10/20/2012 meeting - corporate worldwide anti-piracy

© 2012 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential.

Richard Atkinson | Director, Worldwide Anti‐Piracy

Corporate Worldwide Anti‐Piracy: IntroductionDriving Adobe’s Comprehensive Approach to Grow Revenue & CCM through Conversion From Piracy


Pure Pirates

13%

Tend Pirates34%

Tend Legitimate40%

PureLegitimate

13%Only 13% of Software Users are “Pure Legit”

74% of Software Users are “Dual-Users”

(Purchase AND Pirate)

* Source MPA 2007 and 2009 studies focused on Dual-ConsumersAll other: 2011 BSA/IDC global study of software consumption and piracy.

Debunking Misconceptions about our Software Pirate User Base

Non-Monetized (piracy market share)

Consumers of Adobe Products

Monetized (sales market share)

Perception

Reality

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© 2012 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. * Source 2011 BSA/IDC global study of software consumption and piracy.

Contrary to Common Belief:

¾ of Software Users are Dual Users ~50% of IT Professions believe “over-deployment” is LEGAL ~50% of Users believe Peer-2-Peer Downloading is LEGAL

Individual Users(Mature / Emerging)

Business IT Leaders(</>500 employees)

Not

Con

side

red

Pira

cyC

onsi

dere

d Pi

racy

Debunking Misconceptions about our Software Pirate User Base

3

© 2012 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. 4

Software:1x/year PC Games:

1x/quarter

eBooks:1x/month

Movies:1x/2 weeks

TV:1x/week

Music:1x/day

“Apps”:1x/week

Are our consumers that different?


Deter End User Consumption through audits, legalization, enforcement, and campaigns

Disrupt Distribution through internet takedowns and enforcement

Disrupt Supply through investigations, intelligence collection, and supply chain security

Integrated Strategies and Actions across stakeholders, focused on Pirate-Conversion

Improve Understanding of Pirate-User Segments and Motivations

Enhance Differentiation between pirate and legitimate product, experience, and value

Compete Better with Piracy through Increased Value Proposition

Suppress Piracy through Corrective Action

Mission: Drive Incremental Revenue and Adoption of CCM through Conversion From Piracy

$

5


Alignment is Key to Achieving Our Goal

6

EXTERNAL PARTNERSLeverage partners to curb piracy beyond Adobe’s reach:• Industry Organizations (BSA, etc)• Supply Chain & Ecosystem• Law Enforcement• Resellers/Distributors/Channel

PRODUCTReinforce piracy deterrents as well as add non pirate‐able product benefits: • Engineering/Architecture• Product Mgt/Features• Customer Experience/UI

CUSTOMER‐FACINGWork with internal teams to maximize customer satisfaction and conversion from pirate to legit:• License & Compliance• Field Sales• Channel• Customer Service

MARKETINGMarket benefits of legitimate software to drive conversion:• Pricing / Positioning• Research & Understanding• PR / Communications

ANTI‐PIRACYProvide overall Strategy, Central Services, and data‐based insights and guidance:• Pirate‐Conversion Strategy• Business Intelligence• Global Investigations• Online Enforcement• Legal Coordination• Communications• BSA /Industry Assoc. Global /Regional

LEGAL AND SECURITYDefine processes and influence legislation:• Litigation/Enforcement• Contracts/EULA’s• Government Affairs & Legislation• Action & Risk Management• Joint Investigations


Guiding Principles

ALIGNMENT FOCUS

RESPONSIVE LEVERAGE

• Focus limited resources to maximize impact

•Prioritize efforts within geographies and segments of highest impact/opportunity

•Progressively sequence actions to optimize the cumulative effect

• Internal investments, activities & resources are complementary, not silo‐ed

• Internal stakeholders aligned to Goals, Objectives, Priorities

• Internal efforts aligned with industry & associations efforts

•Adapt to new business models and associated piracy patterns

•Respond to measured effectiveness, trends, insights

•Adapt tactics to local market conditions

• Extend impact by coordinating business partners

• Spread cost and burden across industry

•Maximize law enforcement, govm’t relationships, legislation

Execute

Learn

Adapt


Corporate WW Anti-Piracy Team

Strategy & LeadershipRichard Atkinson

Global Program Manager Mason Bacon

Business Intelligence Pingping Medley

Legal CoordinationDiana Olin

Investigations Michael Draper

Business AnalysisJonas Brueggemann

CommunicationsAnnick Mohageg-Baudot

EMEA Regional ManagerPhilippe Briere

J/APAC Regional ManagerRachel Fung

LTAM Regional ManagerTBD – final stage of interviews

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Fill key gaps in consumer understanding, enabling enhanced targeting, engagements, and opportunity for conversion:

Understand consumer piracy behavior, attitudes, motivations (doing & thinking)

