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Here we'll explore the nexus of legal rulings, Capitol Hill policy-making, technical standards development, and technological innovation that creates -- and will recreate -- the networked world as we know it. Among the topics we'll touch on: intellectual property conflicts, technical architecture and innovation, the evolution of copyright, private vs. public interests in Net policy-making, lobbying and the law, and more.

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May 25, 2005

The Economist Rails on Flawed BSA Piracy Study

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Posted by Jason Schultz

If you have a subscription to The Economist, make sure to check out their great critique of the BSA's latest software piracy numbers (BSA or just BS?; Software piracy):

IT SOUNDS too bad to be true; but, then, it might not be true. Up to 35% of all PC software installed in 2004 was pirated, resulting in a staggering $33 billion loss to the industry, according to an annual study released this week by the Business Software Alliance (BSA), a trade association and lobby group.

Such jaw-dropping figures are regularly cited in government documents and used to justify new laws and tough penalties for pirates-this month in Britain, for example, two people convicted of piracy got lengthy prison sentences, even though they had not sought to earn money. The BSA provided its data. The judge chose to describe the effects of piracy as nothing less than "catastrophic".

But while the losses due to software copyright violations are large and serious, the crime is certainly not as costly as the BSA portrays. The association's figures rely on sample data that may not be representative, assumptions about the average amount of software on PCs and, for some countries, guesses rather than hard data. Moreover, the figures are presented in an exaggerated way by the BSA and International Data Corporation (IDC), a research firm that conducts the study. They dubiously presume that each piece of software pirated equals a direct loss of revenue to software firms.

To derive its piracy rate, IDC estimates the average amount of software that is installed on a PC per country, using data from surveys, interviews and other studies. That figure is then reduced by the known quantity of software sold per country-a calculation in which IDC specialises. The result: a (supposed) amount of piracy per country. Multiplying that figure by the revenue from legitimate sales thus yields the retail value of the unpaid-for software. This, IDC and BSA claim, equals the amount of lost revenue.

Comments (31) + TrackBacks (0) | Category: IP Markets and Monopolies


COMMENTS

1. SFix on May 25, 2005 1:28 PM writes...

These industry presumptions of loss are almost always flawed. Usually they assume that every unauthorized copy of their software is an actual lost sale. While there are undoubtedly some lost sales, these studies ignore the fact that many, perhaps most people who have the unauthorized software installed on their computers would do without rather than pay full price.

Also, as the industry announce $33 billion dollars in "losses" to piracy, they also announced record profits. Therefore, increased piracy is actually correlated with increased profits.

Permalink to Comment

2. Neo on May 25, 2005 3:40 PM writes...

Their methodology is even more flawed than you think. Estimating the amount of software per PC and subtracting legitimate sales leaves a residue containing not only infringing copies of software but also legitimate software that wasn't sold. Losses due to competition from freeware and open source, in other words, are counted into the "losses due to piracy"!

Of course, the BSA probably includes the lost sales due to competition from OpenOffice and Linux intentionally and hopes to pull the wool over regulators' eyes...

Permalink to Comment

3. Copyrighter on May 25, 2005 7:04 PM writes...

"But while the losses due to software copyright violations are large and serious, the crime is certainly not as costly as the BSA portrays."

Certainly?!? There is nothing certain about this. In fact, one could make an argument that they're underestimating it because the calculation of software per PC could be biased downwards by people reporting fewer than are actually installed due to piracy.

But, you know, that runs counter to the Copyfight mantra, right?

Permalink to Comment

4. Neo on May 26, 2005 6:34 PM writes...

Twit.

Permalink to Comment

5. The Bill Gates story on May 28, 2005 7:13 AM writes...

A little story.

There are two possible types of business customers for software: Large organizations with many workstations and employees, small organizations with few workstations or employees.

Large organizations buy the software that the enterprise uses and there are several reasons for this: They need the support that comes with purchased software and to avoid the loss of trust of their employees. They also avoid being blackmailed by fired employees that know that pirated software is used by the enterprise.

In this market there is very little loss for the creator of sold software because of software piracy. Because this market is so solid Bill Gates is the richest man in the world.

Then there is the small business and home computer market. Here the tendency is to use much illegally copied or legally downloaded freeware. Clearly the legally copied freeware cannot be counted as a loss in sales for by Bill's economists.

