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Software Manufacturers:  Piracy on the Rise - 2004-07-13

A study released this month by computer software manufacturers says that the industry worldwide lost $29 billion last year to piracy, more than double the losses of 2002.

Making a copy of a music CD or loading a borrowed program onto your computer may not seem like a crime, but in most situations it is.

Bob Kruger is the vice-president of enforcement for the Business Software Alliance, an industry group based in Washington.

"The biggest form of piracy, the one that accounts for the lion's share of those $29 billion in lost revenue, is copying in the work place," he explained. "Businesses and organizations making more copies of software for office computers than they have licenses to support."

The software alliance says that the value of the pirated products equals 60 percent of all legal global software sales. The Internet, says Mr. Kruger, greatly compounds the problem as more and more software is available online, where it can be downloaded and then illegally distributed.

The problem is most serious in the music industry. Global sales of pirated compact disks have more than doubled in the past three years. The pirated music market has a greater value, over $5 billion , than the legitimate music market of every country in the world outside the United States and Japan.

The entertainment industry is trying to combat online song and movie swapping through a combination of education and legal action. The U.S. music industry has brought 3,500 lawsuits against music downloaders.

Larry Magid, a technology writer in California's Silicon Valley, says even though Apple Computer has been successful in getting people to pay for the music they download, music piracy continues to grow.

"There is now a legal way to download music, but unfortunately for the record industry the unauthorized copying or swapping of music is continuing to gain market share at a fairly substantial rate," he noted. "I'm not sure there is going to be a technology or a legal system that can effectively prevent this, certainly not on a global scale."

The music industry says over eight million people were online at any given time in June using unauthorized music downloads. That is a 19 percent increase from last year.

Robert Kruger says the software industry keeps tabs on where piracy is most rampant.

"The regions of the globe with the highest piracy rates are found in southeast Asia, eastern Europe and Latin America," he explained. "Some of the countries have piracy rates of 90 percent, meaning that nine out of ten software programs are pirated."

Vietnam and China have the world's highest piracy rates, accounting for 92 percent of all computer software installed in each country. They are followed by Ukraine with 91 percent, Indonesia at 88 percent and Zimbabwe and Russia with 87 percent.

It may seem like a losing battle. Larry Magid in Palo Alto says if progress isn't made in combating illegal music downloading the laws may have to be changed.

"Laws have to take a look at behavior," he added. "Just like drug laws, when they become unworkable they may have to be looked at. And if the laws are simply unworkable, if society has moved to the point where people don't respect or acknowledge intellectual property rights, then perhaps the entire music industry and the legal system needs to take another look. The industry may need to find another way to make money, perhaps through advertising, perhaps through subscription fees, I'm not sure what."

The music and film industries are alarmed by data that suggest an increasing number of computer users believe it is not wrong to download unauthorized music or video. An industry association says 58 percent of illegal downloads are audio files, followed by pornography (20%) and other video files (9%).