Pirated software costs continue to multiply

by  Alan Zisman (c) 2006 First published in Business in Vancouver June 13-19, 2006; issue 868

High Tech Office column; 

Every spring I get a press release from the Canadian Alliance Against Software Theft (CAAST) reporting the results of an annual survey about software piracy in Canada and worldwide. The survey, conducted by research firm IDC on behalf of CAAST and its U.S. equivalent, the Business Software Alliance, claimed that worldwide, 35 per cent of all personal computer software installed in 2005 was pirated. CAAST and the BSA represent large software manufacturers, including Adobe, Microsoft and Symantec.

The U.S., at 22 per cent, had the lowest reported piracy rate, while Vietnam and Zimbabwe, at 90 per cent, had the highest rates.

The Canadian rate was reported at 33 per cent, down from a reported 36 per cent in last year’s report, making Canada 16th of the 97 countries surveyed. CAAST reports that worldwide software piracy costs $41 billion in lost sales, with Canada accounting for $943 million of that total. The large size of the U.S. market resulted in the largest dollar losses – some $8.3 billion – followed by a reported $4.7 billion loss in China.

According to IDC’s John Gantz, IDC keeps track of the number of PCs sold and compares it to the number of software packages purchased, trying to factor in variables like open-source software, which can be downloaded and installed legally without being purchased. An earlier survey, conducted for CAAST by Decima Research suggested that only 16 per cent of B.C. consumers felt very confident in their ability to pick out illegal software, while research last summer reported that half of B.C. university students admitted to installing pirated software that they’d downloaded or copied from a friend.

According to Gantz, much of the drop in the overall Canadian piracy rate is the result in an increase in sales of notebook computers replacing desktops assembled by small local shops. The brand-name notebooks more often ship with licensed packages of software pre-installed.

All these numbers leave me with mixed emotions. In many cases, a single piece of software can sell for a dizzying range of prices. A retail package of Microsoft Office 2003 Standard Edition lists for $539, for instance. Unless you have a student at home, then the otherwise identical Student and Teacher Edition lists for $209. No wonder users are confused, and may welcome cheap and apparently legal software advertised in an e-mail message.

CAAST suggests that software piracy results in lost jobs and taxation lost to government and, as a result, harms the economy. If accurate, these lost sales to the software industry instead become money that businesses and consumers spend in other ways, resulting in job gains outside the software sector. Moreover, IDC’s Gantz earlier estimated that only one in 10 unauthorized copies worldwide actually resulted in a lost sale.

And CAAST lost my sympathies several years ago when it engaged in a campaign in Vancouver that accompanied radio ads with letters to randomly selected businesses and other organizations implying they should expect a visit from software auditors and suggesting recipients take a month to get their software licences in order. Software sales jumped, but no followup visits occurred, either in Vancouver or other Canadian or U.S. cities targeted by CAAST and the BSA.

Don’t get me wrong: users should expect to pay for the commercial software they have installed on their business and home computers, just as they pay for their computer hardware, Internet connection and more. Rather than pirating software, users should be investigating open source and other legal alternatives.