P2P Networks Blamed For Software Losses Doubling

L1TH10N writes "CNET News is reporting that software manufacturers have doubled their losses to $29 billion dollars, according to a BSA survey, which is blaming P2P networks for their misfortune. Seems a little too far-fetched to me - a P2P network would be the last place where I would download software, just too much chance that you are downloading a trojan onto your computer. Me thinks the Business Software Alliance are jumping on the bandwagon and vilifying P2P networks just as the Senate is taking aim at P2P providers."

Comments

Ps

[xOleanderx]

It seems like everyone has a copy of Adobe Photoshop these days... Im fairly certain that not even 1/4th of them actually bought this software.

Re:Ps

[craXORjack]

Yah, and not 1/40th of them actually use it. Over the years I've known plenty of people who had illegal copies of software and most of them load it on their system and then ignore it, telling themselves they will learn how to use it... someday.

Monkey1: Dude, I've got Autocad 2005.
Monkey2: Cool! What do you do with it?
Monkey1: You draw pictures and stuff, like of the space shuttle.
Monkey2: Cool! Can I make a copy?

Article text translated for non-BSA users

[YankeeInExile]

Software manufacturers lost $29 billion to piracy in 2003, more than double the previous year's losses, according to an industry survey released Wednesday.

Translation: Software manufacturers CLAIM $29bn in losses due to piracy.

About 36 percent of software installations worldwide are pirated copies, the study by trade group Business Software Alliance and market researcher IDC showed. In dollar terms, the losses were greatest in Western Europe, where piracy cut revenue by $9.6 billion in 2003, followed by Asia and North America. Translation: We assume that 100% of all people running pirated software would have paid full retail had they not found it for less in some other venue.

The Business Software Alliance blamed the rapid spread of piracy on so-called peer-to-peer networks, where Internet users illegally swap software and other files such as music for free or at discounted prices. Translation: We also assume that 100% of all piracy is via peer-to-peer networks.

"Peer-to-peer file-sharing services are becoming a huge problem for us," said Jeffrey Hardee, the Business Software Alliance's Asia-Pacific director. Translation: Sure sucks to be us.

Vietnam and China had the world's highest rates, with pirated versions accounting for 92 percent of all computer software installed in each country, followed by the Ukraine with 91 percent, Indonesia at 88 percent, and Zimbabwe and Russia with 87 percent each. Translation: Places with excruciatingly low per-capita incomes, for some reason don't want to spend the equivalent of a years salary for a substantially defective product.

Hardee identified Vietnam, China, India and Thailand as Asian countries that need to step up their fight against piracy. Translation: I bet governments in these places are cheap.

"We need to see more (government) enforcement from these countries," he said. Translation: So we will buy them.

By region, about 53 percent of software applications on computers in Asia was pirated in 2003, compared with 70 percent in Eastern Europe, 63 percent in Latin America, 55 percent in the Middle East, 36 percent in Western Europe and 23 percent in North America. Translation: Poor people don't buy software.

But the dollar losses were largest in Western Europe, North America and Asia because of the sheer size of those markets and the growing use of expensive, sophisticated software in developed countries, said Hardee. Translation: Even though the first world has the lowest per-capita RATES of piracy, they still have the most people who use software.

"In the Asia-Pacific (region), the governments really do want to develop strong IT sectors. And to do that, there's no question they have to bring down the levels of piracy. This will in turn benefit the Asian economies," he said. Translation: The best way for Asian governments to improve their IT sector is to ship major amounts of capital to Poughkeepsie, Redmond and Cupertino.

Singapore, Taiwan, Malaysia and South Korea are making progress in the battle against piracy, Hardee said. Translation: We are pleased with our rent-to-own program with these governments.

Complete Bullshit

[superpulpsicle]

If Joe Schmoe wasn't going to buy your software to begin with. It's not a loss whether he uses it illegally or not. These statistics are screwed up beyond all hell.