Admittedy there is much copying of for-sale software but this copying may actually increase the sale of for sale software. Bill's economists do not realize this when they calculate losses because their mathematical models were made by the economists themselves and they are not professional statisticians.

This is how it all work giving a real life example.

Joe istalls an illegally copied Microsoft Office in his personal computer at home. Because Joe likes the program he decides to use it also in the small family operated company he owns. As time goes by the company grows and Joe needs to hire non family employees. Joe then buys Microsoft Office and Bill Gates get a little richer. As Joe's company grows he buys more and more copies of Microsoft Office and Bill Gates getes richer and richer. It all started with piracy.

Bill Gates should be thankfull of piracy because it makes him richer. It has made him the richest person in the world.

But Bill Gates's economists tell him that piracy represent loss of sales and that makes Bill mad, since he is not satisfied with just being the richest man in the world. He wants to own the world. Bill Gates does not realize how much piracy actually adds to his bank account because his economists talk too much with the Alliance staff and with lawyers that have never sold anything other than their overpriced services to sucker enterprises with more money than is possible to spend.

Being that Bill has so much money, he then foolishly spent some of his money to fight piracy.

He listened to his foolish economists, got his frinds at the government to put the FBI into action. The FBI, alleging that they were fighting terrorism raided homes to clean all software from hard disks and arrest the terrorist copiers and downloaders.

Guess what?

The pirates that eventually purchase Bill's software switched to freeware in droves. Bill Gates becames poorer.

One day Bill realized that he destroyed his businees by stopping piracy which was really a promotion of freeware. Everybody swithed to freeware. Commercial software was too risky and its purchase only made the unfriendly Bll richer than any human deserved to be. Linux and Open Office took over.

End of story. End of Microsoft.

Rafael Venegas
http://www.gvenegas.com

Permalink to Comment

6. Branko Collin on May 28, 2005 5:39 PM writes...

I would say there are three markets for software, and I base this guess on something I read about FOSS. It would seem that FOSS is ideal for very large and for small businesses.

Presumably large businesses like FOSS for the control it gives them (they can afford to hire programmers and so on), whereas small businesses like the price. Medium sized businesses can afford commercial products and swallow the propaganda of the anti-FOSS crowd.

I would not be surprised if reasones for using illegally obtained software occur along the same lines.

Permalink to Comment

7. Neo on May 29, 2005 3:31 AM writes...

FOSS is a better bet for support than commercial software, actually. Vendors come and go, but community and user-to-user support is forever. If a closed-source product's vendor goes, you have no legal way to improve, fix, etc. the product or even peek into how it's working, nor do the geeks in the community that actually know something about code and can do the same things competently. The community can always repair, update, fix, adjust, tweak, and grok open source however, without having to go through the vendor to get information about internals and such, or get some special "source license" (Java comes to mind) to do so that depends on the vendor's continued availability and willingness to grant the community some sort of access. When the vendor is in control, and the vendor disappears, there goes most community support and inhouse support potential right there. And if they put something evil like product activation in, when they go down, you go down. No IT admin who cares about security and reliability of their systems and is worth their salary will have any companywide IT policy other than "NO ACTIVATED SOFTWARE. PERIOD!" as it's tantamount to a back door. Is giving some other company a special ability to DoS your b0xes smart policy? I doubt it. And it's not like they use such tactics just to stop piracy. They can and do use activation to force people to buy the new version (4.0 comes out, 3.0 will no longer be activatable), to shake clients down (give us more money or we deactivate you!), and assorted other nastiness. Intuit's accounting products are an example. They get old enough they no longer interoperate with the latest tax products (and older tax products are worthless), which is product tying but the DoJ doesn't care; even M$ only got a slap on the wrist after all! Now they also can't be activated once they get too old. Intuit isn't the only one, just a particularly notorious one using such tactics.

