Software Piracy - Global Increase

By Robert Palmer
Posted Wednesday, July 28, 2004

Pirated software is on the increase and now accounts for over one third of the software installed on the world's computers and it's cost the software industry a staggering, $28bn (£12bn) last year in lost revenues. That's the startling claim of the UK based, Business Software Alliance. Their annual survey of global software piracy shows that some 36% of software applications were illegally installed and being used during 2003.

The study, conducted for the first time on behalf of the BSA by global technology research firm, International Data Corporation, incorporated major software market segments, including operating systems and consumer software and local market software. They discovered that while software costing $81bn (£38bn) was installed onto computers around the world, only $51bn (£23bn) was actually purchased and installed legally.

The USA and Canada who collectively are the most honest when it comes to purchasing software show a software piracy rate of 23% whilst the worst offenders are within the Eastern European countries, where piracy levels are an incredible 71%. It's difficult to draw any comparisons from previous years data as this is the first year the study has been out-sourced to an independent company and takes in a wider spectrum of software than the previous studies conducted in-house by the BSA. As well as counting the number of illegally produced software programs installed on systems, the study also includes software for where an insufficient number of site licenses have been purchased.

“Software piracy continues to be a major challenge for economies worldwide,” said Robert Holleyman, president and CEO of BSA. “From Algeria to New Zealand, Canada to China, piracy deprives local governments of tax revenue, costs jobs throughout the technology supply chain and cripples the local, in-country software industry.”

Mr Holleyman went on to say, that the IDC study reflects a logical evolution in BSA’s decade-long effort to measure piracy in the global economy. Its scope was expanded to account more accurately for trends such as the growth of local software markets worldwide and the acceleration of Internet piracy.

For its analysis, IDC drew upon its worldwide data for software and hardware shipments, conducted more than 5,600 interviews in 15 countries, and used its in-country analysts around the globe to evaluate local market conditions. IDC identified the piracy rate and dollar losses by utilizing proprietary IDC models for PC, software and license shipments by all industry vendors in 86 countries.

The study found that the size of a regional software market is the critical link between piracy rates and actual dollars lost. For instance, 91 percent of software installed in the Ukraine in 2003 was pirated, as compared to 30 percent in the U.K. But dollar losses in the U.K. ($1.6 bn) were about 17 times higher than those in the Ukraine ($92.1m). This difference is attributed to a much larger total PC software market in the U.K. than in the Ukraine.

“A number of factors contribute to the regional differences in piracy, including local-market size, the availability of pirated software, the strength of copyright laws, and cultural differences regarding intellectual property rights,” said John Gantz, Chief Research Officer at IDC. “Unfortunately, we found that high market growth regions also tend to be high piracy regions, such as China, India and Russia. If the piracy rate in emerging markets – where people are rapidly integrating computers into their lives and businesses – does not drop, the worldwide piracy rate will continue to increase.”

“The fight for strong intellectual property protection and respect for copyrighted works spans the globe, and there is much work to be done,” Mr Holleyman said. “BSA will continue to work with governments to enact policies to protect software intellectual property as well as implement programs to raise business and consumer awareness about the importance of copyright protection for creative works. Lowering the piracy rate will stimulate local economic activity, generate government revenue, create job growth and cultivate future innovation.”

Countries with Highest Piracy Rate:

* Vietnam 92%
* China 92%
* Ukraine 91%
* Indonesia 88%
* Zimbabwe 87%
* Russia 87%
* Algeria 84%
* Nigeria 84%
* Pakistan 83%
* Paraguay 83%

Countries with Lowest Piracy Rate

* United States 22%
* New Zealand 23%
* Denmark 26%
* Sweden 27%
* Austria 27%
* United Kingdom 29%
* Japan 29%
* Belgium 29%
* Germany 30%
* Switzerland 31%