Software Piracy Will Get Worse

gollum123 writes "According to a study done by the Business Software Alliance (BSA) and research firm IDC, it is likely that software piracy will continue to expand as the Internet grows. Worldwide revenue loss due to software piracy was estimated at $33 billion for 2004 with about 1/3 of the software used being illegal. But within five years, that number could boom to two-thirds, with the value of pirated software nearing US$200 billion. Countries with the highest piracy rates were Vietnam, Ukraine, China, Zimbabwe and Indonesia while United States, New Zealand, Austria, Sweden and the United Kingdom had the lowest."

Comments

Growing Trend?

[lecithin]

"software piracy will continue to expand as the Internet grows"

In other news, the porn industry is getting larger as the Internet grows as well.

Web attacks are on the rise too.

http://slashdot.org/comments.pl?sid=147388&cid=123 49249

Increased Users = Increased Users (for good or bad)

Is this news?

The question should be "Has software piracy increased disproportionately to Internet User growth?

I don't know.

Re:Growing Trend?

[b0r0din]

Wow, so the BSA is reporting that piracy will continue to grow. We all know how objective and unbiased a report created by an anti-software piracy group must be.

Re:Growing Trend?

[JudicatorX]

Nope, because (at least for the BSA and its ilk):

NumberOfPiratedApps == (NumberOfComputersSold * ExpectedAppsPerMachine) - NumberOfAppsLicensesSold

Since OSS apps tend not to be sold, or recorded in some other manner, the 'expected' piracy will go up.

Re:Growing Trend?

[Bwian_of_Nazareth]

What's the bracketing here? ((anti-software) (piracy group)) or ((anti (software piracy)) group)? I prefer to pretend it is the former one.

Re:Growing Trend?

[B'Trey]

That's why no one uses Apache - because they can pirate Microsoft's IIS. MySQL and PostgeSQL have no users because you can pirate SQL Server or Oracle.

Re:Growing Trend?

[eno2001]

DISCLAIMER: Just replying in general, not directed at mph_az:

Sadly, there is some truth to this. A lot of people associate "no name brand" = inferior. In one of my recent comments I complained about the whole free iPod/freeMac Mini/free Sony PSP phenomena. People are more than willing to do ANYTHING to get a free name brand product associated with an image and an easily recognizable logo. If someone did a "freeMicrosoftOffice.com" site, there would be just as many people jumping on that bandwagon because they KNOW Microsoft. They KNOW Office. However, try and do a "freeOpenOffice.org" site and you won't get any bites from the mainstream. This is a problem in the FOSS camp. Marketing is a horrible thing because of how much of a grip it has on the mainstream person. It can be used to control their opinions, their purchases, even who they vote for. People don't want to think. They want something that "just works" and brand name stuff is sold as "just working". Since piracy appears to be "free" access to name brand stuff for many people, they are happy to continue either willingly or ignorantly breaking the law.

In reality, there are few differences in functionality between FOSS applications and their commercial counterparts. Where there is a difference is in how much work you need to do to acquire the FOSS stuff vs. pirated commercial apps. Assuming you're a mainstream user who only barely knows how to use WinZip (that you haven't paid for) and double click on SETUP or INSTALL.MSI files... All you have to do to acquire pirated software is:

1. Run P2P program and search for app
2. Download ZIP, RAR, or other compressed version of app
3. Expand archive of app that you downloaded
4a. If it's self contained, just create a shortcut and run the main application EXE.
4b. If it's an installer, just run it.
5. If it's not cracked (I assume most pirated stuff is cracked) then you might need to look for a crack or regcode generator
6. Run app and be on your way...

To acquire a FOSS app (assuming you're using a really dumbed down version of Linux):
1. Search for an app that does what you want (usually 98% success these days)
2.If they have precompiled binaries in RPM or other packaging format, download and install that
3. You may need to search for and upgrade or install other dependencies (stuff you need to have before you can install the main app)
4. If you can't get binaries and it's a source only distribution, then you need to grab the tar.gz or tar.bz2 archive
5. Expand the source archive
6. If it's following the standard './configure && make && make install' procedure then you should do that now. If it's uses some other compilation method, then you have to read up on that adding to the complexity
7. You might also need to follow up with library dependencies/version issues, etc...
8. If there isn't a tar.gz or tar.bz2 archive, you might need to use CVS to download the current source tree which might be broken since it's in development...
9. Once you've gone through all this, then you need to verify your installation and see if the app works as expected.
10. If you needed to update libraries, you could run into apps that are now broken and need to be recompiled against the new versions of the library meaning more downloads, etc...

Which way do you think Joe Average Mainstream is going to go?

Shareware

[dnoyeb]

And I've got a shareware program thats been downloaded thousands of times but nobody has sent me $20. I have lost 100s of 1000s of dollars to this theft! I need legislation!!

