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BSA Piracy Study Deeply Flawed

zbik writes "Corante reports that The Economist has blown the lid off the BSA's recent report on software piracy (covered by Slashdot), referring to their methods as 'BS'. 'They dubiously presume that each piece of software pirated equals a direct loss of revenue to software firms.' The BSA has complained that the article is offensive but does not dispute their analysis. Score one for common sense."

32 of 437 comments (clear)

  1. OTHER HEADLINES TODAY by Anonymous Coward · · Score: 5, Funny

    Your Rights Online: The Sun is Hot
    Your Rights Online: Osama Bin Laden Not a Nice Man
    Your Rights Online: Some Politicians May Be Influenced By Money

    1. Re:OTHER HEADLINES TODAY by tomhudson · · Score: 5, Funny
      Some Politicians May Be Influenced By Money
      Okay, that WOULD be news - I was under the impression it was ALL politicians are influenced by money. Or booze. Or drugs. Or cheap hookers. Or all of the above.

      If you've managed to find some that aren't yet, quick - post their names here. There's bound to be a few lobbyists willing to try their luck in virgin territory.

    2. Re:OTHER HEADLINES TODAY by ErikTheRed · · Score: 5, Funny
      Okay, that WOULD be news - I was under the impression it was ALL politicians are influenced by money. Or booze. Or drugs. Or cheap hookers. Or all of the above.
      Oh yeah? Well, I'm going to make my own political party! With blackjack! And hookers!

      On second thought, forget about the political party and the blackjack!
      --

      Help save the critically endangered Blue Iguana
    3. Re:OTHER HEADLINES TODAY by eh2o · · Score: 4, Funny

      In other news today, the BSA announced they are beginning an audit of The Economist.

  2. Claims by superpulpsicle · · Score: 5, Insightful

    For any company confident enough to claims they have lost 100,000 copies in revenue. They need to also claim they have increased their market share by 100,000 users.

  3. And this is a surprise because? by IdleTime · · Score: 4, Interesting

    We all know that their method of determining loss is flawed. Let's say I'd like to play with a program called A, I don't really need it in my business or at home, but it looks nice and maybe I'd use a part of it once. I would never have bought program A at $499 for a one time use and to play around with. I rather download it from somewhere and install it. This would count as a loss of $499 but this is flawed. I would never have bought the program in the first place if I had not gotten it from the net. Why? I can't defend spending $499 on a program I have virtually no use for.

    --
    If you mod me down, I *will* introduce you to my sister!
    1. Re:And this is a surprise because? by m50d · · Score: 4, Informative

      We know it's true, what's news is that The Economist has said so. Normal people and perhaps lawmakers are more likely to listen.

      --
      I am trolling
    2. Re:And this is a surprise because? by Bedouin+X · · Score: 5, Insightful

      Just about every piece of software that I use professionally now - Photoshop, Visual Studio, Oracle, SQL Server, NT Server, Netware - I pirated as a teen. I probably wouldn't have learned them otherwise. What is wouldn't - not couldn't.

      Now that I am gainfully employed, I am very vigilant about making sure that my employers always keep me equipped with the very latest versions of them all, even if I don't use them.

      I'm not saying that what I did as a teen was right, but I know for a fact that a few pirated copies in 1996-1999 have resulted in thousands of dollars in purchases over the past 6 years or so.

      --
      Dissolve... Resolve... Evolve...
    3. Re:And this is a surprise because? by forkazoo · · Score: 4, Insightful

      No reasonable person is arguing that you shouldn't pay for software. The argument is simply that not paying for software doesn't always hurt the company that makes the software. That doesn't make it right. That doesn't make it legal. But, when some 15 year old pirates a copy of Oracle, the company hasn't lost any money.

