Companies urged to embrace the piracy model

The latest figures from the Business Software Alliance, published this week, suggest that a quarter of all software installations in the UK are illegal.

But writer and consultant Matt Mason argued at the conference that, far from undermining legitimate industries such as music, fashion and software, piracy actually adds value by "finding gaps outside the market", and sparking innovation in unpredictable ways.

"Copying the pirates is a really good way of beating them at their own game, " Mason said. "You should also let people copy you, because it adds value to the original, making people more interested in the original. Piracy can also create new innovations that no one could ever see coming."

Mason cited the case of pharmaceuticals giant Novartis, which discovered a major problem with pirated versions of its anti-leukaemia drug in Thailand.

Instead of trying to go after the pirates, the firm decided to give out free authentic drugs to Thai consumers, picking up several corporate social responsibility awards in the process, and more good publicity than it could ever have garnered by other means.

Mason added that legitimate businesses will be able to compete with piracy if they seek to provide something that the pirates cannot.

Apple's iTunes store, for example, has managed to accrue over US$4bn in sales, despite the prevalence of peer-to-peer sites, because many consumers want the trust and security of buying legitimate songs.

Another example is Microsoft which, despite the poor reviews and performance of its Vista operating system, manages to outsell the free Linux alternative in part because it is more convenient for customers, coming as it does pre-installed on many devices, he said.

But Mason admitted that the problem is not black and white. "There are common thieves, and sometimes the only way of dealing with them is via the law," he said. "We're dealing with 19th century intellectual property laws, 20th century business models and 21st century complexity that will take a while to figure out."