Software Piracy Losses Add Up to $29B

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UPDATED: Western Europe holds the dubious honor as the worst region for software piracy on the planet in dollar terms, accounting for about $9.6 billion in annual losses to the industry in 2003, according to a new study.

All told, pirated software is in use on about 36 percent of all computers around the globe, which cost the software industry about $29 billion last year, the Business Software Alliance said in a study released Wednesday.

The BSA's survey, conducted in conjunction with global technology research firm International Data Corporation (IDC), also changed its methodology in its annual survey this time. Instead of looking only at business software applications, the study broke it down to distinct segments, such as operating systems, consumer software and local market software.

With the focus on the new segments came new details about the nature of pilfered software. The BSA said the study discovered that, of the $80 billion in software that users installed on their computers worldwide last year, only $51 billion of it was legally purchased.

Robert Holleyman, president and CEO of BSA, said the result of the stolen software is that local governments don't take in tax dollars, and jobs can be impacted -- not to mention its impact on the local software industry.

Other findings about the survey said the Asia/Pacific tallied a piracy rate of 53 percent, which represented annual losses in 2003 of more than $7.5 billion.

Eastern Europe's piracy rate was 71 percent, but the survey tallied the lost dollars at $2.1 billion. Western Europe's rate was 36 percent, with dollar losses of $9.6 billion. Latin American countries notched a 63 percent rate, with losses of about $1.3 billion.

Middle Eastern and African countries came to a rate of about 56 percent, with losses totaling more than $1 billion.

In North America, the rate was 23 percent, but the losses were the second highest at $7.2 billion.

IDC used its own data for worldwide software and hardware shipments for the study, and said it conducted more than 5,600 interviews in 15 countries in order to build the results. In all, the piracy rate and dollar amounts were calculated based on PC, software, and license shipment data related to vendors in 86 countries.

Overall, the BSA said the study found that the size of a regional software market was the critical link between piracy rates and actual dollars lost.

Take, for example, the Ukraine, where the study said 91 percent of software installed in 2003 was pirated. In the U.K., by contrast, the dollar losses ranked much higher because of the larger size of the software market in the U.K., according to the BSA.

In addition, IDC said a number of factors contribute to the regional differences in piracy, including local-market size, the availability of pirated software, the strength of copyright laws, and cultural differences regarding intellectual property rights. The faster the region is growing, the higher piracy rates tracked.

The BSA said it has a pile of work ahead of it about building stronger laws and enforcement of laws regarding intellectual property protection.

Updates prior version to stipulate that Western European countries account for the biggest amount of dollar losses