Today I received an email from an accomplice of mine in what some would regard as a crime. You see, I use this software product called AnyDVD, created and sold by a company called SlySoft Inc. This cheap program does two important things for me: it removes DVD Region Code restrictions (the system which is supposed to prevent foreign DVDs from playing in Australian DVD players), and User Operation Prohibitions on DVDs (those operating controls on a DVD that stop you, for example, skipping the copyright warnings in order to get to the movie proper).

It also does something quite illegal both here in Australia and in the US: it breaks the encryption system on DVDs that prevents copying.

Now most of the software that allows 'ripping' of commercial DVDs is actually given away for free, but AnyDVD costs real money ($US39). The two functions I mentioned earlier are the ones that made it worth me spending money on it. But how does a company charge money for an illegal product?

One way is to set up a crime syndicate in the location where the laws are being broken, but that has high overheads in terms of payoffs to law enforcers, high turnover of staff (a lot get arrested) and occasional violence in turf wars (since normal dispute resolution institutions are denied to these areas of business).

This doesn't seem all that attractive to nerdy software developer types. So SlySoft, by my conjecture I must add, has chosen a different solution. The address of the company is in St. John's, Antigua in the West Indies. In other words, the nature of the product and the presence of the Internet has permitted it to move out of the jurisdiction where its activities are illegal.

There are plenty of poor countries, but an increasing number of them seem to be generating income by providing services for rich Westerners which cannot be provided in the over-regulated West.

A naive misunderstanding of markets would prompt many to say: but what if you get ripped off, the product doesn't work, how will you get redress from a business in far-off Antigua? This entirely overlooks the issue of reputation.

If SlySoft wants to keep my business and sell to others, it has a reputation to maintain. It does that by offering free updates for the first year. Thus the email from my accomplice in crime -- SlySoft -- advising that a free update is available.

Some countries have natural advantages in resources (minerals and agricultural land for Australia, intelligent people for Japan, sun and surf and proximity to the US for Barbados). Some have artificial, but purely fortuitous, advantages (the national Internet domain tag of .tv for Tuvalu). And an increasing number, it appears, derive advantages from Western regulations.