From the streets to the web: The challenges of software piracy

Friday, September 9, 2011

The recent looting and rioting in the UK showed that even in the most advanced economies, there are people who will jump at the chance to commit a "victimless" crime in broad daylight.

But the downside of human nature comes as no surprise to software vendors, who are all too aware of the ease - thanks to the rise of the internet and the democratization of computing tools - with which software pirates can do similar damage, quietly and from behind closed doors.

This, and Latin American consumers' inherent cost-sensitivity, has caused software piracy to become practically virulent in this region.

BNamericas spoke with Business Software Alliance' (BSA) general counsel and antipiracy VP, Jodie Kelley, about how to keep users on the straight and narrow and the reasons behind piracy, among other issues.

BNamericas: There has apparently been a sharp increase in the amount of software revenue lost to piracy, perhaps due to the ever increasing number of web users and the specialization of users at an expert level. Does this mean the problem is escalating?

Kelley: Although the piracy rate has been dropping worldwide, market growth in countries that have higher piracy rates determines a continuous increase in the commercial value of pirated software, which we consider losses to the industry.

In our last global piracy study, BSA estimates that a total of US$59bn was lost by the industry due to illegal software use. Internet access brings great opportunities for both users and software developers, but challenges also arise. And one of those challenges is the migration of piracy on the streets [street vendors] to the web. BSA monitors the global web - P2P sites, auction sites and B2B and others - and, through its Online Auction Tracking System [OATS], tracks down IPs that act illegally. We then request that ISPs and auction sites remove them. Some countries have approved laws that punish the authors of such infringements, and as more countries adopt these legislative concepts, software companies will be more protected against intellectual property theft on the web.

BNamericas: You've found that Latin America is one of the regions where software piracy is highest, alongside Central and Eastern Europe and right ahead of Asia. What is behind that?

Kelley: Several factors make up the software piracy situation in each country. Government protection mechanisms for IP addresses, awareness levels, the technology sector's development, the legal system, among others, all play a role in a country's piracy level.

The rising loss to the industry reflects the expansion of IT markets in countries with traditionally high piracy rates. Emerging economies, for example, were responsible for half of the world's total PC shipments in 2010. These economies are growing at a rapid pace, and the higher levels of piracy in these markets are contributing to higher levels of losses overall. Losses in this case being defined as the overall commercial value of unlicensed software. Wages are also getting higher in these countries, and more jobs are being created. Thus, the middle class in these countries gains purchasing power, and more people gain access to information technology.

Once these countries' governments realize the benefits of creating an environment that stimulates the development of software companies, stronger measures will probably be taken to counter the factors that account for their high piracy levels.

BNamericas: What about Brazil, in particular? Do you feel the government is doing enough?

Kelley: Brazil has reduced its piracy rate from 64% to 54% in the last five years. Despite that this still represents a high piracy rate, the constant reduction reinforces the fact that efforts from Brazilian authorities and associations have been positive, and it places Brazil with the lowest piracy rate in Latin America, alongside Colombia, and among other BRIC countries.

However, Brazil's software market is expanding greatly, and stronger efforts are crucial at this particular moment for the industry to ensure that potential revenues and jobs aren't lost by local and international software companies, thus damaging what's expected to be a strong, long-term expansion for the industry in Brazil. We're delighted at the positive progress to date, but there is still a tremendous piracy issue that needs full dedication and resolution.

BNamericas: How do you reconcile the contradictory finding in BSA's studies that most people claim to support protection of intellectual property, but still get hold of pirated software?

Kelley: This results from users' lack of awareness. Many companies which otherwise operate legally may not know that installing an original copy of a program into dozens and sometimes even hundreds of PCs without the appropriate licensing is actually software piracy. Other consumers believe they're receiving legal software through P2P networks and auction sites.

What regulates legal use of software is not a disk or a password, but a license. Companies that find it difficult to keep track of their licenses can resort to Software Asset Management programs, which in some cases have even shown that they have more licenses than they need.

BNamericas: Brazil, like other countries, has recently been the target of hacker attacks, forcing the government to announce some measures like launching an intelligence office. Is that sufficient, or are the hackers "unstoppable?"

Kelley: Hackers aren't unstoppable. However, the anonymity of the internet works to their favor in terms of making it more difficult to track them. Nonetheless, through dedication of resources and sophisticated technology – and, needless to say, persistence on behalf of law enforcement agencies to pursue these hackers - it's a problem that we can make strong progress toward solving. Like all other crimes, however, it's unfortunately not something that can be permanently eliminated.

About Jodie Kelley

As the general counsel and VP of antipiracy at BSA, Jodie Kelley leads domestic and international antipiracy programs, efforts against other internet crime, and educational programs to promote software license compliance and respect for intellectual property. She manages BSA's antipiracy programs and counsel in Europe, the Middle East, Africa and the Americas.

Prior to joining BSA, Kelley served for six years as VP and deputy general counsel of Fannie Mae, a US government-sponsored enterprise chartered by congress to provide liquidity, stability and affordability to the housing and mortgage markets.

Previously, she was a partner at Jenner & Block in Washington, where she specialized in civil and regulatory litigation and handled cases before trial and appellate courts and regulatory agencies throughout the country.

Kelley is a native of New Orleans. She earned her JD from Harvard Law School and BSS from Pennsylvania State University.

About the company

The Business Software Alliance is a nonprofit trade association dedicated to fighting digital piracy and promoting a legal web environment. Headquartered in Washington, DC, the alliance is active in more than 80 countries, with dedicated staff in 11 offices around the globe - Brussels, London, Munich, Beijing, Delhi, Jakarta, Kuala Lumpur, Taipei, Tokyo, Singapore and São Paulo.