And if he really did use it illegally, consider it spreading your market share.

But Would They Have Bought It Otherwise?

[stevemm81]

Yeah, as someone already said, everyone has Photoshop nowadays.. But would they have bought it if they couldn't get it for free?

I think this is always a weird issue with intellectual property "theft." If I steal a car that I wouldn't have bought since it's too expensive, I not only have that car, but someone else is now lacking their car. But if I "steal" a copy of Photoshop, nobody else is missing anything of their own...

What Happens?

[stang7423]

So what happens when they manage to ban all forms of P2P and they are still losing money?

Who will they blame when there is no one left to blame but themselves? If they would make a product that was worth paying for, or not change more than the average person makes in a month, then they would sell a lot more. I'm not a big fan of microsoft products, but they have been smart recently with their variable pricing levels for the office products. The home user and Education users get a better price than the pro edition.

Now if I could just get Adobe CS Home edition :-)

Uh huh...

[grub]

The movie industry just had a billion dollar month and is whining about piracy. The software industry isn't able to continue it's double digit growth and says piracy is due to their failed projections.

Here's a hint: not a lot of people buy software as often as they used to. Old versions of MS-Office are in use around the globe, old versions of Windows itself. Hell, "if it ain't broke, don't fix it". People and companies no longer pay the upgrade tax automatically. (not to mention free software and how it's doing. :))

Lost Revenue: Formula

[that_old_fool]

Back in highschool, I did a project on software piracy. The old SPA website provided this formula for revenue lost: (software installed - software shipped)*price of software = revenue lost At first glance this *sounds* ok, but under further scrutiny, does not. An important factor to consider is that many users install pirated software not because they *need* it, but because it's *free*. How many people have Photoshop installed? Yet, how many of those people would have gone out and bought it if they couldn't download it from some bittorrent site? The numbers decrease dramatically. Therefore - at best, the "lost" revenue is an assumption, and not an accurate statistic.

Maybe there is a clearer reason for the loss...

[mindmaster064]

People aren't buying the damn software!

We've been in a major economic downturn and to top it off the people that are technical (that would buy lots of the higher end stuff) are getting laid off. No one has the cash for Photoshop, 3D studio, or anything else that is on the top rung of the scales. These people crying about their losses are the same people the fired off 10,000 workers and replaced them with people from India, China, and Indonesia. f**k 'em... Use gimp, openoffice, and one of the many FREE operating systems. Send a clear message, and maybe they'll get these hits:

1) The software is too much money for a guy that now has to deliver pizzas. Pizza guys make $1/$2 an hour, and about $20/$30 in tips a day. Software = $40+, productivity apps range $150-$1000+

2) The software is no better than the stuff that can be downloaded for free, and occasionally it is worse. Gimp = 98% of photoshop (minus the bits no one uses), Openoffice = 120% of MS Office (the extra 20% is the time you do not have to worry about the application virusing you.) etc..

3) People that cannot afford the package and truly need it will bootleg it and apply a crack if they cannot find a free alternative. (This has always been the case, since the dawn of computing.) If you think it is going away or ever will, you are simply insane and delusional. Price your wares fairly and you will sell more.

4) Nothing called software is worth over $100 unless it is used to control missile launches, perform nano-surgery. compute orbital tragectories to neptune. Ok, this is just my opinion... You may have another. :)

-Mind

Everyone - Everyone!!

[myklgrant]

Everyone I know has bootleg Windows software on their computers. From copies of Autodesk used in a home business to many many copies of Office, Photoshop, Frontpage, XP and on and on. My least favourite feature of Windows is how its users don't know they can't afford to use it. Until the proprietary software world gets a handle on bootleging of their software Linux has zero chance of making it to the desktop in a big way. As a Linux user trying to tell people about "Free" software, I get looked at like a raving lunatic. They already have tons of "free" (and easier to use) software on their computers.
Michael

Software less than necessary

[Neo-Rio-101]

I really don't think there are all that many killer apps out there anymore.