    4. Re:And this is a surprise because? by Frymaster · · Score: 4, Insightful
      We all know that their method of determining loss is flawed

      it's all about elasiticity. anyone who has taken a 100-level course in economics (as have apparently the editors of "the economist". big surprise there) should know. a quick rundown is here:

      http://www.quickmba.com/econ/micro/elas/ped.shtml

      most software is highly elastic to most people. playing with this or that nifty piece of software may be fun for an hour or afternoon but unless it's a killer app, they would, given the choice, opt to not use the program rather than pay.

      it's like the classic example of the pay-for park. a hundred people go to the park on a sunday afternoon, so a government beurocrate determines that if the city charges a $10 admission, the profit will be $1000 every sunday. the toll gates go up but, to the surprise of the beurocrat, nobody shows up to buy a ticket.

    5. Re:And this is a surprise because? by IdleTime · · Score: 4, Interesting

      That was not a good example, Oracle offers all their software free of charge as long as you don't use it in a commercial setting. Go to www.oracle.com and download the Enterprise version of the database and use it as much as you like on your own private box. If you are going to use it in a business, you have to pay for it. Quite reasonable I would say...

      --
      If you mod me down, I *will* introduce you to my sister!
    6. Re:And this is a surprise because? by WhiteWolf666 · · Score: 4, Informative

      I hope so.

      The Economist is great. However, they have say many things (That I agree with) that will *never* come to pass.

      For example, the Economist staff openly advocates the legalization of Cocaine in the U.S.
      Why?
      Because this would be a more *effective* policy for reducing drug use in the U.S., let alone reducing the harms of the Cocaine economy.

      Can you imagine the U.S. *ever* legalizing Cocaine?
      I think not. Look for lawmakers to continue parroting the BSA (BS) line.

      --
      WhiteWolf666 an exBush supporter. All you new-school,compassionate,save the children Republicans can rot in hell
    7. Re:And this is a surprise because? by Anonymous Coward · · Score: 5, Insightful

      As someone who leans libertarian on a lot of issues, I find it sad that the Republican party has bought its power by aligning itself with social conservatives who seem intent on legislating morality.

      It's my belief that they've done so because the leadership knows full well that such laws would never apply to them or their families. If they want to have sex with hookers, use cocaine or have abortions, they have the means to safely do so in a way that won't bring them into contact with the authorities. It's only the poor who have to abide by these laws. Hell, a cokehead alcoholic can get pretty far these days with the right connections.

    8. Re:And this is a surprise because? by StikyPad · · Score: 4, Informative
      And no, it was not in coca-cola.
      http://www.snopes.com/cokelore/cocaine.asp


      You know, this is waaaay off topic, and it's probably immoral of me to even be laughing at you instead of donating to a charitable organization that might be able to help your condition, but on the off chance that you didn't bother to read any of the article you linked to, here's the sumamry:
      Claim: Coca-Cola used to contain cocaine.
      Status: True.

  4. BSA PSed off by Bedouin+X · · Score: 4, Informative
    SIR - Your article on software piracy was extreme, misleading and irresponsible ("BSA or just BS?", May 21st). The headline was particularly offensive. The implication that an industry would purposely inflate the rate of piracy and its impact to suit its political aims is ridiculous. The problem is real and needs no exaggeration.
    Beth Scott
    Business Software Alliance
    London


    Boy these people's heads are stuck so far up their asses that they can see through their mouths... you just can't make this stuff up.
    --
    Dissolve... Resolve... Evolve...
    1. Re:BSA PSed off by Stanistani · · Score: 4, Funny

      Dear Madam:

      The 'BS' in the headline was simply referring to your initials...

      No harm done.

      The use of the word 'Madam' in our letter, on the other hand, is deliberate.

      Sincerely,

      The Economist

    2. Re:BSA PSed off by Tackhead · · Score: 4, Funny
      > > SIR - Your article on software piracy was extreme, misleading and irresponsible ("BSA or just BS?", May 21st). The headline was particularly offensive. The implication that an industry would purposely inflate the rate of piracy and its impact to suit its political aims is ridiculous. The problem is real and needs no exaggeration.
      > >
      > > Beth Scott
      > > Business Software Alliance
      > > London
      >
      > Dear Madam:
      >
      > The 'BS' in the headline was simply referring to your initials...
      > No harm done.
      > The use of the word 'Madam' in our letter, on the other hand, is deliberate.
      >
      >Sincerely,
      > The Economist

      Dear Economist:

      Your reply to my earlier letter was extreme, misleading and irresponsible ("Madam", June 14th). The deliberate choice of the word "Madam" was particularly offensive. The implication that an industry would purposely inflate the rate of piracy and its impact to suit its political aims is ridiculous. Whether you refer to unpaid sex acts as "open source", "trying it before you buy", or "blocking the auto-updating daemon with a heavy-ass firewall" the threats posed by individuals slutting around, living together, and the signing of marriage contracts are real and need no exaggeration!

