BSA Says Software Theft Exceeded $51B In 2009

alphadogg sends a NetworkWorld.com piece going over the Business Software Alliance's latest stats on software theft around the world. "Expanding PC sales in emerging markets is increasing the rate of software piracy, according to the Business Software Alliance and IDC. The rate of global software piracy in 2009 was 43%, meaning that for every $100 worth of legitimate software sold in 2009, an additional $75 worth of unlicensed software also made its way into the market. This is a 2-percentage-point increase from 2008. Software theft exceeded $51 billion in commercial value in 2009, according to the BSA. IDC says lowering software piracy by just 10 percentage points during the next four years would create nearly 500,000 new jobs and pump $140 billion into 'ailing economies.' ... In the United States, software piracy remained at 20%, the lowest level of software theft of any nation in the world. ... The PC markets in Brazil, India, and China accounted for 86% of the growth in PC shipments worldwide." The BSA president said, "Few if any industries could withstand the theft of $51 billion worth of their products." It's unclear whether that was a brag about the industry's robustness, or a result of the industry's low cost of goods sold.

Comments

Would the IRS accept this writeoff?

[mykos]

In my line of business, if we have a loss that we have numbers for, we put it on our taxes. I suggest they do the same. I'm sure the IRS will be more than willing to audit the hell out of them. Oops, I mean, accept their numbers without question.

Three major flaws

[nickovs]

As far as I can tell there are three major flaws in the calculation of this figure:

Firstly, it appears to assume a 100% conversion rate between "pirated copies" and "lost sales". As has mentioned repeatedly in other comments, this is impossible to justify.

Secondly, it seems to presuppose that the Average Selling Price that would be achieved in emerging markets like China and Brazil are the same as the current ASP that they get in the Western world where more of the software is purchased legitimately; this too is unsupportable.

Thirdly, they ascribed zero value to the marketing benefit of people "stealing" software in order to determine if they like it and then going on to buy a copy. Repeated studies in the music market have shown that people who download music buy more music and while the situations are not identical it is clear that many people get hold of pirated software to try it and then buy the software for the support that comes with a legitimate copy once they decide that it does the job. Killing illegal copies of software would therefore likely damage sales that they currently make while possibly bringing in some new sales.

Having run software businesses in the past I appreciate that seeing your hard work ripped off can be a serious problem but the BSA spreading mis-information and unsupportable assertions as if they are fact does nothing to make people believe that they are anything other than a bunch of self-serving scaremongerers.