The Hindu Business Line : Piracy watch

How many of us can afford licensed software? How many of us learned software and Internet using licensed products? How many of us equate downloading or copying software with stealing it from a shop?

According to the Business Software Alliance, an alliance of software companies against piracy, there is little evidence that the ability to pay, such as national income per capita, has a significant impact on piracy levels.

In a survey of distributors worldwide, the majority of respondents felt that piracy has more to do with individual attitudes toward intellectual property than with prices. The fourth annual BSA and IDC Global Software Piracy Study said 35 per cent of the software installed in 2006 on personal computers worldwide was obtained illegally, amounting to nearly $40 billion in global losses. A comparison of BSA list of countries with highest rates of piracy and IT industry competitiveness Index, 2007 reveals no surprise. Toppers in piracy, such as Algeria, Ukraine, Indonesia, Pakistan, Venezuela and Vietnam, are the least competent in IT.

Jeffrey Hardee, Vice-President, BSA Asia, shared his thoughts on software piracy in an e-mail interview from Singapore. Excerpts:

“It’s a question of ethics. Unfortunately, there will always be unethical people who choose to steal software rather than pay for it. Some individuals just do not have the mindset of “going without,” he says.

He also pans the argument that some piracy often actually increases software sales, by introducing products to people who would not otherwise become customers. “To test this assumption, in a 2005 Piracy Impact Study, IDC compared the software markets of countries with different piracy rates and calculated how lowering piracy would increase the size of the software market relative to the PC market. We found that lowering piracy, the legitimate software market grows by an amount equal to or greater than the value of the previously pirated software. IDC believes that it is legitimate to equate the value of pirated software to losses.”

Importance of software asset management (SAM) and software audit return (SAR) in the fight against piracy...

SAM is a set of policies, procedures, technologies and people within an organisation — working towards common objectives that allow organisations to take full advantage of all their software. A good SAM practice is essential for businesses. Apart from implementing a process whereby the planning, procurement and management of software is noted, a model SAM practice also calls for regular audits to be conducted on software that is installed in the business network. This would help ensure the legality of software being employed. Businesses will be able to make informed strategic, tactical and operational decisions that will help them become more competitive. They will know what software licences they have, and what is not needed, and budget accordingly. Businesses will also be able to identify their software needs, thereby reducing time for deployment.

Backup and recovery systems are easier to maintain when you know what software goes where. By standardising software versions, employees will be able to work together seamlessly and more effectively. Businesses will be able to remove all unauthorised or unused software from computers, thereby releasing precious memory space for mission critical software and data. Standardising the use of licensed security software will enhance network security as crucial updates and patches are implemented seamlessly and in a timely manner.

Benefits of curbing piracy

Less software piracy can mean more jobs for workers, expanding choices for consumers, productivity gains for businesses, and rising standards of living around the globe. Reducing the rate of software piracy can boost economies and create new jobs and business opportunities that generate spending and new tax revenues.

Workers benefit from more jobs that pay higher wages when piracy is reduced. A 10-point reduction in piracy between 2004 and 2009 could create 2.4 million more IT jobs for workers. IT jobs generally pay better than other private sector jobs too.

Software innovators invest hundreds of millions of dollars every year and immeasurable amounts of creativity in designing, writing and bringing new products to market. They depend upon the revenue they receive from those products to obtain a return on their investment and to fund the development of the next new things. Each single-point reduction in the piracy rate worldwide raises more than $6 billion in additional tax dollars. A 10 point drop in piracy over four years would create $67 billion in additional tax benefits for governments which could be used to provide an additional 33 million computers for schools, 45 million people with healthcare, 6.6 million people with college degrees, 11 million children with schooling, 435 million people with job training benefits or 132 million families with services such as day care, maternity, or home help services. (Based on OECD cost estimates)

Online sale of software

As with other copyright content, the Internet has the potential to become a very good mechanism for distribution. The challenge is to ensure that the Net is used for legal sale and distribution of software. It is important for governments to establish legal protection for technological protection measures that software publishers employ to protect their works (copy and access controls) and for these to be respected.

Software publishers have contributed in countless ways to the Internet’s development and success, providing the means by which content can be created, displayed and exchanged and providing some of the most desired content itself.

There is, therefore, no small irony in the fact that the Internet poses a potentially enormous threat to the economic viability of the software industry.

Software piracy in emerging markets

From the most recent IDC Global Software Piracy Study launched in May this year, progress was seen in a number of emerging markets, most notably in China, where the piracy rate dropped ten percentage points in three years, and in Russia, where piracy fell seven percentage points over three years.

India’s drop in piracy is encouraging, but the high rate is counter-intuitive, given India’s big export market for custom-developed software. The IDC rate, however, measures only PC software and only that consumed domestically. Were the piracy rate lower, it seems clear that India, given its world-class software development skills, could have a much more robust local packaged software market.

China’s piracy rate dropped four percentage points for the second consecutive year and has dropped ten percentage points in the last three years, from 92 per cent in 2003 to 82 per cent in 2006. By reducing China’s piracy rate by ten percentage points over three years, $864 million in losses was saved, according to IDC.

The reduction in the piracy rate and the savings are the result of Government efforts to increase the use of legitimate software within its own departments, vendor arrangements with PC suppliers to use legitimate software, and increasing industry and government education and enforcement efforts. The legitimate software market in China grew to nearly $1.2 billion in 2006, an increase of 88 per cent over 2005. Since 2003, the legitimate software market in China has grown over 358 per cent.

Russia’s 3 per cent drop to 80 per cent in 2006 follows a 4 per cent drop in 2005. Russia’s piracy rate has dropped seven percentage points since 2003, a result of government and industry efforts to lower piracy and, as with China, more arrangements between software vendors and PC suppliers to increase the use of legitimate software. In addition, the increase in discretionary personal income as a result of Russia’s fast growing oil-driven economy seems to have had a positive effect on user willingness to buy legitimate software.

koshy@thehindu.co.in