Software Pirates Go Slow

Survey estimates that 38 percent of applications in use worldwide are illegal.

Cheri Paquet, IDG News Service

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In 1998, 38 percent of applications in use globally were pirated, down from 49 percent in 1994. However, 231 million business software applications installed last year were pirated, 2.5 million more than in 1997.

Software companies lost revenues of approximately $11 billion in 1998, down from the previous year's $11.4 billion, according to the report.

In a sense, the decrease in lost revenue is artificial, according to David Phelps, an SIIA spokesperson. If Asia had not gone through an economic crisis, worldwide software piracy losses may have been closer to $12 billion or $13 billion, Phelps said. "When we crunch numbers for 1999, we may see a corresponding increase between sales and piracy in that region that would take those numbers back up again."

Asia, North America, and Western Europe together accounted for 80 percent of global revenues lost to piracy. The countries with the highest dollar losses due to software piracy are (in rank order): the U.S., Japan, Germany, the United Kingdom, France, Brazil, Italy, Canada, and Russia.

Software piracy in North America represented 26 percent of worldwide revenue losses. The U.S. accounted for $2.9 billion of the North American losses, up slightly from the 1997 figure of $2.7 billion. The U.S. piracy rate declined last year to 25 percent, a 2 percent dip from 1997.

Education and Enforcement

The SIIA attributes the declining piracy rate to the effort in many countries to educate people about the economic effects of piracy and to enforce the laws surrounding piracy.

Thailand, for example, recently jailed convicted software pirates -- a first for that country, Phelps said. "We are encouraged that governments around the world are beginning to be proactive in combating piracy," said Phelps.

Many countries are leading by example and ensuring that their government agencies and departments use legal software.

Internet Threats

Internet piracy, which was not a part of this study, is a growing concern, said BSA spokesperson Jason Penchoff. There are Web sites that offer software for free and there are online auctions in which illegal software is sold, he noted.

"Everyone is grappling with how to protect their software sold online--that will be the next phase of combating software piracy," Penchoff said.

Software piracy affects company productivity and jobs, Penchoff said. For every free package or unlicensed package of software, companies are losing money. "If an automaker lost 38 percent of its revenue, there would be a huge outcry," he said.

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