Software group: Piracy losses growing

updated 10:32 a.m. ET May 15, 2007

LONDON - The rate of global software piracy has remained static for three years, but the cost to companies that make the programs is rising, the Business Software Alliance said Tuesday.

The BSA survey, conducted by the U.S.-based market research company IDC, concluded that for every $2 spent on legitimate software, $1 went to pirates.

"The bad news is that overall global piracy rates have remained stagnant," BSA Chief Executive Robert Holleyman said. "Overall dollar losses have gone up because the overall market is growing."

Though the piracy rate declined in 62 countries from 2005 to 2006, those gains were offset by the growth in sales of computers in some of the most piracy-prone areas, the U.S.-based BSA said.

The report claimed 35 percent of all software installed on personal computers in 2006 was obtained illegally. It estimated software vendors could lose about $180 billion to pirates over the next four years.

Critics say such figures are exaggerated because those obtaining pirated software are unlikely to have paid the full price anyway.

Holleyman said the piracy rate in China, the second-largest market for personal computers behind the United States, had fallen 10 percent over three years, saving software companies an estimated $864 million.

That drop was offset by an increase in piracy in the Middle East and Africa, he said.

The report identified Armenia, Moldova and Azerbaijan as among the world's worst for software theft, saying only one in 20 programs used there was procured legally. The U.S., New Zealand and Japan are among the most law abiding — but nearly one in four programs there were pirated, it said.

Researchers examined the software market in 102 countries, comparing software sales in each of the countries with estimates of the amount of software in use.

The report took the difference to be the pirated amount, calculating losses based on prices for copies of those programs.

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