Pirates get a chance to come clean

Software manufacturers are putting out an olive branch to Canadian businesses located in Vancouver, Calgary, Edmonton and Winnipeg in an attempt to reduce software piracy while at the same time fostering a closer and more amicable relationship with businesses in those cities.

Commencing this month, the Canadian Alliance Against Software Theft (CAAST) has launched what it calls a “software truce campaign” to allow businesses in the four cities to get their software licences in order without facing potential penalties for past errors. Companies currently under investigation by CAAST are not eligible for the program.

Software piracy has always been an explosive subject. Companies complain about prices, often in the thousands of dollars per user in some fields, while manufacturers say there is a general lack of respect for intellectual property in the technology sector.

“[Software] is still intellectual property and we have to learn to respect that no matter how it is presented…but we are not respecting it in the IT world,” said Ruta Cummings, director of corporate sales for Adobe Systems Inc. in Toronto.

At the heart of the piracy issue are the statistics gathered by Redmond Wash.-based International Planning and Research Group, which put the business software piracy rate at 41 per cent in Canada. The most recent statistics are for 1999, and that year Canada had the dubious distinction of being one of only three countries where software piracy was on the rise. The other nations are Portugal and Belgium. Statistics for 2000 will be out later this year.

According to the IPR study this translates into losses of $663 million in retail sales of business software applications in Canada. For British Columbia, Alberta and Manitoba this represents $135 million in losses and 8,531 lost jobs.

“It is enormous. It is creeping up and it makes no sense whatsoever,” Cummings said.

Part of the problem is the lack of education. Many companies are not exactly sure what constitutes software piracy.

“Rapid growth is the biggest culprit,” said Jacquie Famulak, director of CAAST in Markham, Ont. “Say you went from 100 to 120 employees. You buy new computers: did you buy 20 more software licences?” she asked.

“[The truce] is an opportunity to audit your company and develop some good principles. Nobody wants to break the law, nobody wants to be in the newspaper for having broken the law, so here is your chance,” Famulak continued.

“Your company didn’t steal the computers, so don’t steal the software.”

The down side of the truce is that only companies in those four cities are eligible to apply for the get-out-of-jail-free card.

“We hope there is some spill-over effect in terms of educating people to develop sound practices,” Famulak explained.

CAASTS’ went after the big cities on the logic that corporate headquarters are more likely to be found in large centres. CAAST has sent out notices to approximately 20,000 companies located in those four cities. There are plans to move the truce eastward if the initial campaign – the first of its kind in Canada – is successful.

rating the impact

Some of the most difficult aspects about software piracy are actually figuring out how much pirated software is out there, who is using it and how to catch them.

There is also some argument about whether the numbers claimed by organizations like CAAST are too high (41 per cent in Canada vs. 25 per cent in the US and an astounding 91 per cent in China) and that calculated losses are inflated since they are based on retail sales, a purchasing method few companies use.

IPR uses market research to calculate piracy rates. Essentially the rate is PC sales multiplied by adoption rate, minus software sales. If 1,000 PCs are sold and the IPR market research calculates that 45 per cent of them will have a particular application loaded on it, then 450 copies should be sold. If only 300 are sold then the piracy rate is 33 per cent.

David Fay, consultant at IPR, has confidence in the numbers. “We do [the survey] off of market research…so it is really that, that allows us to estimate the demand for software,” he said. “We use a tier structure because we believe different software applications have different piracy rates.”

Where the assumption may have some weakness is that companies, given the choice between no software or a legal version, would opt for the former or simply choose to license four people instead of five.

In a ComputerWorld Canada interview last year, Toronto-based CAAST president Allan Steel said whether or not you agree with the numbers is not the point , but admitted “that it is a very valid point,” that some companies would choose to do without and that the numbers might be a bit high.

Regardless, it is a serious drain on software companies where an increase of sales of even 10 per cent can make all the world of difference.

Pirates (and most users at one time or another fit that bill) have to be educated as to the real cost associated with the act. “I think when you bring it home in how it effects them…jobs are lost, tax revenue lost…then is really has an impact,” Cummings said.

“You are upstanding individuals – why are you cheating here?”