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Despite Overall Progress, Study Shows Software Piracy Is Still a Significant Problem in Eight US States
The theft and use of illegal personal computer software is well above the national average in some of the nation’s largest and fastest-growing states, while the impacts are serious and wide-ranging. These are among the findings of the 2007 State Piracy Study, released today by the Business Software Alliance (BSA), an international association representing the software industry and its hardware partners.
The national average for software piracy in 2007 was 20%, meaning that one in five pieces of PC software in use in the United States was unlicensed. States with piracy rates well above the national average include California, 25%; Illinois, 22%; Nevada, 25%; and Ohio, 27%. States closer to or below the national average include Arizona, 21%; Florida, 19%; New York, 18%; and Texas, 20%. The study was conducted by IDC, the information technology industry’s leading global market research and forecasting firm.
Software piracy in the eight states studied cost software vendors an estimated $4.2 billion, which is higher than the national figure for all other countries in the world except China. Lost revenues to software distributors and service providers were an additional $11.4 billion, for a total tech industry loss of more than $15 billion.
Software piracy also has ripple effects in local communities. The lost revenues to the wider group of software distributors and service providers ($11.4 billion) would have been enough to hire 54,000 high tech industry workers, while the lost state and local tax revenues ($1.7 billion) would have been enough to build 100 middle schools or 10,800 affordable housing units, or hire nearly 25,000 experienced police officers.
“The United States may have the lowest PC software piracy rate in the world, but still, one out of every five pieces of software put into service is unlicensed,” said BSA Vice President of Anti-Piracy and General Counsel Neil MacBride. “Not only is this a problem for the software industry, but piracy also creates major legal and security risks for the companies involved.”
“The most tragic aspect is that the lost revenues to tech companies and local governments could be supporting thousands of good jobs and much-needed social services in our communities,” he said.
Revenue Shortfalls Cost Thousands of Jobs and Local Services
The following table shows the piracy rates of the eight states studied, as well as some of the economic and social impacts:
1. Using data from National Clearinghouse for Educational Facilities2. Based on data from www.nationalpriorities.org3. Based on data from www.salary.com4. Based on purchases by Brownsville, TX, 30 foot coaches
Among the highlights of each state’s piracy picture:
“The eight states studied are a diverse bunch, but collectively they represent 46% of the nation’s PC and software market and 52% of the total piracy losses in the United States,” said John Gantz, chief research officer at IDC. “This study sheds more light on the local drivers of software piracy as well as the serious economic and social impacts.”
How Informants Can Report It, and Employers Can Avoid It
“For companies, the first step in avoiding the risks of software piracy is awareness of the problem,” MacBride added. “Not only can the use of unlicensed software potentially trigger an external audit or even a lawsuit, it can also create security vulnerabilities, productivity breakdowns and hidden internal support costs.”
“To avoid such risks, businesses must create, communicate, and enforce an effective software asset management (SAM) program,” MacBride said. Organizations can download a variety of free software asset management (SAM) tools from BSA’s website at www.bsaaudit.com.
Individuals have a simpler task, MacBride said. “Just know where your software is coming from,” he said. “The old adage that, ‘if something seems too good to be true, it probably is’ certainly applies when it comes to deeply discounted software from dubious sources. Not even an auction site such as eBay is able to keep its site free of illegitimate software.”
Each year, BSA receives nearly 3,000 reports of software piracy from the general public. Reports can be made confidentially through its online reporting form at www.bsa.org or its telephone hotline, 1-888-NO-PIRACY. The majority of BSA’s leads come from current or former employees who have information relating to the unlicensed software activity.
Under BSA’s “Know it, Report it, Reward it” program, individuals who provide qualified reports of software piracy are eligible to receive up to a $1 million cash reward. However, fewer than half of the sources opt for the reward, and informal studies conducted by BSA suggest that a key driver for reporting software piracy is the motivation to simply “do the right thing.”
The BSA-IDC State Piracy Study covers piracy of all packaged software that runs on personal computers, including desktops, laptops, and ultra-portables. The study does not include other types of software such as server- or mainframe-based software. IDC used proprietary statistics for software and hardware shipments and enlisted IDC analysts in more than sixty countries to confirm software piracy trends.
For more details or a copy of the complete study, visit www.bsa.org/statestudy.
Business Software Alliance (www.bsa.org) is the foremost organization dedicated to promoting a safe and legal digital world. BSA is the voice of the world's commercial software industry and its hardware partners before governments and in the international marketplace. Its members represent one of the fastest growing industries in the world. BSA programs foster technology innovation through education and policy initiatives that promote copyright protection, cyber security, trade and e-commerce. BSA members include Adobe, Apple, Autodesk, Avid, Bentley Systems, Borland, CNC Software/Mastercam, Corel, CyberLink, McAfee, Microsoft, Monotype Imaging, PTC, Quark, Quest Software, Siemens PLM Software, SolidWorks, Sybase, Symantec, and The MathWorks.
IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.
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