Reducing software piracy beneficial to economy, study says

The Business Software Alliance (BSA) and Framingham Mass.-based IT analysis company International Data Corp. (IDC) released a study Wednesday detailing the negative global affects of software piracy.

The report concentrated on 57 countries in six regions: Asia-Pacific, Latin America, Middle East-Africa, North America, Eastern Europe and Western Europe. The report highlights how much faster economies in these regions could grow if piracy rates were reduced.

“Globally, four out of 10 software programs, 40 per cent around the world are pirated…reducing that rate by 10 points to 30 per cent…would have the affect of creating 1.5 million new jobs. It would create economic growth by US$400 billion, and generate US$64 billion in new taxes for government services,” Robert Holleyman, president and CEO of the BSA, said.

“According to the organization for economic co-operation and development (OECD), that amount of revenue [would translate into] enough new taxes to provide 30 million computers to schools, health care for 3.2 million people, college degrees for 6 million people…all important societal priorities,” Holleyman said.

With the goal to “jumpstart the world’s stagnant and struggling economies by creating new jobs and business opportunities that generate spending and new tax revenues,” the report suggests trying to lower each region’s software piracy percentage by 10 points.

According to the report, entitled Expanding Global Economics: The Benefits of Reducing Software Piracy, North America currently has the lowest software piracy rate at 26 per cent, followed by Western Europe at 37 per cent, the Middle East-Africa at 51 per cent, Asia-Pacific at 54 per cent, Latin America at 57 per cent and Eastern Europe at 67 per cent.

Findings also indicate that the IT sector, which is projected to grow 34 per cent between 2001 and 2006, could grow 15 points faster, or 49 per cent, with a 10-point piracy reduction. For example, Russia could double its IT sector and create more jobs than the number of people currently employed in its hardware, software and IT services sectors combined.

John Gantz, chief research officer and senior vice-president, IDC, said that for the study, researchers first tested then used the assumption that if piracy rates are lowered, software spending will rise.

“At first glance you may say that this [assumption] is not intuitively obvious because people will just simply not use software that they have to pay for, that they didn’t have to pay for before. Or they’ll substitute something else, either way it will drop out. But in fact we see that lowering the piracy rate creates enough economic activity around software, that other software will spring up and be purchased instead,” Gantz said.

He also said that for the study, IDC forecasters had been asked to accommodate the assumption that there would be a ground war in Iraq in 2003.

Holleyman said that in addition to the vast economic consequences software piracy can cause, there are also negative sociological aspects to consider.

“Our fear is with children in the teen-aged years…there’s almost this climate of being able to get music on the Net for free, then getting software on the Net for free. Pretty soon they’ll be getting intellectual content for free and putting it in their [school] papers,” Holleyman said.

The full report can be found online at

Washington-based BSA is on the Web at

IDC can be found online at

The Toronto-based Canadian Alliance Against Software Theft (CAAST) is a non-profit organization that works with the BSA to provide educational information to corporations, consumers and resellers about software piracy and its implications. Its Web site is at