      Beth S., Madam
      Bunnyranch Sex-worker's Alliance
      Nevada

  5. Referer blocked by alexhs · · Score: 4, Informative

    The economist is refusing connexion with Slashdot as referer. Simply copy/paste the link in a new tab.

    --
    I have discovered a truly marvelous proof of killer sig, which this margin is too narrow to contain.
  6. Much as we might laugh by gowen · · Score: 5, Insightful

    Much as we might laugh at the BSA's (don't they make guns and motorcycles?) figures, illegal software distribution (I refuse to call it piracy until is bad for open source. Every low budget company that copies top-of-the-line software that it can't afford is the loss of another business that might be persuaded at the cost efficiency of a Free Software solution.

    --
    Athletic Scholarships to universities make as much sense as academic scholarships to sports teams.
  7. Piracy is good for business by parvenu74 · · Score: 5, Insightful

    Just ask Microsoft -- if not for so many pirated copies of Windows all over the world they would have lost market share to Linux or something else. They just settled a piracy dispute with the government of Thailand. THOUSANDS of government computers had pirated copies of Windows and Thailand settled with Microsoft for $1 per computer. The last time I checked on NewEgg.com, an OEM copy of WindowsXP Pro costs $140. Therefore, it's worth $139 / machine to Microsoft to make sure Linux is *not* installed...

  8. What do you mean Flawed ? by My_guzzi · · Score: 4, Insightful

    The people (guess Who) that paid for that report got the report that they want. Just what is new about that.

  9. Linux and Openoffice are a loss according to BSA by lugar · · Score: 4, Insightful
    Let's see...

    They estimate the amount of software on each PC and then subtract sales revenues. What is left is pirated software? Talk about a loophole in their logic! Based on their logic, any piece of freeware that is installed on a computer is revenue that BSA considers lost.

    Though if you consider who is partners with the BSA, it's not surprising they'd consider Linux and Openoffice to be "warez"!

  10. How odd... by MaestroSartori · · Score: 4, Interesting
    From TFA:
    To derive its piracy rate, IDC estimates the average amount of software that is installed on a PC per country, using data from surveys, interviews and other studies. That figure is then reduced by the known quantity of software sold per country-a calculation in which IDC specialises. The result: a (supposed) amount of piracy per country. Multiplying that figure by the revenue from legitimate sales thus yields the retail value of the unpaid-for software. This, IDC and BSA claim, equals the amount of lost revenue.
    So, if there's 3,000,000 people with an operating system, but our members have only sold 2,000,000, that's 1,000,000 pirated copies of our member's operating systems! Call the police/FBI/attack-squads!!!

    Surely that can't be how they work it out. Anyone ever had one of these IDC surveys? How specific are they, would they allow them to filter out software by publisher/developer so that for instance GIMP and Photoshop don't both show up as "Graphics Tools"? If not, that means every copy of GIMP would be a loss to Adobe!

    (Note - it wouldn't surprise me if that is exactly how it works, and that it was entirely deliberate, but that's a different matter...)
    1. Re:How odd... by ewhac · · Score: 4, Insightful
      So, if there's 3,000,000 people with an operating system, but our members have only sold 2,000,000, that's 1,000,000 pirated copies of our member's operating systems! [ ... ] Surely that can't be how they work it out. [ ... ]

      Nope, that's exactly how they work it out. Download and read their "study" yourself (the methodology section is toward the back). Their "piracy" estimates are based on nothing more than wild guesses as to how many copies "should" have sold, given the number of computers out there.

      Then, just for fun, they turn around and claim to their shareholders that sales exceeded expectations. Well, which is it, Chucko? Either you sold less than you anticipated (inflating the "piracy" figures), or you sold more (inflating your stock price). Either way, your market projections are way off.

