Software pirates plunder US$12 billion a year

MORE than one third of computer programs running on computers in Australia are pirated, according to the latest industry statistics.

Copyright piracy in Australia is costing the computer software industry losses in the order of US$154.3 million, while worldwide the software industry is losing an incredible US$12 billion annually, according to an industry study carried out by International Planning and Research Corporation for Business Software Alliance and Software & Information Industry Association.

But while dollar losses are climbing annually, piracy rip-off on average is down 13 per cent worldwide - from 49 per cent in 1994 to 36 per cent in 1999.

However several countries are still out of control, including Vietnam at 98 per cent, China at 91 per cent, Russia at 90 per cent, Indonesia at 85 per cent, Malaysia 71 per cent, Philippines 70 per cent, and Singapore 51per cent.

In comparison, Australia is down from 37 per cent in 1994 to 32 per cent in 1999 but higher than North America at 25 per cent.

In the five years since the inception of the study in 1994, two distinct trends have occurred. First, the world piracy rate has declined, but a second trend is the increase in PC and software usage worldwide.

These two trends have offset each other, resulting in an almost US$1 billion increase to losses over the last year to US$12 billion.

The reasons given for the fall in piracy are the lower cost of legitimate software and the increasing local presence of US companies in foreign countries so legitimate software and support for it is readily available.

However despite the progress, a 36 per cent global piracy rate is still substantial, complains the industry.

Eastern Europe had the highest piracy rate of any region worldwide in 1994 and continues that “distinction” in 1999, despite a 15 percentage point reduction. Russia, along with other former Soviet countries, is driving the losses.

Software piracy in the Middle East, Latin America, and the Asia/Pacific Region decreased a dramatic 20 percentage points each between 1994 and 1999.

This accounts for the major gains in piracy prevention in the world over the past five years.

While the decline is remarkable, these regions are all above the world average rate of software piracy and represent the challenge of future anti-piracy efforts as these regions continue to grow.

Western Europe has seen an almost equally dramatic reduction in piracy rates from 52 per cent in 1994 to 36 per cent in 1999. Western Europe is now just under the world average rate of software piracy.

North America continues to lead the world in software consumption but still has a piracy rate of 25 per cent (31per cent in 1994), representing a loss of $3.2 billion.

Losses in Western Europe were up by US$800m with the UK and Germany showing the highest losses with US$680 million and US$650 million respectively, although their piracy rates were measured at 27 per cent for Germany and 26 per cent for the UK. France was third with US$550 million in losses, driven in part by France’s substantially higher piracy rate 39 per cent.

Asia and Eastern Europe experienced a decline in dollar losses. In 1999 Asia’s losses were US$2.8 billion, down $300 million from $3.1 billion in 1994. Eastern Europe’s losses were $500 million, down $600 million from 1994.

The dollar losses have changed between the regions of the world. Whereas in 1994, most of the dollar losses occurred in North America, in 1999, North America and Western Europe were almost equal in dollar losses.

In 1994, Eastern Europe and Asia experienced significant dollar losses due to high piracy rates and growing economies. Since 1994, recessions in both regions have caused the dollar losses to fall.

Latin America, the Middle East and Africa have seen dollar losses rise as economic growth outpaces their respective declines in the piracy rate.

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