BSA: Software Industry Lost $53B to Piracy in 2008

Unlicensed software cost the industry $53 billion last year, up 11 percent from 2007, according to an industry trade group.

In its annual study of software piracy, the Business Software Alliance estimated the that global rate of unlicensed software rose to 41 percent. The group reckons that illegal copies account for one fifth of the software running on computers in the United States.

The United States, by far the world’s largest software market, is in the curious position of having the lowest piracy rate while at the same time accounting for the largest net losses of any single country, at $9.1 billion. The group recently estimated that the United States accounts for more than 47 percent of the global software market.

“We are continuing to make progress against PC software piracy in many countries, which helps people working in the US-led global software industry. That’s the good news,” BSA President and CEO Robert Holleyman said in a statement.

“The bad news is that PC software piracy remains so prevalent in the United States and all over the world,” he said. “It undermines local IT service firms, gives illegal software users an unfair advantage in business, and spreads security risks. We should not and cannot tolerate a $9 billion hit on the software industry at a time of economic stress.”

As a policy remedy, the group advocates tougher IP laws and stricter enforcement, as well as consumer education programs and anti-piracy technologies such as digital rights management, or DRM.

The group also has an extensive history of litigation against alleged software pirates.

BSA warns that lost software revenue has a ripple effect that sucks three to four times the amount of direct losses out of the related IT industries. The group is also quick to point out that lost sales equate to missed tax revenue at a time when the federal government is running a massive deficit.

Beyond the lost revenues for the industry it represents, BSA ties pirated software to security issues. The recent spread of the Conficker worm, for instance, was enabled in part by unlicensed software that doesn’t receive automatic security updates. BSA also noted the substantial rate of Trojans, spyware and other cybercrime tactics lurking on Web sites and peer-to-peer networks used in the piracy trade.

Globally, the study found that the regions with the highest rates of software piracy are Central and Eastern Europe at 67 percent, and Latin America at 65 percent. North America and the European Union had the lowest rates, at 21 percent and 35 percent, respectively.

By country, the worst offenders were Armenia, Bangladesh, Georgia and Zimbabwe, each of which had piracy rates above 90 percent. At the other end of the spectrum, the United States, Japan, New Zealand and Luxembourg all had rates around 20 percent.

The rate of piracy declined in more than half of the countries considered in the study, but BSA attributed the overall increase to the ballooning software markets in high-piracy countries like China and India.

BSA commissioned research firm IDC to conduct the study.

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