I went to a trade show, and most of the software they were trying to sell for windows already comes for free on Linux. Any admin worth their salt knows how to get most business oriented software running for free on a UNIX/Linux system (with the exception of a few programs like Oracle for example)

I see software for boot passwords for windows (When GRUB is free), and disk encrytion for Windows (Linux has cryptoloop, dm-crypt, and Windows already has encrytion built in if anyone cared to ask about it!)

Most of the software sales I see are for application on Windows where a free software version already exists from download.com OR for Linux. People are paying $50 a pop for internet firewalls for example, whereas a firewall for linux is what.... a pagelong free script off the internet? How about internet speed up tools? With a bit of skill, anyone can hack the proc settings of a Linux box to get the same effect. Cost to me = $0
Many clueless users DO see the value in having particular services set up for them, but once they find out from their PC savvy friends that they're being ripped off..... uh-oh.

To me, there seems to be no killer software ap out there that I need to buy, UNLESS I had a specific need for it... and I don't. Other than Windows, the only other app that I felt compelled to buy was Nero and a firewall. I found the rest for free. Not to mention that I got a load of bundled software which came included with my PC hardware (and that does the job quite nicely!)
And I dual boot with Linux as well.

Average users these days just don't understand the concept of software anyway. They just expect their box to work and have everything set up and in there. They're not looking for a computer, they're looking for a home appliance... on par with the reliability of a TV and fridge.
When their boxes get filled full of spyware, spam, and god knows what else... they feel ticked off that they should have to pay more money to keep their systems ACTUALLY WORKING! They don't see the value in software, because they feel as if they are being TAXED! So maybe this is where piracy comes into the picture.

Also with so many free alternatives out there, it's a wonder much commerical software is getting sold at all. There's only so many word processors that people need, you know, and the market has matured. We're not still using VisiCalc anymore.

Online content is a different story however... and I think the only way to deal with that situation is to overhaul copyright law. The genie is out of the bottle.

Re:Ps (People have had it with upgrades...)

[neurocutie]

How about the point that most people would be perfectly happy with Photoshop 4.0. No need to buy 6.0, etc. Similarly, most people would be perfectly happy with MS Word 97. No need for Word 2000, 2003, XP, etc.

The notion that the software industry can and should expect a constant stream of growth or even just stable revenue based on upgrades and otherwise selling mostly the same functionality over and over again is simply flawed. That's like Madonna expecting flat or growth of revenue based on selling Borderline version 1.0, Borderline 3.0, Borderline XP. People have had it with constant upgrades, both software and hardware. Why exactly do I need a 3Ghz machine and Word XP when I type my letters perfectly fine with a P5-166 and Word 95 ? And with the downturn in the economy, I'm simply going to spend my smaller budgets elsewhere. Nicer to blame P2P and the boogyman instead, I suppose...

Not to mention...

[rd_syringe]

...pirating software is wrong. Legally and ethically. Right? Right?!...

Hmm. I feel like I'm an empty voice in the wind here. I guess I never realized that part of it was forgotten. It's never even mentioned in these types of discussions...y'know...someone taking something without paying for it when they're supposed to. I mean, that's bad, right?

I guess I was just raised a certain way. I actually work for and buy shit when I want it. I had to buy my own car growing up. When I wanted WarCraft II, I worked for and bought the fucking thing. Nowadays kids just pirate. A lot of the young generation these days have their cars bought for them. I think that's not just coincidence when you look at what else is freeloaded in today's society.

Everyone suddenly thinks they're entitled to everything. In the many years I've been lurking here since the 90s, that selfish attitude has grown and grown. It's a bit startling to me. But, that's me.

Re:Silly article summary

[Waffle Iron]

I could have sworn making something and selling it was a business model.

