Study: Software piracy declines 10 percent

The rate of global software piracy declined 10 percent in the past eight years, but there was only a modest 1 percent reduction from 2001 until now with a sharp increase in what piracy costs companies, the Business Software Alliance (BSA) said in results of its eighth annual survey released Tuesday.

BSA members include many of the world's leading software publishers including Microsoft Corp., Apple Computer Inc., IBM Corp. and Hewlett-Packard Co. The survey attempts to measure the number of software applications in use without a valid license.

Over the past eight years, there have been reductions in the use of pirated software worldwide, with every country except Zimbabwe decreasing pirated applications in use during that period, the BSA said.

The piracy rate was calculated by measuring the difference between the estimated demand for 26 business software applications in different markets and the legal supply of those applications.

Estimated demand for applications was derived from market data supplied by a technology market research firm. Software shipment information supplied by BSA members accounted for figures on the "legal supply" of software, the BSA said.

The survey found dramatic reductions in areas such as the Middle East and Africa, where more than 80 percent of software was pirated in 1994, compared with 49 percent in 2002, BSA said. In Latin America, the piracy rate fell to 55 percent in 2002 compared with 78 percent in 1994.

Changes to the legal codes of those countries that put tough intellectual property laws on the books have helped companies to pursue pirates, according to Bob Kruger, vice president for enforcement at the BSA.

BSA-sponsored education programs in those regions have also succeeded in changing lax behaviors in using licensed software among otherwise honest users, Kruger said.

However, reductions in other parts of the world were more modest.

In North America, the piracy rate fell from 32 percent in 1994 to 24 percent in 2002. Similarly, in western Europe, the rate fell from 52 percent to 35 percent over the same period.

The lower rate of decline in those countries reflects the thornier problem of dislodging entrenched piracy operations and users intent on using pirated wares, Kruger said.

Year-on-year declines were also modest, especially in North America and western Europe, where the piracy rate declined by 2 percent between 2001 and 2002.

Despite the decrease in the percentage of software that is pirated, financial losses due to piracy are on the rise owing largely to higher prices for software in 2002, the BSA said. Worldwide losses grew from US$10.97 billion in 2001 to $13.08 billion in 2002, an increase of 19 percent. In past years, falling software prices have combined with the decreasing rate of piracy to keep worldwide dollar losses low, the BSA said.

Vietnam and China topped this year's list of countries with the highest piracy rates with, respectively, 95 percent and 92 percent of all installed software in those countries lacking a valid license, the BSA said. China also topped the list of countries responsible for the biggest dollar losses due to piracy, accounting for more than $2.4 billion in lost revenue, up from $1.6 billion in 2001, the BSA said.

The dubious title caps a trend that emerged in recent years as China's economy and use of technology have grown despite a worldwide recession, Kruger said.

The BSA will continue to focus on user education, Kruger said. In countries that lack adequate civil laws to protect software makers, the BSA may also pursue criminal prosecutions of known pirates, he said.

"We typically try to avoid sending police out to arrest people in their homes. But if we can train attention on some of the higher-profile players and more egregious situations and send a message more broadly, we'll do that," he said.

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