight, VP of BSA Europe
said one of the first phases to enhance
anti-pirating efforts was to raise
awareness of software theft through an
advertising campaign, educating
businesses and the public. It is a good
start. From people I have talked to, once
they understand piracy’s impact,
they look at things differently. [6]
Although I have read that companies such
as Microsoft have educational programs
[7], during my three years of residence
in Russia, I never once heard of any.
Russians are very proud
people. Their Russian ethnicity is a
source of great pride. Last year Bill
Gates said that Microsoft’s
intentions are to continue investing in
Russia and CIS [8]. If some of that
investment can be seen as practical to
"Russians," they will embrace
Microsoft and other software companies
more fully. For instance, if they see
software companies putting money toward
their children, as in some sort of
education program, they will be much more
likely to invest in companies' successes.
The program I directed in Moscow had
doors opened to us because the nationals
saw how it would impact Russia’s
success. It is the sense of "sharing
the wealth," even though a great
deal more profit will be made than ever
"invested."
The moral reference
point of fear is very important. Unless
Russians begin to embrace Western
understandings of morals and values, fear
will be an important element to factor
into piracy prevention. Personally, I am
not one who likes to motivate by fear. In
fact, it was something that contrasted my
staff from their Russian colleagues at
the schools and universities. Yet
Russians use it constantly. Children are
brought up with fear as a chief
motivator…it goes on all through
school, then into the rest of life.
Although I generally preferred not to use
fear, there were times when I had to
revert to a "language" the
students understood. It was then that
without question, I got the correct
response so the rule would be enforced.
Practically speaking,
there is need for the business ethicists,
software executives, cultural
specialists, and legal specialists to sit
down and dialogue over the fear factor.
Fear tactics discussion might include
topics like rumour-mongering, special
enforcement techniques, subtle means for
detecting and reporting illegal use, etc.
There needs to be brain-storming of
options to capitalize on the fear factor.
The future distribution possibilities
over the Internet make this a very
important discussion matter.
Although software
companies generally wants compliance
rather than litigation [9], there may be
some need for significant, highly
publicized legal action to demonstrate
the serious nature of the problem. The
legal action, carefully taken, could
educate without polarizing the people.
While Russians generally stand up for
their own, their sense of fairness is
also highly developed. PR would play an
important part of any legal action.
Unfortunately, without legal action,
there is no sense of
consequence…again the fear factor.
Much of the Russian
government has its share of corruption.
People there have learned to play the
political game. They also are quite
familiar with bribery. Since
accountability is weak, the best method
of making sure you get proper action is
often to make a lot of noise. When I had
problems in Russian business or program
development, there were two ways to
develop success: know the right people
(or find someone who does) and create
awareness. Being friendly to the right
people, and giving them some reason for
helping is usually crucial in getting
things done in Russia. Networking gets to
the top guy in the office who can direct
his underlings into action on your
behalf. When that fails, it is necessary
to create public awareness of the
injustice or incompetence of the area.
The squeaky wheel gets the grease! (It
helps explain why Russians seem to be
screaming and hollering at each other.
They get action from each other when they
make a scene.)
Russians can be brazen
and cunning. Although creative genius was
often squelched under communism, it was
still very active in certain areas. Some
of it went underground. Business was not
dead in Russia, just hidden. It has
thrived for decades. So, money or
material gain has always talked…and
still does. Knowing when and how to use
this cultural tool of "wining and
dining" is quite important. It is
sometimes needed to make the cultural
connections necessary in government and
business dealings. It is playing the
political card of relationships.
The piracy problem does
not end with Russia. For instance, the
supply line of pirated material from
China needs to be severed. Piracy
prevention success will come about
through people working together in
various alliances within the
problem’s cultural context. The
challenges facing the Eastern bloc
copyright infringement problem are
significant, but certainly solvable with
qualified people brain-storming together
for a mutual culturally-acceptable
outcome.
Footnotes:
[1] Irene Marushko. Survey
Says Software Piracy Costs $13 Billion in
1995. (Reuters Business Report: 18
December 1996).
[2] Newsbytes News
Network. Russia Has 400 Internet
Providers, Computer Piracy Grows.
(ITAR-TASS: 16 January, 1997).
[3] Harmon, Amy. Piracy
Rules the CDs. (Los Angeles Times: 19
August, 1996). Business, p3.
[4] Ibid.
[5] The moral and
ethical bases are considerably more
detailed than I have time to present in
this brief overview. My experience
working in the Russian system with
educators, businessmen, students,
government officials has provided me with
a wealth of understanding of a complex
people.
[6] Some of the
university and high school students I
taught asked me why piracy was wrong. I
would tell them a story like this:
"How would you feel if you spent two
or three years working on the creation of
a computer game. You put all your time
into its creation. You invested money
into the project. You had to take out
loans to live and research so that you
could create this awesome game. It
personally cost you $40,000 to create.
The people you borrowed money from were
getting on your back because they wanted
their money back, plus the interest from
the loan. Finally you got the product
out. You made thousands of disks to sell
to people. You decided to market the
computer game program for $20. You paid
for advertisement, so that people would
learn about your cool game. It was an
excellent game indeed! Then two people
bought your game. That was your first
$40. Then, those two people passed their
disk on to all their friends and made the
software accessible to anyone who wanted
it on the Internet. A million people
played your game. But you made $40 after
investing $40,000. First of all, is that
right and fair? Secondly, how motivated
will you be next time to invest so much
time and money into creating a
game?" Students began to understand
the problem and saw things in a new
light. They could see the practical
impacts of piracy.
[7] Reuters. Microsoft
Educates Filipinos On Software Piracy. (Newsbytes
News Network: 8 April, 1997).
[8] Dennis, Sylvia. Bill
Gates Claims Piracy Hurts Eastern Europe.
Newsbytes News Network. (M2
Communications: 9 February, 1996).
[9] Reuters. Microsoft
Educates Filipinos On Software Piracy.
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