With FOSS, the community is in control. Malware "features" that improve the vendor's bottom line but cripple the product for users (timebombing/sunsetting, activation or "license server" BS, phone-home/spyware features, embedded or downloaded advertisements, etc.) can simply be removed. Such features are dead weight for users even when they aren't actively causing problems. They contribute to bloat. If they involve network activity, e.g. phone-home or activation stuff or ad-downloading, they add to security risk and may create a dependency of the app on a functioning network that isn't necessary to its function. (What do you mean I have to be connected to the Internet to use my word processor??? What sense does that make???) And every bit of extra code is another place for bugs to creep in. If it's serial #/license validation/activation code, its avowed purpose is to act as a showstopper under some circumstances, so if bugs creep in there, there are very likely to be gratuitous showstopper bugs. And indeed there are. Activation systems have yet to deploy without a lot of incompatibilities and false positives reported. And lost sales. Once word gets out that something uses activation it loses a lot of potential customers very fast. No consultant worth their fees ever recommends an activated product if there's an unactivated alternative in the same problem domain. And it's no surprise. Photoshop CE not working if you use RAID for insurance against data loss is only the latest example of a gratuitous bug/incompatibility that results nor from the app's normal functioning, but from an activation scheme or other such copy protection BS. But with FOSS, that BS is absent, and even if it weren't you could remove it at the source! Foss puts ultimate control not with vendors (though they do exist, e.g. Red Hat) but the community and, ultimately, the user. If the vendor starts to suck that's the vendor's loss but no-one else's; as it should be in a free market. There can be multiple vendors, with their own value-adds or whatever, competing. And even during times when a bit of FOSS has no vendor, it has enduring community support so long as it sees much use, and usually this includes plenty of wizards who have the source and know how to use it. The community can give much more informed support due to the source. And of course, community support is free. Support from a vendor frequently costs. And for what -- is it any better? To judge by Microsoft's slovenly bug-fixing rate, no. To judge by the amount of downtime companies experience from M$ products, no. To judge by there being no better warranty on commercial software than on FOSS, save a meagre media-defects clause with some shrinkwrapped products, no.

FOSS is undeniably superior software in every category you care to rate it on save hardware support and user interface. There are indications that it is making strides in both of these areas. It is clearly superior for server side use already -- An httpd doesn't need a user interface, since only geeks that can edit the configuration script blindfolded will be needing to interact with it in any way other than to retrieve a Web page using the graphical frontend known as a Web browser, and doesn't need to be able to talk directly to modems and laptop displays either.

Permalink to Comment

8. Nathanael Nerode on June 2, 2005 2:38 PM writes...

I can't believe they include legally obtained but non-sold software (including any free-as-in-beer software as well as free, libre, and open source software) in their "piracy" estimates.

That makes their estimates less than worthless, and is deliberately misleading.

Permalink to Comment

9. Wanderer on June 14, 2005 6:48 PM writes...

So, let me get this straight: They guess how much software I "should" have on my computer. They they compare that to how much they've sold. And if the numbers are different, they don't assume that I didn't add any more software than came with the system, or that I'm running Linux, or that I roll my own ... no, has to be piracy. And then, after they make that assumption that I'm using a pirate copy of, say, Microsoft Office, they pile on the further assumption that if I hadn't copied it, I would have bought the full product directly from Microsoft at full retail price, instead of using OpenOffice.org instead. Damn ... I wish the IRS would let me make assumptions like that when I do my taxes!

Permalink to Comment

10. Abe Ohemian on June 14, 2005 6:56 PM writes...

Piracy? What piracy...?

Oh, you mean the violation of copyright and licensing agreements designed to perpetuate wealth and monopoly by requiring that people pay for the opportunity to use flawed software and operating systems for which they have no manual and less control.

Software and operating systems that leave user's personal and financial information at risk without recourse or the opportunity to improve the situation because the proprietary secrets are more valuable than the individual's risk?

Software from companies who purposely distribute communications software without documentation that would educate users to the risks which come built-in in order to facilitate e-commerce and trafficking of user's online habitats?

Yeah... Piracy is a problem!

Permalink to Comment

11. David Walker on June 14, 2005 7:22 PM writes...

This study would also be flawed by any piece of software sold legitimately but not noticed by IDC. Say IDC is 75% efficient in noticing sold software this study might say that 25% of software is pirated without any actual piracy taking place.

Permalink to Comment

12. MNU on June 14, 2005 7:40 PM writes...

Makes you wonder about the piracy claims of the RIAA...

Permalink to Comment

13. Exaggerate OrNot on June 14, 2005 7:59 PM writes...

Software piracy: Hype versus reality
By David Becker Special to ZDNet
August 3, 2004, 5:19 AM PT

Q. But some folks have a problem with the apparent assumption that every pirated copy of a program is a lost sale.

A. I think the methodology behind the study is very sound. I haven't seen where anyone's pointed out anything about the methodology they disagree with. Many people don't like the number for one reason or another.

The notion that not every pirated copy represents a lost sale seems to be a correct one; I don't think anyone in our industry has ever argued it does.