Yes it was when the average citizen didn't have the capability to do mass duplication and distribution of your products. Piracy was less rampant in the old days not because people were more honest, but because it was harder to cheat.

The world has always been full of dishonest people. The current response to this mix of new technology and old-fashioned cheaters seems to be focused on government-dictated restrictions on what your computers can do and Draconian punishments for ever-expanding definitions of crimes. However, centuries of history have shown that this kind of approach often yields questionable results.

If those enforcement efforts fail, then the portion of the software industry that produces shrink-wrapped products will have to find another business plan, rightly or wrongly. That's life in the real world.

Re:Silly article summary

[DakotaK]

Um, I'm a musician, and I support sharing mp3s. Artists get a miserably tiny cut of the CD pie. Come see us live, that's where we do make the money.
Bear in mind I'm not supporting leeches - if you like the artist, you really should buy the CD, which is what I tell anyone on the subject, and a lot at least claim to.
I do agree with your points on shareware - I have a lot of friends who download the free trials and crack them. I'll admit that I cracked software a few times when I was running Windows, but only with things like image editors that are just fuck-around toys (ie Fark Photoshop contests) as opposed to something that I'd need for work or would profit from.

Re:Silly article summary

[An Onerous Coward]

All those pirate copies of Windows XP must be killing Microsoft. Why, I've heard that the entire company is making less than a billion dollars a month.

How do evil software pirates sleep at night?

People have been predicting that piracy would destroy the software industry since at least the mid-eighties when I started reading about it. You know what? It doesn't matter. Some people will pay for it, some people won't pay for it, and some people will pay for it only to get screwed by bad copy control mechanisms. It's the way it's always been.

You also seem to think that most software developers make their living selling the sort of general purpose, widely used software that tends to get pirated. Operating systems, popular applications, games, etc. But a great deal of development is for customized applications and software which solve problems that only the people who wrote the software actually needed solved. Ergo, it's effectively unpirateable. If you have the control code for an assembly-line machine, and there are only twenty like it in the world, you could put it up on Kazaa, but who would download it?

You claim, without proof, that "shareware is dead." Perhaps it is. But given the cheapness of distribution via the Internet, it takes a lot of freeloaders to cancel out the relative handful of people who actually pay money. If you're insulted that 95% of people will use your software without so much as a thank you, it's not the way for you to go. But if you can take a more mature attitude, and say, "I'm making a fair amount, and I'm happy that people like my software," then you stand a shot.

Without further proof of the deadness of shareware (as a business model. It's undeniable that there are still tons of shareware apps out there), I see no reason to believe you on that point.

Last thing: Business models. You are indeed correct. Taking something that is cheaply and easily copied and trying to sell it for far more than replication cost is a business model. Then again, so is picking leaves off your front porch, stuffing them in a paper bag, scrawling "delicious salad" on it in magic marker, and selling it on the street. Love it or loathe it, the effortless duplication of information is a fact, and it is far more sensible for companies to look for new revenue streams than to whine about the unfairness of it all, or to buy legislation outlawing general purpose tools that might be used to infringe.

Re:Newsgroups

[BeerSlurpy]

Kazaa died 2-3 years ago lol return of the fedi.

There are a whole bunch of other p2p services available which are much harder to shut down, most prominently because the servers are outside the US. Soon there will be encrypted networks to replace the current crop of kazaa replacements.

Any commercial p2p effort is going to involve (in addition to the aforementioned encryption) significant non-infringing uses first and then add p2p later. Work is already underway lol hint.

The real reason software is losing money:
Because software companies with mature products keep adding useless features to drive the upgrade cycle, not realizing that improved support for virus propogation is not a feature most people want in Word.

Honestly, Windows and Office were mature products somewhere back in the 97-2000 stretch. The past 4-7 years have seen most of microsoft's products develop lots of useless bells and whistles and lots of security holes and bugs. Why pay the MSFT tax when linux and staroffice are free and provide most of the features you really need. Shit, Firefox rocks just because it does simple browing really well and DOESNT run ActiveX controls or allow popups. Zing, like 100 security holes and annoyances removed in an instant.

