Fact and fantasy on the software piracy front

by  Alan Zisman (c) 2009 First published in Business in Vancouver June 16-22, 2009; issue 1025

High Tech Office column

Argh, mateys! Beware of pirates.

According to the Business Software Alliance (formerly known as the Canadian Alliance Against Software Theft), the Canadian 2008 software piracy rate dropped only slightly from 2007’s 33% to 32%. That rate is far above the U.S.A.’s world-leading 20% and cost the Canadian economy US$1.2 billion.

These figures come from the sixth annual global software piracy study, conducted for the BSA by marketing research firm IDC. BSA Canada chairman Michael Murphy suggested that “Canada’s software piracy rate is nowhere near where it should be compared to other advanced economy countries” and justified calling for stronger copyright legislation.

Another 2008 IDC study concluded that a 10-point decrease in Canadian software piracy would generate more than 5,200 jobs and $2.7 billion in revenue.

But University of Ottawa law professor Michael Geist said the numbers cited are virtually meaningless.
“While the study makes seemingly authoritative claims about the state of Canadian piracy, the reality is that IDC, which conducts the study for BSA, did not bother to survey in Canada.”

When queried by Geist, the BSA acknowledged that no surveying was done in Canada. It said, “Countries that are included in the survey portion are chosen to represent the more volatile economies. IDC has found from past research that low piracy countries, generally mature markets, have stable software loads.”

The widely publicized results, according to Geist, are “a guess,” pointing out that in contrast to the spin put on the story, the BSA acknowledges that Canada is a “low piracy country.”

The IDC went on to state that “in mature markets, piracy rates are driven less by changes in software load than other market conditions, such as shipment rates and volume licensing errors.”

Geist said that this contradicts Murphy’s claim that stronger copyright legislation is needed in Canada.

Geist also criticized a report on the digital economy issued by the Conference Board of Canada. Claiming “Canada is seen as the file-swapping capital of the world,” that report also called for increased emphasis on enforcement of [intellectual property rights].”

Geist noted that much of the board’s report was taken nearly verbatim from an earlier International Intellectual Property Alliance report, and that the data cited in the conference board report came from an out-dated six-year-old study of 30 Organisation for Economic Co-operation and Development (OECD) members, which did not support the conference board’s claim that Canada had the highest incidence of file sharing in the world.

While saying it stood by the findings of its report, the board has recalled it, because “it did not follow the high-quality research standards of the Conference Board of Canada.”

Dale Curtis, representing the BSA’s U.S.-based parent organization more or less admitted as much about his organization’s study. He told the online Ars Technica: “Bottom line: there is no way to measure software piracy with scientific precision.”

Geist’s response: “Rather than using broadbands to account for errors (i.e., 30% to 40% range), they use very specific figures and then cite even small increases or decreases.

If this is just a model without great precision, the BSA should not be using it to lobby policy-makers on the basis that it provides a fairly precise figure.”

My take: it’s virtually impossible to put exact numbers on software piracy. CAAST (now the BSA) in the past counted numbers of computers sold in Canada and then compared that figure with software licences sold. But that was another fundamentally flawed methodology.

It ignored – among other factors – the use of free or open source software. Precise-sounding figures for dollar and job losses and gains are equally meaningless because spending more on software means having less to spend in other areas of the economy – a zero-sum game.

The annual BSA reports sound scientific. Their numbers are used to justify calls for changes in legislation and enforcement. I have to agree with Geist: “The rhetoric simply does not square with the reality.” •