Study: Global Software Piracy Rises

By Matthew Harwood

Global software piracy increased in 2008, costing software vendors an estimated $53 billion, according to an Agence France Presse report based on an annual survey from the Business Software Alliance and IDC. An average of 41 percent of software worldwide was unlicensed, compared with 38 percent in 2007.

The biggest regional problem was in Central/Eastern Europe (67 percent) followed by Latin America (65 percent) and Asia-Pacific (61 percent), while the rate was much lower in North America (21 percent) and the European Union (35 percent).

Despite the United States ranking as the country with the lowest piracy rate at 20 percent, it suffered the most,  losing $9.1 billion from unlicensed programs. The United States is the largest market in the world for software.

BSA notes that software piracy doesn't only ravage the software industry, especially in recessionary times.

Software piracy affects much more than just the global software industry. For example, for every $1 of software sold in a country, there is another $3 to $4 of revenues for local IT service and distribution firms. High piracy thus means fewer jobs in IT services. A 2008 IDC study predicted that lowering PC software piracy by 10 points over four years would create 600,000 additional new jobs worldwide. That projection has been confirmed by actual experience in China and Russia, the new study says.

Software piracy also increases the risk of cyber crime and security problems. For example, the recent global spread of the Conficker virus has been attributed in part to the lack of automatic security updates for unlicensed software. And in a 2006 study, IDC found that 29 percent of Web sites and 61 percent of peer-to-peer sites offering pirated software tried to infect test computers with “Trojans,” spyware, keyloggers, and other tools of identity theft.

Software piracy also lowers tax revenues at a time of increased fiscal pressures on governments worldwide. According to the 2008 IDC study noted above, reducing piracy by 10 points would generate $24 billion in higher government revenues without a tax increase.

John Gantz, chief research officer at IDC, believes that it's uncertain how the recession will ultimately affect software piracy. On the negative side, people with less money to spend will hold onto their old computers longer. Older computers, he says, tend to have more unlicensed programs loaded onto them. However, people that have to buy computers will most likely purchase them with the software already preloaded.

“Reduced buying power is only one of many factors affecting software piracy,” Gantz said. “The economic crisis will have an impact – part of it negative, part of it positive – but it may not become fully apparent until the 2009 figures come in.”

Other factors that will affect whether or not pirate software rates fall or climb include increasing Internet access worldwide that makes it easier and faster to download pirated software pitched against increasing government, industry, and public-private initiatives aimed at combating software piracy.

For more on what companies can do to protect their intellectual property, read this month's online exclusive "Developing an Antipiracy Program," by Rich LaManga, CPP, former director of Worldwide Anti-piracy Investigations for Microsoft.


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