Piracy stats flawed: open source proponent

4/2/2003 5:00:00 PM - BSA fails to consider impact of free software in latest report, consultant says

by Shane Schick
Russell McOrmond, an Ottawa-based Internet technical consultant with Flora Community Consulting and a proponent of the Free/Libre Open Source Software (FLOSS) movement in Canada, dismissed the BSA's findings. He said the way CAAST and the BSA calculate piracy is fundamentally flawed because it relies on estimates of PC shipments by province, the amount of software required and then compares it against software shipment data from BSA member companies. Open source software isn't accounted for.

"This is no way to count from secondary sources the piracy rate," he said. "If there was only one business model in the industry, then their numbers would make sense. But one of the things the BSA is, for obvious reasons, wanting to ignore is that there's two competing industries within this sector."

http://72.14.207.104/search?q=cache:rPcTNWpfCeQJ:www.xchange101.org/print.php%3Fid%3D572++%22What+it+all+boils+down+to+is+that+a+fascist+has+no+regard%22&hl=en&ie=UTF-8

http://tinyurl.com/amdup

SIR – Your article on software piracy was extreme, misleading and irresponsible (“BSA or just BS?”, May 21st). The headline was particularly offensive. The implication that an industry would purposely inflate the rate of piracy and its impact to suit its political aims is ridiculous. The problem is real and needs no exaggeration.

Beth Scott
Business Software Alliance
London

Yesterday it issued a press release announcing a piracy bust in New York which unearthed 421 CD-R burners.

Only there weren't 421 burners, but "the equivalent of 421 burners."

In fact, there were just 156. How did the RIAA account for this discrepancy?

"There were only 156 actual burners, but some run at very high speeds: some as high as 40x. This is well above the average speed," was the official line yesterday.

The implication that an industry would purposely inflate the rate of piracy and its impact to suit its political aims is ridiculous. The problem is real and needs no exaggeration.

Yeah, right.

Permalink to Comment

14. cobolhacker on June 14, 2005 8:07 PM writes...

I mused about this around the same time:

The numbers are made up. The formula they use to come up with them is based on an estimate of the number of bootlegged copies multiplied by the sales prices. Seems simple enough, but it’s not based on any kind of economic reality. Such a formula assumes that a product is so indispensable that everyone who wants to use it is willing to pay for it. Maybe the makers of toilet paper could boast such a claim, but the makers of software probably can’t. The makers of music and movies certainly can’t.

I have no proof of it, but I suspect a majority of people who knowingly use bootlegged software wouldn't have paid for it in the first place.

Permalink to Comment

15. Kevin on June 14, 2005 8:21 PM writes...

I wouldn't be surprised if years from now we look at the RIAA, BSA in the same light as the tobacco companies.

Microsoft, rather than using real copy protection would rather see customers pirating their software than switching to alternative products, open source or not.

I'm sure the motto in Seattle is better of pirated than not ours. Addicting the public over over again.

Permalink to Comment

16. Jeff W on June 14, 2005 8:41 PM writes...

It's too bad the nitwits "elected" to represent us in Congress and the Whitewash, I mean Whitehouse, won't likely read this article. As someone who completely ditched all use of proprietary software in the last year, I am really confused by people running around copying (Piracy is the illegal raiding of maritime shipping) the half tested and woefully lacking crap the proprietary software industry has been spewing out for the last few years. If it hurts the lame companies shilling out that trash, good riddance. They can sink with the RIAA for all I care.

Permalink to Comment

17. Annoyed on June 14, 2005 10:39 PM writes...

If I lie to & defraud my insurance provider over losses and other 'damages' that are purely speculative and ficticious, I go to jail as this is a criminal and illegal act.

Is there a reason why the BSA is not similarly accountable to the law? It very odd how they are seemingly permitted to defraud and commit various acts of banditry ( sueing computerless grandmothers for $millions, etc ) against the public.

Permalink to Comment

18. mdes on June 14, 2005 10:41 PM writes...

There is no sound way to digest this tripe and sh!t out anything that remotely resembles any kind of truth. If any of these people made assumptions like this in school, they would have been laughed out of class.
What this means - that a pirated piece of software results in a direct loss of revenue - is that software pirates (according to the study, that's everyone who owns a computer) cost the software industry the entire profit from one paying customer per item stolen.
This means that if software sales remain consistent for 2005, but software piracy increases 16%, then the entire industry will be in the red.
Whether it is right or wrong to steal is based on your own morals, and the already unconstitutional copyright laws in place (here in the US). But don't feel bad for Microsoft or Adobe. Windows, Office, Photoshop - just a few software products that have become ubiquitous thanks to rampant piracy. The big boys made billions off of little pirates.
If you want to feel bad for someone, feel bad about the little shareware companies.

