“The good news is we are making progress, however, we still have a lot of work to do to reduce unacceptable levels of piracy,” said BSA President and CEO Robert Holleyman. “These significant losses translate into negative impacts on IT industry employment, revenues, and financial resources available for future innovation and the development of new technologies.”
Worldwide, for every two dollars of software purchased legitimately, one dollar was obtained illegally. Global losses increased in 2006 by more than $5 billion (15%) over the previous year. Of the 102 countries covered in this year’s study, piracy rates dropped moderately in sixty-two countries, while increasing in thirteen.
China’s piracy rate dropped four percentage points for the second consecutive year and has dropped ten percentage points in the last three years, from 92% in 2003 to 82% in 2006. By reducing China’s piracy rate by ten percentage points over three years, $864 million in losses was saved, according to IDC. The reduction in the piracy rate and the savings are the result of government efforts to increase the use of legitimate software within its own departments, vendor arrangements with PC suppliers to use legitimate software, and increasing industry and government education and enforcement efforts. The legitimate software market in China grew to nearly $1.2 billion in 2006, an increase of 88% over 2005. Since 2003, the legitimate software market in China has grown over 358%.
“Considering the vast PC growth taking place in the Chinese IT market, this continued decline in China’s software piracy rate is quite promising,” said Holleyman. “BSA is encouraged by the commitment from the Chinese government to ensure legal software use. We look forward to continued dialogue between the US and China aimed at addressing issues that affect both economies.”
And in Russia, the piracy rate decreased by seven percentage points since 2003, down from 87% in 2003 to 80% in 2006.
In addition, the study indicates that even relatively low piracy rates can amount to huge losses in large markets. For example, while the US had the lowest piracy rate of all countries studied at 21%, it also had the greatest total losses at $7.3 billion. China saw the second highest losses at $5.4 billion with a piracy rate of 82%, followed by France with losses of $2.7 billion and a piracy rate of 45%.
Other key findings:
• In more than half of the 102 countries studied, the piracy rate exceeded 60%. In approximately one third of the countries, the piracy rate exceeded 75%.
• Emerging markets in Asia Pacific, Latin America, Eastern Europe, and the Middle East and Africa accounted for one-third of PC shipments, but only 10% of spending on PC software.
• The European Union (EU) and Canada continue to have high losses despite low piracy rates. The EU had losses of $11 billion with a 36% piracy rate, while Canada had losses of $784 million with a 34% piracy rate.
• Over the next four years, businesses and consumers worldwide will spend $350 billion on PC software. If current trends continue, the study predicts more than $180 billion worth of PC software will be pirated during that period.
“A number of factors contribute to regional differences in piracy: the strength of intellectual property protection, the availability of pirated software, and cultural differences,” said John Gantz, chief research officer at IDC. “Reducing software piracy around the world will take much more work and investment, but those efforts will pay off in the form of stronger local IT industries that drive broader economic growth.”
“The critical elements of the global fight against software piracy are education, strong government policy, and enforcement,” said Holleyman. “Expanded access to the Internet in emerging markets is making piracy more convenient, which makes it all the more imperative to keep up anti-piracy efforts.”
