Software Piracy Declining In Emerging Markets, Stable Overall

by Mary Swire, for LawAndTax-News.com, Hong Kong

25 May 2006

According to a new global study published by the Business Software Alliance on Tuesday, thirty-five percent of the packaged software installed on personal computers worldwide in 2005 was illegal, amounting to $34 billion in global losses due to software piracy.

However, some improvements in a number of markets indicate education, enforcement and policy efforts are beginning to pay off, especially in emerging economies such as China, Russia and India and in Central/Eastern Europe and the Middle East & Africa.

“The progress made in reducing PC software piracy in several emerging markets provides some encouragement; however, much more needs to be done,” observed BSA President and CEO Robert Holleyman, continuing:

“With more than one out of every three copies of PC software obtained illegally, piracy continues to threaten the future of software innovation, resulting in lost jobs and tax revenues."

Piracy rates decreased moderately in more than half (51) of the 97 countries covered in this year’s study, and increased in only 19. However, the global rate was unchanged from 2004 to 2005 as large developed markets like the United States, Western Europe, Japan and a handful of Asian countries continued to dominate the software market while their combined piracy rate hardly moved.

According to the BSA study, Russia saw a four point drop in its PC software piracy rate while India’s piracy rate declined two points. China, with one of the fastest growing IT markets in the world, dropped four points between 2004 and 2005.

“This year marks the second year in a row where there has been a decrease in the PC software piracy rate in China. This is particularly significant, considering the vast PC growth taking place in the Chinese IT market,” said Holleyman.

Speaking at the Asia regional launch with regard to the improved Chinese and regional figures was Jeffrey Hardee, Vice President and Regional Director for Asia, who announced that:

“The reductions we have seen show that efforts made by governments in addressing software piracy through sound policy initiatives, educational outreach and enforcement programs bear fruit and we think most economies in the region are well-positioned to bring about significant reductions in piracy in the coming years if these efforts are sustained."

However, in Hong Kong, the software piracy rate increased from 52% to 54% over the past year, representing a loss of over US$112m.

Belinda Lui, Chair of BSA Hong Kong, observed that:

“It is disappointing to see that, despite efforts made by the local administration, Hong Kong was one of the few economies in Asia-Pacific that witnessed a rise in its piracy rate. It is clear that more needs to be done to effectively address the ongoing problem of software piracy in the Hong Kong business environment, and perhaps a different approach needs to be taken."

She added:

“Software piracy is an ongoing challenge in Hong Kong and it is time to reinvigorate and refocus efforts. We hope to see a plan by the Government to address the issue, which includes facilitating effective prosecution of infringers and conducting sustained and visible enforcement."

"BSA will continue to work closely with the Government to raise general awareness of the importance of copyright protection and continue with its efforts to empower businesses with the tools they need to better manage their software assets. Only with an intellectual property friendly environment, will Hong Kong be able to reap the economic benefits of a reduced piracy rate and continue to fuel the local software industry to innovate and prosper.”

The BSA-IDC Global Software Piracy Study covers all packaged software that runs on PCs. The study does not include other types of software such as that which runs on mainframes or servers or software sold as a service. IDC used proprietary statistics for software and hardware shipments, conducted 5,600 surveys and enlisted IDC analysts in 38 countries to confirm software piracy trends.

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