Intellectual Property Protection: Mind the Income Gap
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by Timothee Kencono Malye - 02/27/2017, 10:31

The purpose of intellectual property protection is to encourage the emergence of new technologies, inventions, and artistic expressions, which ultimately will promote economic growth. “Intellectual Property” is a property derived from the creativity, taste, intention, and human thought, i.e. painting, musical composition, software, or technology invention. The developed countries are particularly fond of promoting the protection of intellectual property rights through international agencies such as World Intellectual Property Organization.

Intellectual properties need to be protected so people who created them did not get discouraged and stopped inventing things if there is a violation on their works whether economically or spiritually (i.e. other person claim a piece of art as his creation). The spirit of the protection is good, especially for the developed countries with stronger R&D culture such as USA compared to the developing countries such as Indonesia. The developing countries yet to have the sufficient tools, human resources, and particularly the right mind set to have a significant amount of intellectual properties of their own, especially in relation to software. Software itself is any set of instructions that directs a computer to perform specific operations, such as a Blu-ray disc that contains video game (application software) or a Windows installation disc (operating system). This article limits its discussion to intellectual property in the form of software.

Intellectual property protection has drawbacks such as the potential of exploitation and monopoly of developing country market by the developed country with stronger R&D culture. For example, if an Indonesian company wants to challenge Microsoft’s operating system software (Windows) by making an even better operating system, that particular company will need a huge amount of money and marketing prowess that could rival those of Microsoft. Same situation applies on a gaming company that wants to make a triple A video game that could challenge Square-Enix of Japan’s video game. Thus, in current world situation at least, the hegemony of developed countries in the realm of software is practically unchallenged. So developing countries citizens can only be consumers of software.

In the long run, the case might be different, because the dawn of mobile gaming and apps industries in developing countries is already happening. This is because the development of mobile apps did not cost as much as a decent PC operating system or a triple A video game, and from that, maybe a handful of successful startups could actually rise and challenge the more established software companies in the developed countries. But the government set priorities on current condition, so the government of the developing countries yet to take intellectual property matter seriously because of the lack of R&D culture in their respective countries. If the governments of such countries actually enforce their intellectual property laws, there would be no pirated video game software in Indonesia that could be easily found on the street, and maybe China would lost a good portion of its economy related to knockoff products.

Even if the government of developing countries tries to actually enforce the intellectual property law, the biggest benefactors of such action would be the developed countries, since the revenue generated from the product are theirs. This lack of incentive also made the government of developing countries reluctant to enforce the law. China even turns a blind eye on the knockoff product industries to boost its economy. While from the angle of the consumer itself, the price of original software is comparatively high in the developing country. The price is set at the developed country citizen’s purchasing power standard, and they sell it in developing countries with that price. For example, the price of an original Playstation 4 video game disc might be as high as $60, while Indonesian college fresh graduate standard salary is only around $400 per month, compared to around ten times of that number in USA.

Microsoft has made a revolutionary marketing strategy by launching Windows 10 as a free operating system (even though this is mostly in order to outmaneuver Google). They planned to earn profits from selling features and selling subscription versions of their apps that run in the ecosystem of their products, just like the other IT companies these days. By selling their features and apps separately in a reasonable price, the customers from developing countries could actually buy the original versions of the products. For video game companies and other software companies that use a more traditional method of selling apps (by selling a disc containing the software), I recommend selling those products at a different price tags for the developing countries citizens with lower purchasing power. To prevent those products to be used at developed countries, an effective Data Rights Management (DRM) and set of regulations on export/import should be sufficient. If software developers want developing countries citizens to appreciate their products by buying the original ones, they must remember that it cost a hefty portion of someone’s monthly salary to buy a piece of “Final Fantasy” video game disc.

 

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