Software Piracy Rates Fall in China, Russia

Software piracy rates are falling in China and Russia, according to a new study published today by the Business Software Alliance (BSA). The two countries have topped the list of nations with the highest piracy rates.

According to the study, China’s piracy rate dropped four percentage points for the second consecutive year and has dropped 10 percentage points in the last three years, from 92 percent in 2003 to 82 percent in 2006.

In Russia, the piracy rate decreased by seven percentage points since 2003, down from 87 percent in 2003 to 80 percent in 2006.

Overall, according to the study, global losses increased in 2006 by more than $5 billion (15 percent) over the previous year. Of the 102 countries covered in the study, piracy rates dropped moderately in 62 countries, while increasing in 13.

“Considering the vast PC growth taking place in the Chinese IT market, this continued decline in China’s software piracy rate is quite promising,” Robert Holleyman, the BSA’s president and CEO, said in a statement.

According to the BSA, the legitimate software market in China grew to nearly $1.2 billion in 2006, an increase of 88 percent over 2005. Since 2003, the legitimate software market in China has grown over 358 percent. By reducing China’s piracy rate by ten percentage points over three years, the study claims, $864 million in losses was saved.

The reduction in the piracy rate is the result of the Chinese government’s efforts to increase the use of legitimate software within its own departments; vendor arrangements with PC suppliers to use legitimate software; and increasing industry and government education and enforcement efforts.

The study, though, indicates even low piracy rates can result in large losses. Of all the countries in the study, the U.S. has the lowest rate at 21 percent, but it also had the largest total losses at $7.3 billion. China was second in total losses with $5.4 billion.

“The good news is we are making progress, however, we still have a lot of work to do to reduce unacceptable levels of piracy,” Holleyman said. “These significant losses translate into negative impacts on IT industry employment, revenues and financial resources available for future innovation and the development of new technologies.”

The study, conducted independently by IDC for the BSA, covers all packaged software running on PCs and laptops. It does not include software run on servers and mainframes.

John Gantz, chief research officer at IDC, said a number of factors contribute to regional differences in software piracy rates, including a country’s intellectual property laws, cultural differences and the availability of illegal software.

“Reducing software piracy around the world will take much more work and investment, but those efforts will pay off in the form of stronger local IT industries that drive broader economic growth,” he said in a statement.

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