Determine best opportunities for conversion (triggers & elasticity)

Estimate piracy impacts & opportunities to business

Provide strategic insights on where piracy is headed

Business Intelligence

General Profile Existing Sales Pipeline Pirate Downloading Product Activation Customer Research

BusinessIntelligence


Using Data to Understand Consumers and their Behavior

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P2P pirate download tracking

Product activation tracking

Piracy activity is monitored by IP address

Tracking data is then used to profile and target pirates

Home Users(trace to their ISP and to their

near-location/zip-code)

Employees at Businesses(trace to Company Name)

Students & Faculty at Schools and Universities

(trace to School Name)

All Internet-enabled devices have a unique, traceable IP address

BusinessIntelligence


Dramatically decrease the availability of pirated product online, which is the primary distribution method in most markets for counterfeit and regular piracy:

Increase frustration of pirate-consumers

Maximized leverage of tools and approaches

Global Online Enforcement

P2PLocker &

LinkAuctionB2C/B2B

Web HTTP(websites)

Search Engine Results

UseNet iRC

High High Very High Very High Very High Moderate Low

Low Moderate Moderate High High Moderate Low

Short-Term Trial

Short-TermTrial

BSA (WW)SIIA (N/A)

IACC Short-Term

TrialNone None

Appears Low

Appears High

Low to Moderate

TooEarly

Too Early

n/a n/a

Res

pons

es

Scale/Impact

Ability to significantly disrupt?

Current Approach

Effectiveness

OnlineEnforcement


Online Enforcement Effectiveness: How Long Does It Take to Find “Pirate” Copies of Our Software? (13 seconds)

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• This approach will be used to measure our Online Enforcement efforts (NOTE: STILL ESTABLISHING BASELINE, ENFORCEMENT PILOTS IN THIS AREA HAD NOT YET STARTED)

• Currently, It only takes a consumer an average of 13 sec. to find a live download link ----- Our Target is 360 sec.

OnlineEnforcement


Combat large piracy operations via the results of key global investigations:

Provide insights to Adobe processes being wrongfully leveraged

Create strategic disruptions to the Piracy Supply Chain / Ecosystem

Stop pirate-discount products from displacing legitimate sales

Global Anti Piracy Investigations

Intelligence

Gathering

piracy@adobe

Internal Reporting

Piracy Hotline

Industry Partners

Internal Tips

Law Enforce

ment

Customer Impact

Global Impact

Pirates’ level of sophistication

Revenue Potential

Business Impact

Investigation Decision Factors

GlobalInvestigations


Linking 3 Teams/Experience for Investigations & Resolution

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Worldwide Anti-Piracy

(abuse by our consumers)Corporate Legal

Fraud Investigations

(abuse by our employees)

Customer ServiceFraud Investigations

(abuse of Customer Service)


Example: current OEM Investigation

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Futuresoft.com

Business and Individual Customers

GovernmentCustomers

Replicator

Replicator

OEM GL Partners

Grey Market Education Distributer

Counterfeit OEM

Distributor

Channel Partner

Upgrades Only

Potential source of

leaked serial numbers

Customers receive Counterfeit Software

of Older Version + Legitimate Upgrade to

Current Version

OEM Serial #s

OEM PartnerOEM China Replication

Supply Chain

Pirate Counterfeit Ecosystem (wholesale)

Retail Ecosystem(some are Adobe APC Partners)

Being sold ~50% OffTo Customers believing they are getting

Legitimate Product at a discount

Current-Product Model (single element)Older-Product + Upgrade Model (2 elements)

Primarily Impacting Key Mature Markets:USA, UK, Germany, Japan, Australia

GlobalInvestigations

Redacted

Redacted


Intelligence Gathering

Limited Intel

Internal Test Purchases

Internal Reporting

Industry partners

Industry Associations

Strategic test purchases

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Serial Number Analysis

Industry Associations

Internal Reporting

Test Purchases

Industry Partners

German Investigation

Law Enforcement

Cases


Investigative Priorities

Focus on point of compromise

Eliminate internal source

Establish scope

How big is the problem

Establish testing protocol

How to identify compromised serial numbers

Discover additional victims

Combine investigative efforts

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Data Analysis

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Gather subset of

serial numbers

Identify single point of relation

All numbers relate to

one OEM partner

All numbers sent to same

country

Replicators in China

identified


Current and Next Steps

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Identified Main Distribution Channel

Identified Primary Suspects

Identified loopholes that allow numbers to be compromised

Solidified partnership with other victims

Prepare Civil and Criminal actions Last Step


Questions?

10/20/2012 meeting - corporate worldwide anti-piracy

Technology

legitimate

industry partners

internal reporting

adobe confidential

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rights reserved

industry associations

software consumption