BSA Releases BSA-IDC Global Software Piracy Study

by Mike Godfrey, for LawAndTax-News.com, Washington

15 May 2009

Governments and software companies are making progress in slowing the illegal use of personal computer software products, but progress has stalled in the United States, posing serious challenges to the high tech sector and cyber security.

These are among the findings of the Sixth Annual BSA-IDC Global Software Piracy Study released on May 12 by the Business Software Alliance (BSA). The study was conducted by IDC, the information technology (IT) industry’s leading global market research and forecasting firm.

According to the BSA, in 2008, the rate of PC software piracy dropped in about half (57) of the 110 countries studied, remained the same in about a third (36), and rose in just 16. The worldwide PC software piracy rate rose for the second year in a row, from 38% to 41%, because PC shipments grew fastest in high-piracy countries such as China and India, overwhelming progress elsewhere.

In another sign of the scale of the problem, the monetary value of unlicensed software – “losses” to software companies – broke the USD50bn (GBP32.9bn) level for the first time. Worldwide losses grew by 11% to USD53bn in non-adjusted dollars.

The study goes on to state that, at present, the United States has the lowest PC software piracy rate in the world, at just 20%. However, it has the largest dollar losses from piracy at USD9.1bn (GBP5.9bn), because it is by far the world’s largest software market. Losses have risen steadily in recent years while the piracy rate has hovered around 20-21%.

“We are continuing to make progress against PC software piracy in many countries, which helps people working in the US-led global software industry. That’s the good news,” said BSA President and CEO Robert Holleyman, who added:

“The bad news is that PC software piracy remains so prevalent in the United States and all over the world.”

“It undermines local IT service firms, gives illegal software users an unfair advantage in business, and spreads security risks. We should not and cannot tolerate a USD9bn (GBP5.9bn) hit on the software industry at a time of economic stress,” he continued.

The study then went on to explore the negative impacts of piracy beyond the software industry, announcing that software piracy affects much more than just this global industry. Explaining this, the study revealed that for every USD1 (GBP0.65) of software sold in a country, there is another USD3 (GBP1.9) to USD4 (GBP2.6) of revenues for local IT service and distribution firms.

High piracy thus means fewer jobs in IT services. A 2008 IDC study predicted that lowering PC software piracy by 10 points over four years would create 600,000 additional new jobs worldwide. That projection has been confirmed by actual experience in China and Russia, the new study says.

Software piracy also increases the risk of cyber crime and security problems, the BSA continued. For example, the recent global spread of the Conficker virus has been attributed in part to the lack of automatic security updates for unlicensed software. Furthermore, in a 2006 study, the IDC found that 29% of websites and 61% of peer-to-peer sites offering pirated software tried to infect test computers with “Trojans,” spyware, keyloggers, and other tools of identity theft.

Software piracy also lowers tax revenues at a time of increased fiscal pressures on governments worldwide.

According to the 2008 IDC study noted above, reducing piracy by 10 points would generate USD24bn (GBP15bn) in higher government revenues without a tax increase.

Continuing to explain their findings, the BSA went on to announce that the global economic recession is having a mixed impact on software piracy. John Gantz, chief research officer at IDC, noted that consumers with reduced spending power may hold on to computers longer, which would tend to increase piracy because consumers are more likely than other types of PC users to load unlicensed software on older computers.

However, pocketbook pressures are also spurring sales of inexpensive “netbooks” and laptops, which tend to come with legitimate pre-loaded software; and spurring businesses to implement software asset management (SAM) programs to increase efficiencies and lower IT costs.

“Reduced buying power is only one of many factors affecting software piracy,” Gantz said, adding:

“The economic crisis will have an impact – part of it negative, part of it positive – but it may not become fully apparent until the 2009 figures come in.”

Among other factors affecting PC software piracy, the global spread of internet access is driving up piracy, with the IDC projecting 460 million new internet users coming online in emerging markets in the next five years.

Growth in the number of consumers and small businesses will also bring more high-piracy users into the fold, the study says,

On the positive side, the study goes on to note that the factors contributing to falling piracy rates include legalization programs offered by software vendors and governments; public-private partnerships in education and enforcement, including BSA’s anti-piracy initiatives; new software distribution models such as “cloud computing”; the influence of compacts such as the World Intellectual Property Organization (WIPO) and the European Community; and better technical protection measures such as digital rights management.

“The proven ‘blueprint’ for reducing piracy is a combination of consumer education, strong intellectual property policies, effective law enforcement, and legalization programs by software companies and government agencies,” Holleyman said, concluding:

“The progress seen in so many nations is proof that this anti-piracy strategy works.”

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