Re:Shareware

[Phanatic1a]

Meanwhile, this call for legislation has scared off many potential users of your shareware program, so there are now thousands of people not downloading your software. If your asked-for legislation passes, that means you've robbed yourself of hundreds of thousands of dollars in income.

Re:Shareware

[Anonymous Coward]

at least you didn't charge $40 the thefts would have cost you even more.

Insightful research!

[c0ldfusi0n]

"According to a study done by the Business Software Alliance (BSA) and research firm IDC, it is likely that software piracy will continue to expand as the Internet grows."

In other news, scientists established today that the bigger a container gets the more it can contain. Still no cure for cancer.

Re:Insightful research!

[porcupine8]

Oh, I don't doubt that - but you shouldn't generalize to all charities from a few bad ones. Having a personal crusade against PeTA, I know full well that some "charitable" organizations are extremely dishonest and misuse money left and right.

That's very different from the original assertion: The 'charities' that are collecting money for a cancer cure don't want it either because then they'd have no reason to exist.

If you're going to claim that ALL (or even a significant majority) of cancer charities are dishonest, you should really back up that claim. Especially since the claim doesn't have anything to do with simple mismanagement of money; it's more an accusation of pure greed at the expense of those they claim to help. Sure a lot of charities waste money through inefficiency and bloat, but on a large scale it's really only a minority that are flat-out deceitful and ill-intentioned.

Crazy predictions

[rgmoore]

Is it just me, or do the numbers not add up? On the one hand, this:

Currently, about one-third of software used is illegally made copies. ... Worldwide revenue loss due to software piracy was estimated at $33 billion for 2004.

seems to suggest that the worldwide market is about $100 billion dollars per year. On the other hand, this:

But within five years, that number could boom to two-thirds, with the value of pirated software nearing US$200 billion.

says that they're expecting it to be worth about $300 billion in just five years. Are they really suggesting that the worldwide market is going to triple that quickly? There are really only two things that could cause the market value to grow that fast: increased hardware sales or increased prices. I don't see Intel or AMD planning on tripling sales over the next five years, so I have to assume that most of that growth is expected to come from massively increased prices. Is it any wonder that piracy would be likely to grow, too?

Re:Crazy predictions

[Anonymous Coward]

And in how many of these countries does the $ estimate of piracy outstrip their GDP? Sheesh - if someone in the US pays $100 for software there's no WAY someone in Zimbabwe can afford the same $100 for the same software...

Re:Crazy predictions

[ThosLives]

You're right that their numbers don't make sense. The one assumption they have is that they could sell the entire volume out there at its current price to come up with the "value" of pirated software. This is fundamentally flawed, as the value of the software that is currently pirated isn't the price of the software, it's the risk involved with the piracy. I've said it before, but it's not possible to claim damages based on unpurchased resources - especially when the resources are not scarce.

I think software businesses need to go back to basic economics: the value of non-scarce resources is very low. I think that the only way for the software industry to remain viable is not to be strict on piracy but become a service industry: we will write programs and support it for a fee. Basically this means anyone can use the software, but new software won't be written and existing software won't be supported without payment. Because the actual executing code isn't scarce, it has very little value: the value is in creating that software and keeping it running.

This is very similar to the *IAA issues: the value isn't in the distribution of the art, but in the experience of listening to it and having new music created. This is why I think that software isn't a "real" commodity but a service. (Also why I think information should not be property - information is not 'scarce' and so cannot be effectively managed using concepts of property. There might be another way to manage it, but it's not with property protection laws).

Anyway, I could go on, but the fundamental thing here is that "unrealised sales" is not equivalent to "lost revenue". Lost revenue is simply poor accounting or "we got less than we did before". The software industry, even if piracy increases, will probably still continue to post revenue gains. So their complaint is "we won't have high enough revenue gains" not "we will have revenue contraction".

Re:Crazy predictions

[stretch0611]

"We failed to meet our sales quota. It must be because of piracy" --- Quote by chicken little who was interviewed for this story.

Seriously, businesses think piracy is to blame for soft product sales, they fail to think of free and cheaper alternatives, lack of interest, or people that are fed up with their buggy crap that they pass off as software.

And then there is Micro$oft. In the US, almost every PC comes with their software. I doubt anyone other than a geek knows how to get a computer without the latest edition of WinBloat.

Microsoft has had so little piracy due to its exclusive deals with hardware vendors that it had to invent new methods of piracy. M$ has said that if you donate your old hardware to a school that you can't donate your software. Then M$ audits the schools for compliance. ($40 billion in cash and they still want to rape the educational system)

Percentages?

[flood6]

Those with the lowest piracy rates were the United States, New Zealand, Austria, Sweden and the United Kingdom.