Of course the big boys do worse to these guys every day than a few thieves could ever hope to do.

Permalink to Comment

19. David F. Skoll on June 14, 2005 10:45 PM writes...

There are 20 or so Intel computers at my workplace. They are all in production use.

I have paid exactly nothing for the software that runs on them, because they all run various flavours of Linux that are freely downloadable.

So according to the BSA numbers, I've pirated around $20,000 worth of software, I suppose, taking into account the retail price of Windows XP, MS Office, Adobe Acrobat, Visual Studio, and all the other proprietary software I didn't buy (because I just use the free equivalents.)

Permalink to Comment

20. Wesley Parish on June 14, 2005 11:40 PM writes...

Consider this for size:
"We also look at the effect of piracy and ask whether piracy can ever be beneficial to Microsoft. This extension was motivated by analyzing data on a cross-section of countries on Linux penetration and piracy rates. We found that in countries where piracy is highest, Linux has the lowest penetration rate. The model shows that Microsoft can use piracy as an effective tool to price discriminate, and that piracy may even result in higher profits to Microsoft!"
http://hbsworkingknowledge.hbs.edu/item.jhtml?id=4834&t=technology

There you have it - Microsoft clearly believes in having its cake and eating it too, in all senses of the words "having", "eating",and "cake".

Permalink to Comment

21. John Penner on June 15, 2005 12:07 AM writes...

A comment made by Microsoft Founder, Chairman, and Chief Software Architect Bill Gates in 1998 and reprinted widely and often in the official media in CHINA became a lightning rod for criticism of the software giant. Fortune magazine reported that, in a presentation to business students at an American university, Gates said rampant software piracy might turn out to be a positive thing for Microsoft.


"Although about three million computers get sold every year in China, people don't pay for the software," Gates reportedly said. "Someday they will, though. And as long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade."

Permalink to Comment

22. John Penner on June 15, 2005 12:09 AM writes...

A comment made by Microsoft Founder, Chairman, and Chief Software Architect Bill Gates in 1998 and reprinted widely and often in the official media in CHINA became a lightning rod for criticism of the software giant. Fortune magazine reported that, in a presentation to business students at an American university, Gates said rampant software piracy might turn out to be a positive thing for Microsoft.

"Although about three million computers get sold every year in China, people don't pay for the software," Gates reportedly said. "Someday they will, though. And as long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade."

Permalink to Comment

23. James Aguilar on June 15, 2005 12:36 AM writes...

I don't think they really believe their figures. It's just like war: you do whatever the worst you can to the other guy, you try to make him suffer enough that he stops doing what you don't want him to do. If that means kludging the figures a little, OK. If that means ruining the lives of individuals by sending them to jail for a long time in order to try and convince other people to tow the line, that's also OK.

I think it's fair, though, considering that software pirates are indeed stealing revenue fairly earned from the company they target. We can't expect that we should receive amnesty from breaking the law. Just like speeding, the question is, how much are you willing to risk, how much damage are you willing to take, how much is it worth. Play the game, but don't cry about it if you, like the people an earlier poster was talking about, get caught and have to pay up big. The companies probably shouldn't pretend to be so innocent either.

Permalink to Comment

24. Samuel on June 15, 2005 1:53 AM writes...

In my youth I pirated computer games and music for my own enjoyment. However, most of the rubbish I copied, particularly the music, I never really used. I certainly would not have paid money for.

However, some people have been benefited by my piracy. As you do, I grew up and got a job. I no longer feel a need to get stuff for free illegally when I can pay for it. In fact, I feel like I should pay for it, especially as I am a computer programmer by trade.

The first game I bought was called Shogun Total War. I originally pirated this as a "maybe I'll play it" game. I played enough that I considered it worth paying $100 for. I bought Medieval Total War the day it hit the shelves. I pre-bought Rome Total War. I would not have ever played these had it not been for piracy, just as I now do not play most computer games. Now that I am paying, I am more selective, so most don't even get the chance.

