Survey Says 1 in 3 Programs in Companies Are Illegal
May 25, 2000
By David Noack
WASHINGTON (APBnews.com) -- One in every three pieces of software used by businesses worldwide in 1999 was illegal, costing software makers $12.2 billion for the year, according to the latest survey by two trade associations.
The report released Wednesday said that software piracy is on the increase, with financial losses to the industry last year almost 11 percent higher than the $11 billion estimated in 1998. Since the survey first started five years ago, overall losses have topped $59 billion.
International Planning & Research, an independent research firm, conducted the survey for the Software & Information Industry Association (SIIA) and the Business Software Alliance (BSA). Investigators looked at sales data and market information for 26 business applications in 85 countries.
The major problem reported is businesses installing software on more computers than their license agreements allow for.
'A free ride'
Piracy losses for the United States and Canada lead every other region of the world at $3.6 billion, or 26 percent of the total. While businesses in those countries are arguably among the most honest in the world, they are also the largest users of pirated software.
Researchers did not attempt to estimate losses from programs distributed illegally on the Internet or installed on home computers, which would boost the overall piracy figure. Industry experts say that tracking online and at-home licensing violations is too difficult.
"Too many U.S. and Canadian businesses are getting a free ride on pirated software," said Ken Wasch, president of the SIIA.
Officials also said the amount of theft in the software industry is unmatched in other industries.
Theft by mouse click
"No industry would or should tolerate such a high rate of theft," said Robert Holleyman, president of the BSA. "The explosive growth of the Internet is making piracy even more prevalent, since pirated copies of software can be distributed and downloaded quickly and globally, with the click of a mouse."
Peter Beruk, SIIA vice president of anti-piracy programs, believes that an education campaign against software piracy is working.
"The piracy rate hasn't changed, which is a good sign," Beruk said. "In fact, it's actually gone down 2 percentage points worldwide from 38 percent last year to 36 percent this year. Statistically that is not significant. At the same time, more and more people are using software, so I think the educational message has been a good one."
Both trade associations have taken aggressive stands against software pirates by publicizing the piracy problem with online auction sites and going after so-called Warez Web sites, which provide copies of software that can be downloaded.
Individual software companies, including Microsoft, Novell and Adobe, have gone after software pirates as well.
Rates higher for poor countries
The two trade associations said that the big culprits in software piracy are in North America, Asia and Western Europe, accounting for 83 percent of the revenue losses. These regions are the predominant users of software.
The 10 countries where piracy is the most costly are the United States, Japan, United Kingdom, Germany, China, France, Canada, Italy, Brazil and the Netherlands. Total losses for the top 10 countries were $8.4 billion, or 70 percent of worldwide losses.
A breakdown by region showed that piracy rates tend to be highest in poor countries.
- Asia and Pacific: Software piracy in this region cost software publishers $2.8 billion in 1999, led by a $975 million revenue loss in Japan. Countries with the highest piracy rates were Vietnam (98 percent), China (91 percent), and Indonesia (85 percent). China accounted for $645 million in losses and India $214 million.
- Eastern Europe: Although dollar losses in Eastern Europe appear low compared to other regions, with $505 million estimated in 1999, the region continues to have the highest average piracy rate at 70 percent. Countries with the highest piracy rates were the former Soviet Union, less Russia (90 percent), and Russia (89 percent). Poland and Russia tied for the highest dollar losses at $165 million each.
- Western Europe: The region accounted for losses of $3.6 billion, just $2 million less than North America. The largest dollar losses to software piracy in 1999 occurred in the United Kingdom ($680 million), France ($652 million) and Germany ($548 million). For the second consecutive year, the highest piracy rates were in Greece (71 percent), Spain (53 percent) and Ireland (51 percent).
- Central and South America: Countries with the largest revenue losses in 1999 include Brazil ($392 million), Argentina ($192 million) and Mexico ($134 million). These three countries represent 64 percent of the region's dollar losses. The countries with the highest piracy rates were Bolivia (85 percent), followed by El Salvador and Paraguay (each with 83 percent).
- Middle East and Africa: At 60 percent, this region had the second-highest regional piracy rate in the world. South Africa, Israel and Turkey represent 53 percent ($255 million) of the total dollar losses in the region. The countries with the highest rate of software piracy in the region were Lebanon (88 percent), Oman (88 percent) and Bahrain (82 percent).
- North America: The U.S. and Canadian software markets have the lowest rate of software piracy for any region of the world. The North American piracy rate has declined from 32 percent to 25 percent over the past five years. But because of the size of its software market, software manufacturers lose more revenue here than anywhere else, $3.6 billion last year. In 1999, the U.S. had a piracy rate holding steady at 25 percent, and the piracy rate in Canada rose 1 percent to 41 percent.
NEWSCENTER
Missing 
