May 23, 2006 9:41 AM PDT

Study: Software piracy costs $34 billion

Software piracy resulted in a loss of $34 billion worldwide in 2005, a $1.6 billion increase over 2004, according to a study commissioned by the Business Software Alliance.

The study, conducted by information-technology research firm IDC, found that roughly one out of every three copies of personal computing software installed in 2005 was pirated. While the rate of piracy has fluctuated from country to country, globally it has remained steady since 2004.

"The piracy is the same rate, but overall more software and PCs were actually shipped in 2005," John Gantz, chief research officer for IDC, said Tuesday.

China, Russia and India have seen two or more point drops in their piracy rates, while piracy has actually increased in 19 countries. But after the U.S., China also saw the highest revenue loss, $3.9 billion. That's because the PC market in China expanded in 2005.

"In Asia Pacific, over half the countries went down and yet the average went up. That's because the amount of PCs going into India and China became a much bigger part of the total. They have an increased share in the PC market overall," Gantz said.

The United States had the lowest piracy rate--21 percent--of any country. It was followed by New Zealand, with 23 percent, and Austria and Finland, both with 26 percent piracy rates.

But the U.S. also lost the most amount of money, $6.9 billion, due to piracy.

Topping the list of countries with high software piracy rates are Vietnam and Zimbabwe, each with 90 percent; Indonesia with 87 percent; and China and Pakistan with 86 percent.

The BSA defines pirated software three ways: as a purchased, legal copy that is installed on more computers than the copy is licensed for; as software that is illegally sold or distributed; and as software that is downloaded from the Internet but never paid for.

Gantz said IDC keeps a daily watch on the PC market, collecting surveys and inventory data. Piracy percentages and figures are calculated from the amount of PC units shipped, the amount of software packages deployed and paid for, and from deductions for variables like open-source software options. The remainder is considered pirated software.

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This is irrelevant
"Software piracy costs $34 billion"

What type of statement is that? "...cost 34 billion" This is a very misleading statement because it implies that every pirated software would be bought which there is NO evidence for.

I am not supporting pirating software in any way and I believe in punishing people who do pirate and use pirated software.

But statements like this are not the way to get ride of it.

IDC, do your homework first. Then tell us the real loss from pirated software instead of stipulating and releasing numbers that are missleading and does not answer any question in regards to this great prioblem.

Posted by ornulf (3 comments )
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Reading this cost my employer $12
Hope he does not bill you.
Posted by JJWhitney (32 comments )
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Message has been deleted.
Posted by UntoldDreams (91 comments )
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Lost Sales != Pirated Copies
Very dissapointing to see another doom-and-gloom number. Piracy is wrong, but these numbers will be used to justify invasive, and arguably illegal, DRM technologies like Sony's rootkits and Starforce.

The most common falacy in these reports: Any pirated copy of software represents a loss of sales exactly equal to the package's MSRP.

If teenager Joey installs a second copy of his Unreal Tournament game on his brother's computer to see if it runs, most piracy reports count that as $60 in lost sales, nevermind that the going legal street price for Unreal is $10.
Posted by jonandrews (1 comment )
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And enforcing DRM != sales
If MS used technology to make sure that every copy of Windows/Office that is not paid for doesn't work, the result would not be that every single person using these would go and pay MS. It would just force people to actively check the alternatives, and might eventually mean loss of market share for MS and other BSA members.
Posted by hadaso (468 comments )
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piracy vs price-gouging monopoly
I suspect a major percentage of those who pirate would simply not use the software if forced to purchase.

I base that on the many people I know who are doing without either legitimate or pirated copies because they can't afford or are unwilling to pay the unrealistic prices. Hundreds of dollars for MS Office might not seem high to a major corporation but it is outrageous to those of us who want quality software, but only have occasional use for it.

Yeah, piracy is wrong and should be stopped, but monopolization and Price gouging are wrong too, yet the monopolies have more money to spend combatting piracy.
Posted by BengalTigger (36 comments )
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Hardly lost money...
I'd agree that they (software companies) possibly lose money, but piracy demonstrates that the companies should be price discriminators when selling their software. Using your example of Joey and his brother, keep in mind that the software company has no explicit costs associated with that pirated copy. Even if UT sells for $60, it costs between $0.01 and $59.99 to make, thus the amount of money lost is less than $60. Also consider that if forced to, most so-called pirates would not actually purchase software they pirate. Piracy is essentially a myth perpetrated by large software companies so that they can have a coercive monopoly (or coercive oligopoly). Software developers should have some form or protection to own their ingenuity, but they should not have these all-inclusive laws prohibiting even the back-up of software. Remember, nature abhors a vacuum: this too shall pass!
Posted by CNerd2025 (98 comments )
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piracy affecting small tech firms
I agree with JonAndrews, piracy doesn't take into account second installations. This not only affects the bottom lines of the large firms, but also the smaller contracting firms. 41% of high tech workers are employed in the small business sector and are at risk of their livelihoods when their work isn't rightfully paid for <a class="jive-link-external" href="" target="_newWindow"></a>
Posted by marileev (292 comments )
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Truly Amazing!, Caveat Emptor!
To take these figures for true worth, these pirates , must own and operate very large production facilities, that would be the envy of both the music and movie major players.

