The BSA needs a time machine, not copyright reform

The BSA (Business Software Alliance, orBad Statistics Alliance, depending on who you talk to) have releasedyetanother one of their comical studies. I have been verycritical of these studies (See: Lies,Damned lies, and IIPA/BSA/etc statistics). What Irecommend people do is skip to the methodology section and see whatthey are measuring, and decide for themselves whether what they aremeasuring is harmful or beneficial for the Canadian economy.

BrianJackson wrote an article that quotes MichaelGeist indicating the study was “shockingly misleading”. I will go further and suggest that what the BSA is really asking foris a time machine, not copyright reform.

Twenty years ago the softwaremarketplace was different than it is today. A tiny few companies,primarily those who make up BSA today, dominated the softwareindustry as people perceived it. There was “one true”business model: software was sold the same as computer hardware,distributed via brick-and-mortar retail channels, charging royaltyfor boxes or software pre-installed on a computer.

Advancements in communicationstechnology have brought about change, and the BSA study is ameasurement of that change, not some alleged benefit of turning backthe clock 20 years. If you take a closer look at the methodologysection of the BSA study you will find that many of the things thatthe BSA is claiming is harmful and in need of a legislative fix areare actually positive developments in the software marketplace.

More and more software isdistributed in ways that do not involve brick-and-mortar retailchannels, being pre-installed on a computer, or even charging royaltyfees. While the BSA calculates this as a loss due to “piracy”in their studies, this should be recognized as a positive developmentthat reduces software costs and benefits the economy. We do not wantto go back in time, and most reasonable people would consider thegrowth of online software distribution to be a good thing. Manypeople are predicting that the “app stores” that have beenpart of the Linux software distribution system for decades(centralized repositories with one-click download/installation), andhave recently been added to mobile computing for Android and AppleiOS, will become the norm for all computing platforms.

We are slowly migrating awayfrom desktops and laptops to mobile devices from the cell-phone totablet and other form factors (embedded in televisions). IDCcompetitor Gartner expects that Symbian and Android together willaccount for 59.8 percent of the total worldwide mobile OS market by2014, Symbian with 30.2 percent, and Android with 29.6 percent. BothSymbianand Androidare open source mobile operating systems, with open source being acompetitor to the software production, distribution and fundingmodels promoted by BSA. It is far more likely that the trend that wesee in mobile computing will migrate its way back to olderform-factor computers than the very outdated methodologies used fordesktop software trying to be mangled into the mobile space.

Without the complexity of thelegacy retail system, it has allowed for the growth of theindependent software marketplace. Being independent means separatefrom the incumbent software vendors that make up the BSA. Thisgrowth in the competing software marketplace will quite appropriatelyregister as a loss for BSA members. This includes softwareprofessionals that participate in the growing commercial Free/Libreand Open Source Software (FLOSS) marketplace, as well as the smallersoftware vendors that make a great living through AppStores withouthaving the overhead of maintaining a retail distribution systemthemselves.

Here are a few of the factorsin their study.

  • Estimating losses: Theirmethodology doesn't adequately differentiate between infringingsoftware and people using legal alternatives. IDC, the company theyhired to create this study, is notorious for under-estimating theusage of FLOSS and other non-BSA software. When the study claimsthat Canada's infringement rate was 29% in 2009, that could be 9%infringement and an under-estimation by 20% usage of competingsoftware for all we know.
  • Multiplying bysoftware-related services market: The methodology is focused onservices provided by or on top of BSA members, including outdatedoverhead such as pre-Internet retail. This also incorrectly suggeststhat someone not paying royalty fees for software is not going tohire value-add services from competitors, something that makesabsolutely no sense to suggest. The only thing lost when someonedoesn't pay a royalty to a BSA member is the royalty to the BSAmember. Nothing else can be extrapolated from that, so thismultiplier has no legitimacy in the methodology.In fact, the opposite is likely true. Money spent on software royalty payments is money that is then notavailable for value-add software related services. This means thatincreasing royalty payments to BSA members actually subtracts thatvalue-add to the software user, reducing their productivity and thustheir profitability.
  • New jobs: This is linked tothe false claims from the services market, but also linked to thefact that royalty payments leaving the country may theoreticallycreate jobs in some other country, but won't benefit Canada. Infact, the more money that is leaving the country in the form ofroyalties, the less money that is available to pay Canadians.

Note that I am not excusinginfringement, just putting this “study” into a more validperspective.

I will agree with the BSA thatreducing software copyright infringement would be a good thing. Theeasiest and most long-term beneficial way to do this is to encouragepeople to switch from illegally free software to legally freesoftware. While twenty years ago it was valid to claim that what theBSA members offered didn't have viable alternatives, that is nolonger true. People who aren't evaluating competitive software aredoing so based on nostalgia, not valid technological or businessreasons.

Some representatives of BSAmembers have admitted that while their first choice is people payedthem money, their second choice is people infringe since they leastwant people to switch to competing independent software. If you lookclosely at their legislative suggestions they are also primarilyaimed at reducing competition, not reducing infringement.

The IDC study makes somepretty classic statistical mistakes. For instance, they suggest thatit has been found that countries that they have received higheramounts of royalty payments from are countries that are richer. This is a correlation, not a causal relationship. Most reasonablepeople would believe that being a richer country is the cause, androyalty payments is the effect, but the study makes the ludicrousjump to suggest the opposite : that higher royalty payments wouldmake the country richer.

The study claims that “IDChas concluded that software revenues lost to software piracy would berecouped dollar for dollar if piracy rates were lowered”. Thisis not a conclusion, but the assumption upon which their entiremethodology was built. IDC can't tell a correlation from a causalrelationship, and they can't tell an unfounded assumption from aconclusion. I hope that the politicians that these “studies”are aimed at will take the time to look at the methodology, andunderstand just how wrong the claims made really are. We needpolicies which promote these advancements in the softwaremarketplace, not policies that seek to turn back the clock to thedays when the tiny number of companies represented by the BSApractically owned the marketplace.

Russell McOrmond is a self employed consultant,policy coordinator for CLUE:Canada's Association for Free/Libre and Open Source Software,co-coordinator for Getting Open Source Logic INto Governments (GOSLING),and host for DigitalCopyright Canada.

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