This is why microsoft is:
-releasing a stripped down version of XP at a lower cost to compete with Linux (read, lower our prices because people dont find our new products any more compelling than our old ones that they already have)
tech.veolzie.com (off google)
-reducing costs (read- laying off thousands of their programmers and sticking to bug fixing and maintenance of their existing stuff)
www.newsfactor.com (off google)

Re:Silly article summary

[silverhalide]

You're kidding, right? The submitter is either purposely acting ignorant or really has had their head under a rock for the past five years. Software piracy is "far-fetched?" Why do you think all the games companies are so eager to move to consoles now?

I would argue game companies are leaning more toward consoles because they are easier to develop for, sufficiently powerful now, and have reached a critical mass for an audience (Average gamer vs. L33t PC geek with his tricked out box).

Software piracy is probably not as common as you think. Here on slashdot, I guarantee a vast majority of users have at some point "borrowed" an application. The general population, on the other hand, the kids and average parents on AOL, probably have not.

There will always be a segment of the population that steals software. I am willing to bet, however, that this PERCENTAGE of users has not increased over the years (noting that the total number of users, therefore pirates, have).

There are two types of piracy in my book: the for-profit pirates, and the tinkerers. The former is what the BSA is (or should be) focusing on, such as Russian mafia groups burning windows XP cds and selling them and profitting from the stolen software. I think almost everyone can agree this is unacceptable in any form, morally and ethically.

Then, there's the tinkerers. The college kids who download that $700 photoshop program, or $2000 Matlab program, or $10,000 Maya suite for the purposes of learning it and toying with it. Here's the shocker, by these kids learning these packages because they stole them, they make the software more valuable. Once they get into a real job, and boss asks you to whip together some images, the kid who knows Photoshop is gonna make said company go out and buy that software.

Now granted, this is an idealization, and I'm sure businesses pirate software as well, but the larger the user base that knows your software, the more valuable it is and more likely it is to be purchased. I'm willing to bet Microsoft actively looked away from pirates back in the early days when their market share wasn't so certain, because these new users were using the software, getting hooked on it, and eventually landed in a situation where they had to buy the packages.
As far as games go, the reality is that almost every new game will have some sort of network functionality. Users may pirate a copy of a game, and play it in single player mode, but now they're hooked, and want to play online, where now it's very easy to check to see if your copy is legit. Again, another user roped in and hooked.

Still, a hax0r kiddie who steals a copy of Autocad is no skin off of anyone's back, because he was never a potential customer to begin with. But if he learns it, and eventually ends up in the business world, then that's one more license sold for Autodesk.

Re:Newsgroups

[thulsey]

The reason the software industry is losing millions is their price point. I mean - come ON. The Operating System people run this software on doesn't cost half as much as the software itself. If you purchased all your software, you would have bought your computer 3 times by the time you were done. Prices for Photoshop, Dreamweaver, Maya, Office, or are just high. Some, such as Maya, which creates its own OS almost once you are inside it, are targetted at mostly professionals in an industry that just has to spend tons of money, anyway. But the rest?

I am not saying that the man hours put in, cost of distribution (online or shipping) and other costs don't justify a high price, but they do guarantee that most people will think twice or thrice before purchasing that software even when they reall really need it. Video game that I use 8 hours a day for months (Diablo 2 with expansion, anyone?) -- US$30-$50. And I would be willing to bet that it cost just as much to develop between writing, programming and developing the engine, sound, graphics, packaging, tech support, etc. than any version of Photoshop ever produced. Ok, I don't know that, but come on.

If your software only costs a small amount and people are willing to pay for it, don't you come out just as well (and with a larger user base, to boot) as the monster corporations that charge an arm, a leg, and a third extension and half less people buy it (but thanks to whatever method you use, just as many people using it?