I'm guessing that's a percentage. I wonder what the actual number of pirated software users are for those countries compared to the ones mentioned as having the highest rates. I'd bet the US andother developed countries still have higher numbers.

I'm shocked.

[jocknerd]

Would we ever expect an organization who profits from piracy to proclaim that the rate of piracy might be decreasing?

Estimated

[sandman935]

I'm more than a little tired of hearing how much the recording and software industries THINK they're losing. They don't know.

Re:Estimated

[stlhawkeye]

I'm more than a little tired of hearing how much the recording and software industries THINK they're losing. They don't know.

It's critical for them (and us) to understand the difference between these two concepts:

1. What is the total value of pirated material?

2. How much revenue are the copyright holders losing because of piracy?

I think we all understand why the first number is much larger than the second. I pirate stuff that I never intended to buy. If I couldn't get it free, I wouldn't have it, period. This means that my stolen software is tallied in Figure #1, but not Figure #2. My pirated copy didn't cost them anything, they were never getting my dollar.

The question of how much money they're losing is impossible to answer. The question of the total value of all illegally pirated materials isn't that difficult to estimate, and probably estimate accurately.

The fallacy of the BSA and other IP rights lobbyists/enforcers is in assuming that Figure #1 == Figure #2. When they say, "Internet piracy cost us $30 million last year", they're lying and they know it. What they mean is that the total value of pirated materials that belonged to them was $30 million. This number is unquestionably much more significant than the net affect of piracy on their sales. Don't get me wrong, I have no doubt that, when all the dust clears, they're losing more money off illegal pirating than they're generating from people who only bought the stuff because they sampled it first.

Really, there's two major sins of ignorance being committed on both sides of this issue. One is being done out of a deliberate attempt to deceive and the other is just wishful thinking.

The first sin I just explained - reporting value of pirated material as being the same as net loss in sales. This is an utter lie for two reasons. First, not all piraters were necessarily going to be purchasers under other circumstances, and there's a small but measurable crowd of people who were not purchasers, but because purchasers because they were piraters.

The second fallacy is committed en masse on Slashdot, and is repeated ad nauseum whenever this comes up. And it is this: "I've bought (insert dollar amount here) worth of CDs this year specifically because I could sample it first. And all my friends are the same way. And all of their friends. Since everybody I know is like this, I assume everybody else in the world is like this, and thus, these companies are profiting by the peer to peer networks." At best this is wishful utopian thinking, and at worst it smacks of downright stupidity. The largest pirating demographics are kids and college students. We who buy after pirating are the exception, not the rule, and yes, there are plenty of studies conducted by independent surveyors that demonstrate this.

Actually

[TheConfusedOne]

The porn industry gets larger and larger and then suddenly contracts, gets bored, and probably nips off for a quick nap.

Yet another thing the US is trailing in.

[Darkmoor]

Damnit people! We have to TRY HARDER! C'mon we can't let countries like China and Vietnam beat us at everything!

Prices

[tedrlord]

I thought that computer companies had already taken this into account with their pricing, anyway. The argument I always heard for why Photoshop is $700 was because of all the piracy. So then, of course, that means that more people are going to pirate it.

How else is Photoshop so popular? If there were no piracy, people would all be using Paint Shop Pro or something, which is 1/5 the price.

Anyway, as long want software for uses that don't match the price, there's going to be piracy. There's not much we can do about it.

Re:Prices

[Vellmont]

The argument I always heard for why Photoshop is $700 was because of all the piracy.


Baloney. Photoshop is $700 because they've got the screws to the design industry and can get away with that price. Photoshop is used by almost everyone doing professional work with digital pictures. The people that use it know how to use it very well and don't want to switch to another tool of unknown quality (and have to re-learn how to do everything).

It isn't a commodity product needed by low paid secretaries like Word, it's a product of usually well paid professionals, and companies are willing to spend more on those people because it'll wind up saving them more if they get just a few more hours productivity out of them. Furthermore because it's not a commodity product, there's a much smaller market for it than Word/Office. Almost everyone needs an office product, but not many need a super-fancy photo editing program. I get along just fine with Gimp, and have no need at all for Photoshop. Of course I also am not a designer, I just do some occasional photo editing a few random purposes.

"while United States"

[mindaktiviti]

I think the United States is much lower probably because of companies like Dell. If everyone would put their computer together nobody would want to spend an extra $200 for an OS where that money could go for a new video card. I wonder how much smaller MS' revenue would be if the norm for purchasing computers would be through parts (just theoretical, I know that wouldn't happen because it'd be too much fo a hassle for joe sixpack).

Also, I know of one great way to battle piracy. :) Use Open Source! :D

Re:I do not condone piracy but...

[Lally Singh]

Remember that the most pirated products are also at monopoly pricing levels. How many really would buy?