Further, in churning out these clones and copies, they would be shipping a minimum of at least 1000 full standard size shipping containers per month around the world by volume alone. Further selling it in to a retail network, that would be approximately 20% the size of Walmart's! Thus all pirates would have a very high visible street profile!

If converted to internet data usage,absolutely no bandwith would be available anywhere for any user of the some 700 million home and business together with all plain vanilla international telephone users at the same time!

Also given the values claimed, they should also by rights, reflect in world wide government siezure of counterfit and illicit goods value!

As Prince Hamlet would say "O day and night, but this is wondrous strange!"

Sadly, with these wondrous statistic's, what a pity they cannot take my dog for walks on cold winter days!

Caveat Emptor!
Posted by heystoopid (691 comments )
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This Appears Wildly Inflated
Where did they get these numbers? I have a hard time believing that if all piracy ended tomorrow that suddenly software makers would earn $34 BILLION more dollars.

Also if this "study" is really just a Trojan Horse meant to gain acceptance of rootkit DRM, I'll wager we see a large uptick in the use of Open Source applications.
Posted by R. U. Sirius (745 comments )
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doubtful percentages too
in Zimbabwe, and inclined to doubt that we top the list. There's definitely not that much piracy around to talk about.
Posted by kabweza (5 comments )
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So, in other words, consumers SAVED $34 billion in 2005. Downloading is estimated to save consumers $34 billion a year.

My family has saved hundreds, possibly thousands of dollars. That is money which can go to groceries, rent, and paying the bills. My family, and hundreds of thousands of other families are richer because of piracy. I have no problem keeping money which would only go to the extremely wealthy.

Downloading severely weakens the monopoly that big media has traditionally had. Downloading movies illegally has forced big media monopolies to drastically drop prices, which has saved consumers billions.
Economist magazine excerpts:

[I]ntellectual property?, as published work and inventions have since become known, is different in kind from tangible property. Economists call ideas, and their expression, ?non-rivalrous??for example, if I take your car, you are left without a car, but if I borrow or steal your idea, we can both use it. As Thomas Jefferson famously put it: ?He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.? Whereas all tangible property is scarce, ideas or their expression are not.

In America, the length of copyright protection has increased enormously over the past century, from around 28 years to as much as 95 years. This makes no sense. Copyright was originally intended to encourage publication by granting publishers a temporary monopoly on works so they could earn a return on their investment. But the internet and new digital technologies have made the publication and distribution of works much easier and cheaper. Publishers should therefore need fewer, not more, property rights to protect their investment. Technology has tipped the balance in favor of the public domain. Copyright was originally designed to restrict publishers from exerting too much control over information; today it constrains individuals from creating new works. Instead of adapting to the internet, media companies are using the law to change the very features of the internet that make it so successful.

[The issue] is about power. Specifically, it concerns the way in which financial and political power are used by corporations to preserve the status quo and to further their own commercial interests. This may be to the detriment of something more socially valuable: a loss of creativity that can never be measured.

IMAGINE that drug companies were so successful at lobbying governments that they won an extension of their patents from 20 years, as they are today, to 100 years; and that the scope of those rights was extended so that future medical discoveries were in effect blocked. The ensuing public outcry would almost certainly result in the law being rewritten in favour of scientific advancement.

Yet this is actually happening (and with little public scrutiny) in a different area of intellectual property: copyright law. The alternative is to return to the original purpose of copyright, something no national legislature has yet been willing to do. Copyright was originally the grant of a temporary government-supported monopoly on copying a work, not a property right. Its sole purpose was to encourage the circulation of ideas by giving creators and publishers a short-term incentive to disseminate their work. Over the past 50 years, as a result of heavy lobbying by content industries, copyright has grown to such ludicrous proportions that it now often inhibits rather than promotes the circulation of ideas, leaving thousands of old movies, records and books languishing behind a legal barrier. Starting from scratch today, no rational, disinterested lawmaker would agree to copyrights that extend to 70 years after an author's death, now the norm in the developed world.
Posted by travb (2 comments )
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