[_Y_]

I'd like to address your WoG example. Firstly there are two types of pirates. Those that don't have the money to ever buy, those that have money. The first (and arguably largest group) will NEVER be your customer. These are people that can barely afford their internet. If there was no piracy these people would never get your game. Second group consists of two subgroups - those that might pay and those that wont. I'd argue that the first group is larger based on examples below. Also there are some transitions from people that can't pay into a group that might pay (e.g. a student gets a high paying job and can afford books/software that he pirated before). However they are not a crux of my concerns. I think the value of piracy is a "word of mouth" advertisements. Even if only people that can't afford your game and pirate it there is going to be boon for your business (e.g. poor kid might have someone who is a bit richer and will buy the game to show off) if they spread good word about it.

"First is Monthy Python. A while back, the Monty Python team made a shedload of their sketches freely available in high quality on their own YouTube channel, hoping that as a result people would buy more DVDs. According to this widely linked story, the experiment has been not just successful, but wildly, crazily so. They’re reporting that sales of Monty Python DVDs at Amazon have increased by 23,000% — that’s 231-fold — since they made all that material available on Youtube."

(Neil Gaiman on books he published for free) "Then I started to notice that two things that seemed much more significant. One of which was that places where I was being pirated -- particularly Russia (where people were translating my stuff into Russian and spreading it out into the world) I was selling more and more books. People were discovering me through being pirated. And then they were going out and buying the real books, and when a new book would come out in Russia it would sell more and more copies.

"That's really all this is. It's people lending books. And you can't look on that as a lost sale.... What you're actually doing is advertising. You're reaching more people. You're raising awareness. And understanding that gave me a whole new idea of the shape of copyright and what the web was doing. Because the biggest thing the web was doing is allowing people to hear things, allowing people to read things, allowing people to see things they might never have otherwise seen. And I think, basically, that's an incredibly good thing." "

Source: http://reprog.wordpress.com/2011/02/13/everyone-wins/