Software Piracy Losses Hit $33 Billion, Study Shows

35% of the software installed on personal computers worldwide was pirated in 2004, adding up to US$33 billion in losses for software companies like Apple Computer, Adobe Systems and Microsoft, according to a study released Wednesday.

Despite the percentage of piracy falling 1% from 2003, the value of the software pirated went up from $29 billion, primarily because of overall growth in the PC market and a weaker U.S. dollar resulting in a rise in dollar losses.

Spending on commercial package computer software rose to over $59 billion, up from $51 billion in 2003, according to the study carried out by the research firm IDC, on behalf of the Business Software Alliance trade group, which is a consortium of software companies worldwide. But over $90 billion worth of software was actually installed on computers globally, up $10 billion from the year before, the study revealed.

?Worldwide, one out of every three copies of software in use today has been obtained illegally,? said BSA President and CEO Robert Holleyman. ?These losses have a profound economic impact in countries around the world. Every copy of software used without proper licensing costs tax revenue, jobs, and growth opportunities for burgeoning software markets.?

For every two dollarsi worth of software purchased legitimately, one dollaris worth was obtained illegally, the study found.

Among the key findings:

  • Although piracy rates decreased in 37 countries, they increased in 34 countries. They remained consistent in 16 countries.
  • In more than half the 87 countries studied, the piracy rate exceeded 60%. In 24 countries, the piracy rate exceeded 75%. Just over a third of the countries studied had a piracy rate under 50%.
  • The countries with the highest piracy rates were Vietnam (92%), Ukraine (91%), China (90%), Zimbabwe (90%) and Indonesia (87%).
  • The countries with the lowest piracy rates were the United States (21%), New Zealand (23%), Austria (25%), Sweden (26%), and United Kingdom (27%).
  • The emerging markets in Asia Pacific, Latin America, Eastern Europe and the Middle East and Africa account for over one-third of PC shipments today, but only a tenth of spending on PC software.

Despite the U.S. coming in with the lowest piracy rate, dollar losses in America were the highest at $6.6 billion given the size of the market. U.S. losses were nearly double those suffered by China, which had the second highest amount of dollar losses.

Without strong online copyright laws and enforcement of those laws, Internet piracy ? via warez sites, spam, auction sites and P2P systems ? will continue to grow alongside increases in Internet usage, the survey concluded. During 2004, an additional 75 million people began using the Internet, bringing the total number of global Internet users to almost 800 million, according to IDC. By the end of 2008, 1.2 billion people will be online. The fastest growing Internet populations are those in the emerging countries; China alone will add 100 million new Internet users over the next four years.

The adoption of policies designed to protect intellectual property rights is key to curbing piracy, the SBA said.

?BSA?s education programs, policy initiatives and enforcement efforts around the world continue to have an impact on the piracy problem,? said Mr. Holleyman. ?But the continued influx of new users in emerging markets, and the increased availability of pirated software primarily through the Internet and P2P networks, underscores that continued education is a must. BSA will continue its efforts to stem the growth of piracy and thus stimulate local economies, create jobs, generate tax revenue, and encourage investment in technological innovation for the future.?

IDC conducted over 7,000 interviews in 23 countries to carry out the study and its analysts in over 50 countries reviewed local market conditions.

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