      Schwab

  11. Once in a while... by erroneus · · Score: 5, Interesting

    ... some Microsoft (related?) sales person calls my company and asks me about any plans for upgrading to whatever it is they are trying to sell at that moment. I get the pleasure of stating, "we're attempting to reduce our use of Microsoft software" and when asked, I explain that the BSA audit our company went through some years ago soured many people on Microsoft so badly that we're steadily seeking alternatives.

    It's not a full or heavy press at the moment, but I believe there will be a day...

  12. Wha? by SuperKendall · · Score: 5, Insightful

    Let's debunk a few myths:
    1)"I wouldn't have paid for it anyway, so it's not a lost sale"
    OK, so let's say I go in to get my car's wheels rebalanced (or some other service). When they're done.. I just drive off without paying. Have I done anything wrong? Well, what if "I wouldn't have paid for it anyway"? So it's not a lost sale!


    Umm, what the hell? That made zero, and by zero I mean none, sense. The analogy is too terrible to even examine.

    2) "The software is too expensive"
    So perhaps you wouldn't buy product A which is overpriced for your needs. But by pirating A, you rob product B and C - competing products that are much cheaper with limited functionality compared to A that still meet your needs - of market share.


    Now here I can only conlude it should be illegal to buy any software at all, for everytime you do so you are depriving any computer of companies of revenue. I suggest you write your senator right away and demand that all software sales be outlawed on these grounds.

    The fact is, if you don't pay for the software (unless a license is given for free), then you have no right to use the software. Period.

    Now that part I agree with. You have no right. What is in question is how much harm it does, which depends entirely on the circumstances of the pirating and cannot be assigned a simple number. If a baby is given a pirated copy of Photoshop for teething is that really a loss to Adobe of $600? Please justify a yes response. The BSA would say yes.

    --
    "There is more worth loving than we have strength to love." - Brian Jay Stanley
  13. Brazil's Response by Trinition · · Score: 5, Informative

    You've just gotta love Brazil's response:

    "We're against software piracy. We believe Microsoft's rights should be respected. And the simplest way to respect their rights is for Brazilians everywhere to switch to free software."

  14. total BS by Anonymous Coward · · Score: 5, Insightful

    The BSA, what a bunch of jokers. They go around claiming that SW piracy does the SW industry this incredible injustice...

    Well, it's funny that you can hardly find anyone in the SW industry who agrees, who actually know something about SW, like artists and programmers for example. It's only executives who aren't very technical and don't actually understand or use much who claim they're losing vast sums to piracy.

    Want to know who pirates SW the most? People who make SW, and people who ultimately drive purchases of the most expensive SW for business and personal use. I've decided purchases of software selling for up to $16K per seat for entire teams in companies I've worked for, and it all went to staff members who were largely able to use it because they had learned to various degrees on pirated copies.

    If it wasn't for SW piracy, far fewer people would be software expert users and the SW industry would be much smaller than it is. As a result, fewer PC computers would be sold, and we'd generally have a less computationally advanced society. That would obviously effect industries like the internet including commerce, movie special FX, and video game development, which are big economic drivers for the national economy.

    Take Photoshop for example, that ubiquitous paint program. In my entire career I've never met a single Photoshop user, NOT ONE, that didn't sometimes use, and hadn't learned primarily on a pirated copy before becoming employed at a business that would purchase it to match their skills. Many of those people became interested in the field, and THEN went to school for training, because of the ability to try extensively for free. No trial programs don't suffice and never have. Reality is that every single art student has, and needs, a cracked copy. Later, studios buy software to match the preferences of the users, whose opinions are often based on use of pirated SW.

    *** SW "piracy" = free advertising = increased market growth. ***

    You can say the same for movie FX, or game development. Try and find people in those industries who don't give a large credit in their education to pirated software, or who would be less likely to be in the industry, and therefore not purchasing SW, if it wasn't for piracy. It's the same for many other industries. Even many secretaries and business software users have had access to pirated software to learn it, give it to friends, etc, which eventually supports a purchase in SW, and is like free advertising for the SW makers.

