Software Piracy: Who Are the Real Victims?

By , July 11, 2005

Does exchanging disks or downloading from the Internet really undercut into sales of software?

When I was growing up, it was common practice to exchange program disks on the Commodore 64 or Apple II with friends, family, and even schools. Kids in my neighborhood would often share their games with their friends, and even my uncle copied games for us to play on the C-64. There was no big shame in piracy, and no one really bothered to question if it was really immoral (much less illegal).

As I grew older, I began to wonder about the implications of software piracy as it relates to corporations. Does exchanging disks or downloading from the Internet really undercut into sales of software (game, business, or otherwise)?

To find out, I did a little bit of research. For starters, I googled the Business Software Alliance (BSA). Assuming that you can believe the BSA, global software piracy has been steadily declining since 1994 (according to a 2003 BSA report) .

The BSA studied six regions of the world, including the Middle East/Africa, Latin America, Western Europe, Eastern Europe, Asia/Pacific, and North America.

Middle East/Africa. This region is the most improved region with a 31-point reduction in piracy, from 80 percent in 1994 to 49 percent in 2002. In this region, piracy rate fell from 84 percent in 1994 to 50 percent in 2002, a decrease of 34 points supported by improving piracy rates in all countries. Most improved of all countries is the UAE with a 50-point drop, from 86 percent in 1994 to 36 percent in 2002.

In Africa, the piracy rate declined 29 points, from 77 percent in 1994 to 48 percent in 2002. South Africa dropped 30 points, from 64 percent in 1994 to 34 percent in 2002, and Egypt dropped 32 points, from 84 percent in 1994 to 52 percent in 2002, making it the most improved country in Africa.

Latin America. Second only to the Middle East/Africa region in improvement, the Latin America regional piracy rate declined 23 points between 1994 and 2002.

Guatemala had the largest drop, 33 points, from 94 percent in 1994 to 61 percent in 2002. El Salvador decreased its piracy rate 29 points, from 97 percent in 1994 to 68 percent in 2002. The piracy rates in Costa Rica and the Dominican Republic each decreased 28 points; both countries decreased from 89 percent in 1994 to 61 percent in 2002. Brazil and Mexico, the two largest countries in Latin America decreased 22 and 23 points, respectively. Brazil dropped from 77 percent in 1994 to 55 percent in 2002. Mexico fell from 78 percent in 1994 to 55 percent in 2002.

Western Europe. The piracy rate of Western Europe decreased 17 points, from 52 percent to 35 percent, the third best of all the regions. Ireland improved the most, decreasing from 74 percent in 1994 to 42 percent in 2002. Spain followed with a 30-point improvement, dropping from 77 percent to 47 percent. Finland and the Netherlands each reduced their rates by 28 points. Switzerland had the lowest piracy rate in Western Europe in 1994, and after decreasing six points to 32 percent in 2002 it is still below the regional average of 35 percent. However, it is well above Denmark, which had a piracy rate of 24 percent in 2002.

Eastern Europe. The piracy rate in Eastern Europe dropped 14 points, from 85 percent in 1994 to 71 percent in 2002, and is the fourth most improved region. Slovenia improved the most, reducing its piracy rate by 37 points, from 96 percent to 59 percent. Hungary followed with a 31-point drop, from 76 percent in 1994 to 45 percent in 2002. The piracy rate in Russia dropped only six points, from 95 percent in 1994 to 89 percent in 2002. The Ukraine also only dropped six points, from 95 percent to 89 percent.

Asia/Pacific. The piracy rate in the Asia/Pacific region improved 13 points, from 68 percent in 1994 to 55 percent in 2002. Japan had the largest drop in piracy in the region, decreasing from 66 percent in 1994 to 35 percent in 2002. Taiwan followed with a 29-point drop, from 72 percent in 1994 to 43 percent in 2002. The Philippines dropped 26 points from 94 percent in 1994 to 68 percent in 2002. Korea dropped 25 points, from 75 percent in 1994 to 50 percent in 2002.

North America. North America has the lowest piracy rate in the world, and it declined from 32 percent in 1994 to 24 percent in 2002. At 23 percent in 2002, the U.S. piracy rate decreased eight points from 31 percent in 1994, and is still the lowest of all the countries worldwide. The piracy rate in Canada was 39 percent, a drop of seven points from 46 percent in 1994.

BSA commissioned the International Planning and Research Corporation (IPR) , an independent research firm, to conduct the survey. The study evaluated sales data and market information for six major world regions and examined 26 business software applications. The study is based on the reconciliation of two sets of data: the demand for new software applications and the legal supply of new software applications. The data are derived from two primary sources: software shipment data supplied by BSA member companies and market data provided by MetaFacts, Inc., a technology market research firm."

So is software piracy declining overall? Yes. But is it still a pretty big problem? Absolutely. What can governments and businesses do to combat software piracy?

There are three major ways to combat software piracy overall:

Long gone are the days of swapping disks on a Commodore 64 or Apple II. But software piracy today still remains a huge problem in the global market, especially with the rise of broadband and high speed internet access.

The digital world should be made safe for consumers willing to purchase software at reasonable prices. Software piracy, however, openly challenges that freedom and restricts the flow of good, quality software through rising costs and development burdens. This is not the way the digital world should be.

Paul Panks is a software developer in Arizona. He can be contacted at dunric@yahoo.com.