Making Software Pirates Pay

If you’re like a lot of other software executives, you probably have your own impressions about what unlicensed software means. You might imagine that unpaid software is only used by students, that it only happens in China, or that people who use unlicensed software would never pay for it.

In fact, many people using unpaid software are professionals— engineers, designers and office workers from mainstream companies. They may not even know they are using pirated software, but they are using your software for legitimate business and profiting from it.

The good news is that if your application is being pirated and used, it means that people find your software valuable. It helps them achieve something that they could not do without the benefit of your application.

This is not just an optimistic way of viewing piracy: it’s based on the economic realities of supply and demand. Think about it. There are thousands of pirated applications available and people and organizations are using your application to meet their needs.

The problem is that these prospective customers are leaking out of your sales funnel and you likely don’t even know it and have not been able to measure the impact it has on your business. Equally alarming, your customers may also be using pirated software—limiting your opportunities to expand within existing accounts.

Research from Microsoft and Adobe has identified three different types of pirate users, and their behaviors may surprise you. Let’s take a closer look and learn a bit more about who these pirate users are.

The good news is that Opportunistic and Legally-Inclined pirates are unintentionally using pirated software and are willing to pay for it. Based on research conducted by Microsoft, Adobe and Disney (and Revenera’s experience converting unpaid use globally), we know that 83 percent of all pirates in mature markets are Opportunistic and Legally-Inclined and that they will pay for software.

Professionals using your software with an unpaid license will pay for software. Even organizations as established as Embraer, the U.S. Army and the Vatican have been found to be using millions of dollars in unlicensed software.

Intentional Use by Businesses
Of course, some people and organizations do make a business decision to use pirated software. Perhaps the pricing is not appropriate for their market, or the licensing is so difficult to use that they deployed pirated software so users can do their jobs. They use pirated software because the repercussions seem low, or they’re waiting to get caught and asked to pay.

These organizations use pirated versions of your software and are competing against your paying customers by saving on software costs and undercutting your customers’ prices. We’ve also seen cases where half of the organizations pirating software are also paying customers, installing additional copies of software illegally.

When a vendor releases a new version of its software, piracy groups race to disable the licensing—sometimes the same day the software is released, but almost always within the first 30 days. These groups have been around for 20 to 30 years and do it to compete for bragging rights and to prove who is the best at cracking software, not to make money.

Once the piracy groups announce the release of a cracked version, a single link to your software explodes virtually across thousands of websites.

Cracked software is widely distributed and made available online through a well-established, extremely efficient, global channel of hundreds of thousands of Peer-to-Peer (P2P) sites, IRC channels, file hosting sites, industry-specific portals and forums. Once it hits this distribution channel, your software spreads around the world like wildfire.

Many of these sites don’t make money by selling your software. They cater to the Pirate-Inclined and generate advertising revenue by hosting your software and driving millions of visitors to their sites.

Other sites do make money selling pirated software. As mentioned above, they target Opportunistic and Legally-Inclined pirates and sell pirated software at 70-80 percent of its list price to convey a sense of legitimacy and authenticity. Trying to stop piracy in these channels often resembles “Whac-a-Mole:” you takedown one site and two more pop up in its place.

It only takes one person in an organization to store a cracked version of your software on company servers before it rapidly spreads throughout the organization.

Traditionally, software vendors have identified unpaid use anecdotally, through profiling, or by implementing their audit rights:

• Sales reps often suspect that an account isn’t ordering more licenses because they are overusing what they’ve paid for.
• Support reps receive requests for help from people who don’t exist in the customer database or who are using an overused or illegitimate license or activation key.
• Many vendors offer a whistleblower hotline or web form where piracy or overuse can be reported.
• License compliance teams develop profiles of likely overuse based on past experience and use them to prioritize their audit targets.

While all of these methods may ultimately uncover some unpaid use, they are not always programmatic or scalable and do not provide a real-time pulse on the unpaid use of your products.

These well-intentioned victims of piracy have leaked out of your sales funnel. They may have come to your website at some point to learn about your solutions or even downloaded a demo version, but somewhere along their buyer’s journey they began using a pirated version and fell out of your sales funnel.

Fortunately, vendors that have implemented piracy detection, software intelligence and in-application messaging have the ability to directly reach and educate those well-intentioned victims.

In-application messaging is an essential tool to convert, nurture and retain customers. Software vendors should focus on trigger points, escalation timing, and messaging content when implementing in-application messaging. In the context of converting unpaid users, consider the strategies below to maximize conversion rates. Remember that this is an iterative process where testing and measuring are key components to success.

The landing page is the unpaid user’s primary entry point on the path to purchase.

To optimize for conversion, build landing pages that keep a consistent language with your website, product, and messaging. Consider that the unpaid user may already be suspicious and if they are a victim (or have a guilty conscience) they will need assurance that they are not being scammed.

Starting with these basics for landing page optimization will accelerate your learning and lead to more effective conversion of unpaid licenses.

Tip: Use bold calls to action to direct the unpaid user to act

• Reinforce what you want the user to do using buttons like “Add to Cart”, “Buy Now” and “Join”
• Use arrows and other action oriented graphics

Tip: Show the value of a paid license

• Highlight functionality missing in the unpaid version
• Describe the benefits of a paid license
• Explain the risks of unlicensed software

Tip: Use design best practices to build trust with unpaid user

• Be consistent between landing page and in-application experience
• Adhere to brand and user experience guidelines
• Test colors and layout
• Integrate with corporate marketing strategy

Tip: Create effective content that speaks to the unpaid user

• Define the problem and explain the solution
• Use FAQs and Q&A to anticipate concerns and fears of unpaid users

Tip: Adjust landing pages based on region and country, consider:

• Language and tone of content
• UI and web design
• Payment methods
• Currency and pricing

A/B testing is a method of comparing two versions of a webpage against each other to determine which one performs better. By creating an A and B version of your page you can validate new design changes, test hypotheses, and improve your website’s conversion rate.

Testing takes the guesswork out of landing page optimization and enables data-backed decisions that shift business conversations from “we think” to “we know.” By measuring the impact that changes have on your metrics, you can ensure that every change produces measurable and positive results.

Develop a culture of experimentation and embrace the idea of making mistakes to improve conversion with unpaid users.

Now that you know that 83 percent of pirates will pay in mature markets and that software vendors, both large and small, are using the principles and best practices of ecommerce marketing to convert pirate users into paying customers to recover revenue, how do you pull this all together?

• Identify the application(s) that are being pirated and quantify the opportunity
• Start building your team and strategy or leverage a trusted partner
• Implement software intelligence to identify pirated use
• Develop your in-application messaging strategy to enable you to target unpaid users and escalate your responses

Revenera can help. Contact us for a free piracy assessment and to discuss appropriate strategies for converting pirated users to paying customers.