Piracy threatens economy: report

Although software piracy rates have remained relatively stable, there is no room for complacency, according to a recent study released by the Canadian Alliance Against Software Theft (CAAST).

Last month CAAST reported that the national piracy rate remains unchanged from 2000 (38 per cent), but the Toronto-based group comprised of software makers pointed out that the rate has jumped by up to nine per cent in some provinces.

CAAST president Allan Steel painted a picture of economic ruin if the rate doesn’t decrease and said the Canadian economy stands to lose “millions of dollars in wages and tax revenues” if things don’t change.

“Businesses that break copyright laws often don’t realize the effect their actions have on the economy,” Steel said.

The independent study, conducted for CAAST and the Business Software Alliance (BSA) by International Planning and Research Corporation (IPR), indicates that in 2001, software piracy cost Canada $289 million in lost retail sales of business software applications, $2 billion in wages and salaries, and as many as 32,000 jobs.

The figures are based on global statistics and also factor lost tax revenues, CAAST said.

Steel is calling for stricter enforcement of Canada’s statutory damages provisions – which set the fine for copyright infringement at up to $20,000 per work infringed – as a “powerful deterrent to businesses that commit this crime.”

Among the key findings:

– Quebec and Alberta have the lowest piracy rates in Canada, and are the only provinces below the national average of 38 per cent;

– Piracy rates in eight provinces have increased since 2000;

– Prince Edward Island continues to have the highest rate at 51 per cent;

– Ontario, the largest province in Canada, has a piracy rate equivalent to the national average;

– provinces with a higher population tend to have a slightly lower piracy rate, as large corporate and government offices tend to be located in those regions.

CAAST said companies must take steps to stamp out software theft to avoid suffering “serious consequences.”

But Colin Ross, an IT services technician at Northern Lakes College in Slave Lake, Alta., said it’s a specious argument to say the Canadian economy is suffering from software piracy. While he doesn’t condone software theft, he said there are probably more pressing issues to worry about.

“I wonder if CAAST has ever looked at the cost to the economy if there were no software piracy?” Ross said. “How many of the small business owners would be actually buying additional copies of software and, if they did not, how would productivity suffer?”

It is interesting, Ross said, that CAAST is comprised of mostly American corporations and Canadian subsidiaries of U.S.-based multinationals.

“Although the companies that form the alliance all produce some very good software, it is also some of the most expensive to purchase. The need of software producers to make a profit somehow needs to be balanced by the need of consumers to have software available to them that they can afford. Perhaps if the software that CAAST members produce was more affordable, more of it would be purchased rather than pirated and everyone would benefit,” Ross said.

Alister Sutherland, an analyst at IDC Canada Ltd. in Toronto said that while software privacy is indeed a serious issue, the industry would never get rid of it completely. “Software piracy is a problem especially, of course, for software vendors. The only way that make money is by licensing and if someone is using it without paying for it and without permission, then it’s a problem,” Sutherland said.

But when it comes to licensing, the software industry is a bit at odds with the market, Sutherland said. Companies are aware of the ramifications, but small businesses and other users who own multiple PCs aren’t spending more money on separate copies to comply with a licensing agreement, which by law they are required to do.

“In their minds, (users) may not see themselves as pirates because they’ve already paid for the product,” Sutherland said. Medium- and large-sized companies usually comply because they can’t afford to be caught, he noted, adding that stronger product encryption has been a successful deterrent against theft.

Steel contends it’s an issue of business ethics and proper asset management.

The CAAST report offered steps companies should adopt, including the adherence to a corporate policy on copyright compliance, auditing company computers, documenting software purchases and understanding licensing agreements.