Outlook Series | BSA: $48B In Stolen Software

BSA: $48B In Stolen Software

May 15, 2008

Although piracy of software on personal computers (PC) declined in many countries in 2007, fast growing PC markets in some of the world’s highest piracy nations caused overall numbers to worsen—a trend that is expected to continue. Moreover, dollar losses from piracy rose by $8 billion to nearly $48 billion.

These are among the findings of the fifth annual global PC software piracy study released today by the Business Software Alliance (BSA), an international association representing the software industry and its hardware partners. The study was conducted by IDC, the information technology industry’s leading global market research and forecasting firm.

Of the 108 countries included in the report, the use of pirated software dropped in sixty-seven, and rose in only eight. However, because the worldwide PC market grew fastest in high-piracy countries, the worldwide PC software piracy rate increased by three percentage points to 38% in 2007.

“We are making much-needed progress in the battle against PC software piracy, and that’s good news for governments, end users, businesses, and the industry,” said BSA President and CEO Robert Holleyman. “The battleground is now shifting, however, to emerging markets where many of our collective challenges remain.”

Software piracy negatively affects much more than just the industry. It also puts a strain on technology companies’ ability to invest in new jobs and new technologies; harms local resellers and services firms; lowers government tax revenues; and increases the risk of cyber crime and security problems. A recent IDC study conducted for BSA found that reducing software piracy by ten percentage points over four years could deliver billions in economic growth and hundreds of thousands of new jobs.

“By the end of 2007, there were more than 1 billion PCs installed around the world, and close to half had pirated, unlicensed software on them,” said John Gantz, chief research officer at IDC. “This study shows that government and industry anti-piracy efforts are working in many countries, however, their attention will increasingly turn to combating piracy in emerging economies.”

Among the study’s key findings:

Among the nations studied, Russia led the way with a one-year drop of seven points to 73%, and a five-year drop of 14 points. Russia’s piracy rate is still high, but it is decreasing at a fast pace as a result of legalization programs, government engagement and enforcement, user education, and an improved economy.

The three lowest-piracy countries were the United States (20%), Luxembourg (21%), and New Zealand (22%). The three highest-piracy countries were Armenia (93%), Bangladesh (92%), and Azerbaijan (92%).

Piracy rates dropped slightly in many low-piracy markets where rates have been stagnant for several years, including the United States (-1%), United Kingdom (-1%), and Austria (-1%). Many other developed economies experienced a continuing gradual decline, including Australia, Belgium, Ireland, Japan, Singapore, South Africa, Sweden, and Taiwan.

Market factors contributing to increasing piracy rates include: (1) dynamics in the PC market where the fastest growth is in the consumer and small business sectors; these are the hardest sectors in which to lower piracy; and (2) expanded Internet and broadband access. With approximately 700 million people expected to go online for the first time between 2008-2012, 76% of them will be in emerging markets. Access to pirated software will continue to shift from the streets to the Internet.

Market factors contributing to decreasing piracy rates include: (1) increasing globalization among countries in emerging markets; (2) technologies such as technical protection measures like digital rights management (DRM) which software developers are building directly into their products; (3) new software distribution models such as software-as-a-service.