Global software piracy losses totaled $29B in 2003

Piracy continues to be a costly global problem for software makers, with US$1 in every US$3 spent on applications and programs going to illegal sources, according to a revamped study from the Business Software Alliance (BSA).

The study, conducted for the BSA by market research company IDC, found that 36 percent of all software bought in 2003 had been pirated, costing software vendors worldwide losses of US$29 billion. Of the US$80 billion in software installed on computers worldwide last year, only US$51 billion was legally purchased, according to the group.

In the U.S. alone, the piracy rate was 22 percent -- the lowest among the nations surveyed. By contrast, the highest piracy rates in the world are in Vietnam and China, where piracy stood at 92 percent last year, according to the study.

Although it had the lowest piracy rates in the world, the financial hit in the U.S. was the highest, costing the industry US$6.5 billion in revenues. Hong Kong had the smallest losses from piracy, totalling US$102 million.

By continent, the piracy rate in the Asia/Pacific region was 53 percent, with dollar losses totaling more than US$7.5 billion, according to the study. In Eastern Europe, the piracy rate was 71 percent, with dollar losses at more than US$2.1 billion. In Western Europe, the rate was 36 percent, and dollar losses totaled US$9.6 billion.

In Latin American countries, the average piracy rate was 63 percent, with losses totaling nearly US$1.3 billion. And in Middle Eastern and African countries, the piracy rate was an average of 56 percent, with losses totaling more than US$1 billion.

In its announcement today, the Washington-based BSA said the methodology of its new study has been revised from past years, when the organization looked only at business desktop software. The study by Framingham, Mass.-based IDC includes new categories of software such as operating systems, games and other consumer-oriented programs as well as local-language applications around the world.

In the past, the study results focused on shipment data from software and hardware manufacturers, according to the group. The new study uses proprietary IDC data for those shipments, as well as more than 5,600 interviews in 15 countries designed to better analyze the problem and to offer a more extensive picture of the problem.

The changes in how the latest study was done mean past totals can't be directly compared for analysis. But they will lead to improved tracking and analysis in the future, said Bob Kruger, vice president of enforcement at the BSA. The new study answers critics who complained that old BSA studies only looked at business desktop software piracy, he said.

"We've always wanted to basically reflect as much of the marketplace as we could," Kruger said. "It's a logical evolution for the study."

And while the 2003 results don't directly correlate to past studies, the latest figures show that the piracy problem isn't going away, he said.

"I think it underscores what we've been saying for a long time, that this is a huge problem and it needs attention" from manufacturers and governments around the world, Kruger said. "It adds some credence to our arguments over the years that everybody loses from piracy."

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Todd R. Weiss

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