BSA: Piracy economic impact is tens of billions of dollars

In its neverending crusade against software piracy, the Business Software …

A new study commissioned by the Business Software Alliance says that countries around the world are leaving billions of dollars of economic growth on the table due to piracy. The study was carried out by IDC and looked the potential economic impact of tighter antipiracy controls in 42 different countries.


According to IDC, China's IT workforce could become the largest in the world within four years if a similar 10-point drop were to take place there. The Chinese economy would add an additional 355,000 jobs and IT spending would grow by 13.7 percent annually over the next four years, instead of the currently projected 10.3 percent. Asia as a whole would see an additional $40 billion in economic growth, 435,000 new jobs, and more than $5 billion in new tax revenues under the scenario envisioned in the BSA-sponsored study.

"Out of an estimated $21 billion worth of PC software being employed in new computers in the Asia-Pacific region in 2006, $11.6 billion was deemed to have been pirated," said Jeffrey Hardee, BSA VP and regional director, Asia Pacific. "This study clearly shows the huge economic benefits that economies would derive from a ten-point drop in PC software piracy over the course of the next four years."

According to IDC, the software piracy rate in China was 82 percent in 2006. The figure was 80 percent in Russia, another country identified as a hotbed of piracy by the BSA. Indonesia weighed in with a whopping 85 percent. At the other end of the spectrum are Canada, with a piracy rate of 34 percent, and the US at 21 percent.

Data source: IDC

The BSA offers some helpful tips for governments interested in reducing software piracy and reaping what are apparently billions of dollars in economic benefits and tax revenues. Governments should mandate the use of legitimate software in the public sector in order to "lead by example." Countries should also devote "significant government resources" to combating piracy, including better law enforcement training and the creation of "national IP enforcement units." The BSA also suggests strict adherence to the WIPO's copyright law obligations as well as the WTO's copyright enforcement ideals.

Although software piracy is definitely a significant problem, especially in developing countries, history suggests that the BSA's software piracy numbers be taken with a large grain of salt. In the past, the IDC has derived its software piracy rates by comparing the estimated amount of software installed on the average computer in a country with the amount of software actually sold. Figure out the number of PCs in the country, do a little multiplication, and you've got a figure that supposedly represents the amount of money lost to pirated software.

The economic benefits from a piracy crackdown promised by the BSA might be open to question, but the BSA and IDC's attempt to detail how piracy costs a nation's economy billions of dollars in lost economic growth annually could find receptive eyes and ears in capitals of the world.

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