    If it was possible to magically end all piracy in the US today, you'd see SW revenue and computer sales plummet in the short term, and overall national competitiveness drop in the long term.

    These BSA bozos really do have their heads DEEP up their asses.

    Companies like Adobe for example should be THANKING SW piracy for thier stock price.

  15. And so is their letter to the Economist by guardiangod · · Score: 4, Insightful

    Software piracy

    SIR - Your article on software piracy was extreme, misleading and irresponsible ("BSA or just BS?", May 21st). The headline was particularly offensive. The implication that an industry would purposely inflate the rate of piracy and its impact to suit its political aims is ridiculous. The problem is real and needs no exaggeration.



    What an amusing little letter from an organization such as BSA.

    extreme, misleading and irresponsible

    Fine, enlighten us then- what is so "BS" about it, any proof/evidence?

    The headline was particularly offensive.

    W00t, let's go after the title, not the actual story itself! Attack the title to create an impression! Yes that's the way to win an arguement.

    The implication that an industry would purposely inflate the rate of piracy and its impact to suit its political aims is ridiculous.

    I don't see why not. Wow, I am really speechless. Fine, if you want to accuse the E of slendering, provide evidence that would uphold in a court battle.

    The problem is real and needs no exaggeration.

    So is your logic apparently.

    Jesus, I can't believe the government is delegating the enforcement power to these idiots. This stuff looks as if it had been pass thru the random complain letter generator.

    They should just hire me- even I can do better than that.

  16. BSA COSTING LINUS BILLIONS OF DOLLARS! by typical · · Score: 5, Funny

    The BSA's fraudulent activities cost Linus Torvalds over $300 billion dollars yearly in the United States alone.

    Their bogus numbers have caused people to be frightened away from Linux, which Linus *could* potentially be selling for $1000. The fact that he is making *no money* from each copy of Linux used is due to the fact that the BSA has damaged the perception of Linux so much. As a product technically superior to Windows, it should have taken over by now. That's $1000 per person. There are ~300 million people in the United States, counting every man, woman, and child. (We all know that GNOME is simple enough for a baby to use, so counting babies is perfectly legitimate.) Since Linux is upgraded so frequently, people would buy a new copy about annually.

    As you can see, since the BSA is COSTING LINUS TORVALDS OVER $300 BILLION DOLLARS IN THE UNITED STATES THIS YEAR ALONE, we desperately need laws to protect the starving open source software authors that are being victimized by the criminal activity of the BSA. It is crucial that we receive laws to protect these authors -- all companies choosing a non-open-source software product over an open-source software product should be required to annually submit a report with cost estimates and associated usability/compatibility testing as to why they choose not to use open source software.

    No, it's just not the same. We need whatever PR people the BSA has.

    --
    Any program relying on (nontrivial) preemptive multithreading will be buggy.
  17. Re:Of course their methods are BS by mangu · · Score: 4, Funny
    BSA is the 'BS' Association


    And the rebuttal they sent was signed by a Beth Scott. It's BS all the way...

  18. Worse yet, look at some "markets" by Moraelin · · Score: 4, Insightful

    The BSA (and a few others) are basically arguing that if some Chinese kid got a copy of AutoCAD or 3DSMax, that's a lost sale and it litterally means some $6000 lost. Can they possibly present a coherent business plan where it's even possible to enlarge that market there, at those prices, if piracy didn't exist?

    Hello? An average Chinese family's yearly income, last I've checked, is around the $1500 mark. That is, before, food, clothes, rent, etc.

    Take your current yearly salary, multiply it by 4, and ask yourself if you would _ever_ pay that much for a piece of software you don't even really need. Would you?

    Some of that software waved around by the BSA as big losses even I wouldn't buy on a western european salary, and I could afford it easily. E.g., would I pay some thousands of dollars on 3DS Max just to mod a $40 game like "X2 - The Threat"? Because that's the kind of use those pirate kids see out of that software. Heh. Would you? Right. That's what I thought too.

    --
    A polar bear is a cartesian bear after a coordinate transform.