Price it right and it gets copied less

[Nf1nk]

The most commonly copied software I hear about are.
1. Windos OS of the month
2. microsoft office
3. Adobe Photoshop
Why? because they are all way over priced, and have acceptable free alternatives. If software is priced properly then it is not worth searching through the virus and bug ridden back alleys of warez looking for the latest version. The free versions aren't used by as many people because there is a percieved lack of quality in them.
(I said percieved. I used open office in 2001 and it was good except the spread sheet program didn't do curve fits worth a damn. That feature is important to me so I bought Office)

Zimbabwe ?

[bushboy]

Zimbabwe barely has food enough to feed it's populance, who number such a small amount ?

Well, I don't know what they are using the software for - possibly to figure out how to share 1 bag of maize between 5000 people ?

South Africa maybe definately, but please, Zimbabwe ?

Really, the Zim Dollar exchange is Z$15 000 to a US dollar !
If they are pirating software, it's because a copy of windows would cost them the equivalent of 20 years salary !

Surely this is a mistake in the article ?

Re:Zimbabwe ?

[malsdavis]

Thats the BSA for you:
To them (the BSA) it doesn't matter if people in these countries can't afford to eat, as long as they and there bankrupt governments don't pirate their software!

Sounds extremist, but the majority of BSA literature concerning piracy in third world countries does definatly convey this sort of ideology.

what a bunch of crap...

[muszek]

My PLN 0.06 ($0.02) :

I'm from Poland. Let's say I've seen 50 private computers over the last few years (friends, family, etc). Vast majority is Win-based. One friend has legally purchased Win XP ("my dad wanted to buy it, I didn't oppose) and tones of pirated stuff.
Several of them have laptops that came bundled with (legal) Windows.

Average salary in Poland is ~500 Euro (~666 dolars) per month. Fresh university graduates usually earn around 250 Euro. MS Office costs ~250 Euros, Photoshop costs... I don't know, 600 Euro? And so on, and so on. People need that stuff - everybody gets pirated soft, otherwise they would have to spend their entire earnings on software or... turn to open source if the law was enforced.

Piracy helps software companies - that's a common wisdom that everybody knows. Those young people that use illegal stuff eventually get older, start earning better money, buy legal stuff.

If the law was properly enforced, people would move their asses to open source and discover that it ain't bad. I bet all those evil monsters would be very happy.

Worldwide revenue loss due to software piracy was estimated at $33 billion for 2004 with about 1/3 of the software used being illegal.

Given every illegal copy would be purchased... which obviously wouldn't. I can't imagine any of those 50 people I mentioned suddenly found even 200 Euro to pay for anything. Seriously.

But within five years, that number could boom to two-thirds, with the value of pirated software nearing US$200 billion.

What a bunch of crap. "Come on, governments, protect Microsoft and other nice companies from the 33% of world population, which is pure evil and will turn 33% of other people into beasts. Oh, and please nuke Zambia in Vietnam. More and more people get cheap computers over there, but they don't want to spend 200% of their salaries on our divine technology. And while you're listening to us, we'd like to support big pharmacy companies that sued African governments for buying generic anti-AIDS drugs. We strongly believe those little black beggers should die if they can't pay for legal, but 10x more expensive equivalents."

Midlife crisis

[hey!]

Are they really suggesting that the worldwide market is going to triple that quickly?

Speaking as a guy in my 40s, I know a midlife crisis when I see one. They start when the perception of unlimited possibilities you had when you were a youth inevitably gives way to the realization you are probably not going to set the world on fire; at best you've got to work like hell to keep the bonfires you have set supplied with fuel.

The relevance to the topic at hand is this: I lived and worked through the great informatics boom of the late twentieth century from roughly 1980 to to the dot com crash of 2001. In the late 80s early 90s, we had exponential growth of spending on software, fueled by exponential growth in the adoption of computers. In the late 80s, I worked for a company with few hundred employees, and we used to regularly order literal truckloads of computers. This gold rush atmosphere was artificially prolonged for perhaps another six or seven years by the dot com boom.

The dream was that licensing software was like printing money. Hell, the license certificates after a while started to look like money -- or at least some kind of bond certificate or something.

Well, the gold rush is over. Sure, some people may make huge fortunes creating new, paradigm disrupting products, but by in large the software market (specifically software licensing revenues) is mature, and in some cases may shrink as open source takes over mature application areas.

And, like the former hotshot who looks into the mirror and sees a tired looking, paunchy middle age gent, our friends in the software industry facing a paradigm shift from land office business to the crappy, low margin service sector, are exhibiting stage one of the whole Kubler-Ross reaction to facing the inevitable: denial, anger, bargaining, depression and acceptance.

Well, guys, there's good news and bad news about being middle aged. The good news is that you don't have any problems talking to pretty girls anymore. The bad news is that their respectful and call you 'sir'.