Study Finds Software Piracy Falling in Many Countries, but Challenge Shifting to Emerging, High-Growth Markets

WASHINGTON—(BUSINESS WIRE)—May 13, 2008— Although piracy of software on personal computers (PC) declined in many countries in 2007, fast growing PC markets in some of the worlds highest piracy nations caused overall numbers to worsena 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 industrys 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 thats 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 studys 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. Russias 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.

Experience has shown that the blueprint for reducing software piracy includes education, smart government policies, effective enforcement, and legalization programs, Holleyman said. In short, we know what works, and were going in the right direction through collaboration with governments. That said, it is important for BSA and its members to expand our campaigns and outreach, and government support and involvement is critical.

BSAs five-point blueprint for reducing software piracy and reaping the economic benefits includes:

  • Increasing public education and awareness of the value of intellectual property and the risks of using unlicensed software;
  • Updating national copyright laws to implement World Intellectual Property Organization (WIPO) obligations in order to enable better and more effective enforcement against digital and online piracy;
  • Creating strong enforcement mechanisms as required by the World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS), including tough anti-piracy laws;
  • Dedicating significant government resources to the problem, including national IP enforcement units, cross-border cooperation, and training for local officers and judiciary officials; and
  • Leading by example by implementing software management policies and requiring the public sector to use only legitimate software.

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