I pirated the album Sickness by Disturbed. Since then I have bought Sickness and Believe, and may buy the new one if it has no copy protection. Same goes for System of a Down. Two bands I would never have listened to had I not been able to listen for free (I do not listen to the radio, it is full of poo), but I now own all their albums.

This brings me to copy protection. I refuse to buy any product with copy protection or activation (I made an exception for Rome Total War).

I do not have internet at home. My work provides me with free internet that is fast. Why use dialup? So I can get viruses at home as well? I cannot activate software. Sucks for Microsoft, because I would buy Visual C# if it did not need internet, but I guess I will have to use Java instead.

Ironically, I do not listen to my Disturbed albums. My old CD player cannot read them because of their copy protection. I cannot play them on my computer (which I run all music I listen to off, then into the stereo) because they want to play by themselves and not as MP3s in WinAmp. So I had to pirate the albums I have bought once again just to listen to them.

My stance on music has become: If you want to license my listening, then you have to provide it in a form I like. Which is backed up on original CDs, which look nice in a shelf too, but ripped to MP3, and run from my home stereo, car MP3 player or walkman style MP3 player. If I can't rip it without mucking about on the net for 4 hours then I don't want it.

And if I can't run software on my computer without connecting to the internet, then I don't want that either. Having the internet means I have to worry about viruses, and security updates, and getting hacked. Not that I have anything anyone would want, but people have tried. If I want to get Service Pack X, or Patch Y, I will download it at work, burn it to CD, and take it home that way.

And hopefully no-one tracks me down and sues me.

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25. Shuraneeth on June 15, 2005 4:08 AM writes...

I too have had a similar experience. When I joined our company ten years ago we were unable to afford any software for our two computers. We ran Windows & Office pirated. Today our company runs 10 computers all using legal copies of Windows and Office. We would never have been able to afford those products today if we did not use pirated versions ten years ago. We would not even know how to use that software productively if we had not been exposed to the pirated versions.
On my home computer I have a copy of Office that I "borrowed" from the office. I cannot afford Office at home, but I do use it to do some office work (and some personal stuff). I don't actually see why I should pay for a separate copy, since I already paid for it at the office and I cannot use them both at the same time. If I was forced to make a choice, I would run EasyOffice Freeware at home.
I also as a matter of principle will no longer buy copy protected music CDs. The only place I listen to CDs is in the office, but those CDs will not work on my Office computer. I already ruined one of them trying to bypass the copy protection (for a product I had legally paid). Sorry RIAA, you have lost money on me, not because of piracy, but because of copy protection.

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26. CyraX on June 15, 2005 4:45 AM writes...

What about the software that I had bought and then not used it any further (upgrades etc;). In addition to that, when I buy a software (Office 98 say), I would expect that piece of software to work flawlessly else it means that I was a beta tester.
Second thing, if losses of this order are projected for getting new laws passed, then they have to roll them back when they are not that high.
Third - In thrid world countries a piece of software will definitely cost more than the per capita income. Is the price of the software justified in those countries? If not, do not project the global losses - talk about the losses per country.
Fourth - Why should one reduce piracy anyways? Over priced movies for example VCD == 300 INR but the DVD is 900 INR. Exactly why does the DVD version of a movie cost three times? Well its the same movie and the cost of producing the movie has already been counted into the VCDs.
Oh yeah how come they forgot to blame the P2P for every possible pirated piece of sw?

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27. Dondilly on June 15, 2005 8:45 AM writes...

I think the possible reasoning behind the commercial software industry's inflation of piracy figures has been missed.

You just have to look at what has happened in the music industry. In many country's governments have been lobied using inflated piracy figures, claiming they are being bled dry by illegal downloads etc. What has in the long term been the prefered solution by the music industry has been taxes being applied to everything from blank tapes, CDRs, hard drives, memory cards and MP3 players and used to directly compensate the music industry.

In Europe there was even the spurious case of Sony in one division promoting their own PCs with burners for home video editting while at the same time claiming that sales of x millions of CDRs indicated widespread piracy.

The taxes being applied to these devices fails to acknowledge the ever increasing non piracy uses for the taxed devices, memory cards for cameras, PDAs as well as MP3 players as just one example.

The other thing the tax fail to account for the quality of the current artist portfolios of the music companies. It amounts to government providing subsidies for an industry that is providing a product no one wants. It is ironic that in this state of affairs and while piracy does exist. Potential customers can hear for themselves if an album is worth buying before they hand over the cash and so sales drop even further.

