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PIRACY BY THE NUMBERS
A big reason software piracy is a murky area for solution providers is because software piracy itself is difficult to put into context -- though many have tried.
The major software publishers, along with piracy watchdogs such as the Business Software Alliance (BSA) and the Software & Information Industry Association (SIIA), have spent the past 10 years decrying the rise of illegal downloading and file sharing via the Internet. Software makers such as Microsoft and Adobe contend commercial software piracy robs them of millions of dollars of revenue each year. The BSA's research puts the total losses for the software industry at an incredible figure -- $63.4 billion worldwide in 2011, up from $58.8 billion the year before -- and claims more than half of the world's computer users admit to pirating software, according to the BSA's 2011 piracy survey.
"It tells you people are still pirating software," said Peter Beruk, senior director of compliance marketing at the BSA, "and that it's a growing problem."
Keith Kupferschmid, general counsel and senior vice president of Intellectual Property Policy & Enforcement at SIIA, attributes the growth of software piracy to two factors: the technology that makes file sharing incredibly easy, and economic factors that lead businesses and consumers to download software to save money.
"The issue fluctuates, going up and down," Kupferschmid said. "A couple of years ago, during the height of the recession, corporate software piracy went way up, according to our metrics."
But there are plenty of skeptics who have challenged the BSA's data and argue that accurately determining the number of illegal downloads or copies is not feasible.
"I know people want a number that's close to reality, but it's probably impossible," said Julian Sanchez, a research fellow at the Cato Institute, a libertarian think tank. "The tendency here is that these organizations are trying to estimate the amount of pirated software in circulation and then estimate the dollar amount lost based on inflated Western prices."
Sanchez covers Internet and technology policy for the institute and has followed legislative efforts to curb piracy such as the Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA), which initially were supported by the BSA and SIIA (the groups withdrew their support following last January's massive SOPA protest). Sanchez said even if some software piracy represents a lost sale, it could have a positive effect for the company that is having its software pirated.
For example, Sanchez said when Microsoft Word is pirated, it propagates the .doc standard and displaces other competing platforms and even free alternatives. So even if Microsoft is losing some revenue, it's gaining a stronger hold on the market. "Do people use Word because they love Word? Probably not," Sanchez said. "It's more that they want the .doc standard. They could use OpenOffice or other free alternatives, but not if Word is also available for free."
Further complicating the issue is defining software piracy, which is far from cut and dried. Copyright infringement -- the act of reproducing a copyrighted work and distributing it without authorization -- is a criminal offense in the U.S. and carries a maximum penalty of five years in prison and a $250,000 fine. Under federal law, infringing users may be liable for up to $150,000 for each software program pirated or copied.
Most people probably don't think that installing a legally purchased version of Microsoft Office on a second computer is the same as "stealing" Office from the Web via a BitTorrent site. But the SIIA calls this practice "softlifting" and contends it's just as illegal as traditional software piracy.
And technically speaking, the SIIA is correct. Then again, it's technically illegal to photocopy a magazine article and distribute it without the publisher's permission, which is a common practice and is no longer demonized today as a money-draining plague.
It's this practice of "softlifting" or sharing legally purchased software that gets a lot of businesses in trouble with the BSA and SIIA, which audit companies suspected of corporate software piracy on behalf of their software publisher members.
"The vast majority of corporate piracy cases are inadvertent infringement and bad oversight and cutting corners, with the minority being willful software pirates and infringers," the SIIA's Kupferschmid said. "I think we see less cases of willful piracy at the corporate level, so there's a silver lining."
In fact, most solution providers say their clients are largely in the dark about software licensing and what's legal -- and more importantly, not legal -- when it comes to software.