Piracy is costing global software industry US$53bn a year

12 May 2009

Pirated software now makes up 41pc of all PC software installed on the planet, with losses to companies estimated at US$53bn, the Business Software Alliance said this morning. Reducing piracy could create hundreds of thousands of new jobs.

Piracy of software on personal computers in Ireland remained static at 34pc in 2008, while piracy rates dropped in half of 110 countries, with only 15pc seeing an increase. However, industry losses due to software piracy in Ireland rose to €84m in 2008.

These are among the findings of the sixth annual global PC software piracy study released today by the Business Software Alliance (BSA), an international association representing the global software industry.

The study covers 110 countries and was conducted independently by IDC, the information technology (IT) industry’s leading global market research and forecasting firm.

“This report demonstrates that we have more work to do in Ireland to further reduce software piracy,” a spokesperson for BSA in Ireland said.

“In these uncertain economic times, it is vital that companies do not skip corners and use unlicensed software, as this would increase the detrimental impact on those businesses, as well as consumers and the local and global economy.”

In Ireland, the rate has been declining consistently since its 2003 rate of 41pc because of the combined work which has been done by the BSA and ICT industry locally, which encourages Irish business to take a more responsible attitude to software asset management (SAM).

The BSA has invested significantly in education and enforcement programmes in Ireland over the past 12 years to raise awareness around these issues. The rate has been helped considerably by the Copyright and Related Rights Act 2000 – one of the most stringent copyright laws in Europe.

Recent activity by BSA in Ireland, working with local partners and the launch of a New Guide on Software Asset Management, is resulting in renewed interest in maintaining compliance standards in Irish business – despite the economic downturn – with many companies realising that good systems management can save companies money as well.

“I am heartened by the fact that Ireland’s piracy rate has not increased for 2008,” said Kathryn D’Arcy, director of ICT Ireland.

“Of the 10 major software companies in the world, seven have a substantial base in Ireland, so the ICT sector is of huge importance. It is therefore vital that Ireland continues to reduce its piracy rate and respects intellectual property, if it is to remain attractive to foreign direct investment and maintain competitiveness on a global scale.” 

Software piracy affects much more than just industry revenues. An IDC study released in January 2008 found that reducing software piracy could generate hundreds of thousands of new jobs and billions of dollars in economic growth, while increasing tax revenues to support local programmes and services.

Among the 110 countries studied, PC software piracy dropped in 57 countries, stayed the same in 36 and increased in only 16. However, because the worldwide PC market grew fastest in high-piracy countries, the worldwide piracy rate increased by three percentage points to 41pc in 2008.

While emerging economies account for 45pc of the global PC hardware market, they account for less than 20pc of the PC software market.

If the emerging economies’ PC software share were the same as it is for PC hardware, the software market would grow by US$40bn a year. Also, lowering global piracy by just one point a year would add US$20bn in stimulus to the IT industry.

Spreading internet access will increase the supply of pirated software. Over the next five years, 460 million people in emerging countries will come online. The growth will be highest among consumers and small businesses, which tend to have higher rates of piracy than businesses and government agencies.

The global economic recession is having a mixed impact on software piracy, said John Gantz, chief research officer at IDC. He noted that consumers with reduced spending power may hold on to computers longer, which would tend to increase piracy because older computers are more likely to have unlicensed software loaded on them.

However, pocketbook pressures are spurring sales of inexpensive ‘netbooks’, which tend to come with legitimate pre-loaded software, and business use of software asset management (SAM) programs to lower IT costs.

“In any case, the cost of software is only one factor driving software piracy,” Gantz said. “The economic crisis will have an impact, part of it negative, part of it positive, but it will be one of many factors, and it may not become fully apparent until the 2009 figures come in.”

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years