Software Piracy Slows

The rate of global software piracy has declined 10 percent in the past eight years, but the drop has been modest recently--while the cost of piracy has jumped sharply, says the Business Software Alliance, in its eighth annual survey.

BSA members include many of the world's leading software publishers, among them Microsoft, Apple, IBM, and Hewlett-Packard. The survey, released this week, attempts to measure the number of software applications in use without a valid license.

Overall Progress

Over the past eight years, the use of pirated software has fallen worldwide, the BSA's study finds. Use of pirated applications has decreased in every country except Zimbabwe during that period, the BSA said.

The survey finds dramatic reductions in software piracy in the Middle East and Africa. In 1994, more than 80 percent of software in those regions was pirated, compared with 49 percent in 2002, the BSA says. In Latin America, the piracy rate fell to 55 percent in 2002 compared with 78 percent in 1994.

Tougher intellectual property laws in some countries have helped companies pursue pirates, says Bob Kruger, BSA vice president for enforcement.

The software association has also sponsored education programs in many regions, which it credits with changing lax behavior about licensed software among otherwise honest users, Kruger said.

However, reductions in other parts of the world are 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 says.

Year-on-year declines are also modest, especially in North America and Western Europe. In both regions, the piracy rate declined by 2 percent between 2001 and 2002.

Biggest Pirates

Vietnam and China top this year's list of countries with the highest piracy rates. The BSA says 95 percent of the software in use in Vietnam and 92 percent of the software used in China are lacking a valid license. China also tops 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 says.

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 says.

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

"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 says.

Financial Hit

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.

The study estimates that worldwide losses grew from $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.

The organization calculates the piracy rate by measuring the difference between the estimated demand for 26 business software applications in various markets and the legal supply of those applications.

A technology market research firm supplied data on the estimated demand for applications, the BSA says. BSA members supply software shipment information that accounts for figures on the "legal supply" of software.