I think this is likely to happen in certain software sectors too. Taxes on hardware bought to run FOSS will be used to subsidise commercial vendors of overpriced software no one wants. While the vendors have no incentive to improve their product (or their attitude to potential customers) all the time they receive the subsidies.

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28. Daniel Price on June 15, 2005 11:07 AM writes...

What the study seems to miss is that piracy won't affect different products to the same extent. For example, photoshop is generally pirated by people who have an interest in web/graphic design. You could argue that the chances are, if they're making any money out of web design then they'll have no choice but to buy it (and will probably want to as well). For similar reasons computer science students at university have access to cut price (and sometimes free) software so they learn to use it and get 'hooked' on it - like Kevin said earlier: "Better pirated than not ours".

Now compare photoshop piracy to computer game piracy. For games, the incentive (generally) doesn't exist to buy it if the gamer already have a pirated version - studies have shown that a large percentage of gamers would buy a copy if they couldn't get it for free. By lumping different types of software together (not even mentioning software in different price brackets), you're bound to get an inaccurate survey.

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29. BM on June 15, 2005 8:20 PM writes...

So let me get this straight....
I buy a computer. I install on the machine, legally obtained copies of the software available at work at highly reduced prices as provided for under the bulk licensing agreement my employer has negotiated with the software corporations, the costs of which I claim back from my employer.
The difference in revenue between me buying a copy of the full blown personal version of the software and my perfectly legal version is counted as piracy by the BSA.
Methinks the software corps cry wolf. Personal versions cost more than corporate versions which cost more than personal versions for corporate use. In fact, personal versions cost more than the corporate and personal for corporate use versions combined. And then they claim I am the pirate?

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30. Pinky on June 16, 2005 1:44 PM writes...

Perhaps the ways this study is flawed are innumerable. I cleaned up my act last year. I had pirated everything. Movies, records, business software and games. I still purchased DVD's, CD's, business software and games that I thought were truly worthy. I really would rather own a legal copy of good movies I enjoy. I really would rather own a legal copy of a CD I really enjoy. I really would rather own legal copies of useful quality business software and my favorite games. I believe much of the time, piracy is primarily a means to acquire something you can't currently afford. If I could afford all those things I loved, I would own them. I don't buy movies that I haven't watched (watch a rental or possibly watch in the theater if I have high expectations, matinee only), I don't buy music I haven't heard (and to quote Samuel from this thread, radio is poo) I don't buy business software (it's SO very expensive) that I haven't used and I don't buy games I haven't played (games are pretty expensive now, too). Since I went straight, I've probably only purchased about 15% as much software and music as I did previously.

It's not a loss if I couldn't afford it in the first place. It's not a loss if I wouldn't otherwise have interest in purchasing the software. It's still not an actual loss, losses are out-of-pocket, it cost them no money for me to digitally reproduce their product.

What is worst of all, many of the sentences being given for violators of anti-piracy laws are comparable to the maximum sentence for manslaughter while the BSA and RIAA are pushing for stiffer penalties. At least in the USA, isn't there some law or other requirement that "the punishment should fit the crime"?

Digital media piracy is most comparable to photocopying a copyrighted book.

Just because they overvalue their product is no reason to increase the penalty. If it were reason, one could publish a shareware program with a registration fee of $1 million. Users who then use the software beyond the trial period could be sued for $1 million per count and/or serve life in prison?

Just because it's easier to accomplish than other crimes is no reason to increase the penalty. If it were, then speeding should carry heavier penalties because it's even easier to accomplish.

Ridiculous extremes can show the ridiculousness of a presupposition.

According to my study, they suffer more losses for being big rich corporate whiners. I plan on buying even less, now. But they'll probably add that up as another loss due to piracy.

On another note, perhaps if Bill Gates realizes the benefits of software piracy (as quoted earlier in this thread), perhaps Microsoft's obscene prices are intentional incentive to promote piracy. That opens a whole new can of worms and paves the way for quite a conspiracy theory, including the possibility of Microsoft being responsible for releasing patches and hacks for their "pirate-safe" software to further promote piracy. But perhaps that doesn't belong on this forum.

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31. Fabien Ninoles on June 16, 2005 1:45 PM writes...

It's clearly a case of interest conflicts: the business of BSA is to fight software piracy. If loss due to software piracy weren't displayed as "catastrophic", this will signed soon the end of the BSA.

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