Software piracy widespread but slowly declining: study

The illegal copying – or piracy – of business software cost Canada $457 million in retail sales, $1.9 billion in wage and salary loss and 32,000 jobs last year, according to a recent report.

The study, conducted by industry organization the Canadian Alliance Against Software Theft (CAAST), indicated that 38 per cent of software in use during 2000 was pirated – a decrease of three per cent from 1999. Although the rate of piracy declined in 11 of the 12 provinces and territories surveyed, only Alberta and Ontario had rates lower than the national average.

CAAST is “really, really pleased” that the software piracy rate has dropped, but it still remains far too high, said Jacquie Famulak, one of the organization’s Toronto-based directors.

“CAAST believes that copyright infringement is theft. And theft is theft. It’s difficult with software because it’s not a tangible thing – it’s not like stealing a car. That’s why we try to raise awareness about it,” she said.

As well as gradually changing attitudes, the drop is likely related to 1999’s modifications to the Canadian Copyright Act that introduced statutory damages for piracy, Famulak said

“Statutory damages mean that you can get a stricter penalty enforced by a court for copyright infringement – the U.S. has had that kind of remedy available for years and years and Canada never had it. Now that you can raise the stick of statutory damage it is a big deterrent – it either causes people to settle their cases quicker, or not [copy software] at all,” she said.

The use of pirated software in the United States has been much lower than in Canada for some time, said Anne Griffith, the Washington, D.C.-based research director with the Software and Information Industry Association (SIIA).

“In the past year the rates have gone down a slight bit in the U.S., and over time, the rate has gone from 26 per cent in 1995, to 24 per cent in 2000. The U.S. economic loss in 1995 was US$2.9 billion, and in 2000 was US$2.6 billion. The (piracy) rate is going down, but the value of software is going up so the (dollar) losses might actually go up even when the rate goes down,” she explained.

As in Canada, Griffith attributed this decline to an active combination of education and enforcement campaigns by both lobby groups and large software makers like Microsoft.

Despite the possible repercussions, some small offices still have little difficulty justifying multiple installs of a single software package, said Chad, a manager of a small, non-profit organization in Saskatoon, who asked that neither he nor his group be identified.

“For us there are two main reasons. Number one, we don’t see a risk in it. As far as I know – having worked in the non-profit sector for eight years – I have never heard of any non-profit company being taken to court for pirating software. And secondly, we simply don’t have very much money.”

With an operating budget of a little over $100,000 per year, buying four copies of a thousand-dollar software package instead of just one would eat up a painfully large percentage of an already thin budget, Chad said. However, he would prefer to stay on the right side of the law if he could.

“I have found in the U.S. that (publishing software) QuarkXPress, for example, does offer non-profit and charitable companies substantially cheaper versions of their products – like $200 instead of $1,500. But I’ve been searching and unfortunately we’ve never found any kind of deals like that for Canadian charities.

For now, both Famulak and Griffith believe that the rate of piracy will drift downward. However, Griffith acknowledged “there is probably some irreducible minimum” rate of software copying that will never go away.