Report: SOFTWARE PIRATES!!!! New Report from BSA as Bad as Old Reports from BSA

Business Software Alliance, an organization that presses for the interests of software companies, released a study yesterday claiming widespread economic benefits for countries that cut their piracy rates, particularly countries like China and Russia, which have high piracy rates and large IT potential. A piece in the Mercury News by Robert Hollyman, CEO of BSA, highlights the key claims of the report. For example a 10-point drop in the Asia-Pacific area, according to BSA, would yield 2 million new jobs and an additional $135 billion in economic growth. Worldwide, if the rate of piracy dropped from the current 35% down to 25%, by 2009 there would be an increase of 2.4 million new jobs. $400 million in economic growth, and $67 million in tax revenue.

Seem like a stretch? That's because it is. In the past, similar reports by the BSA have been blasted as 'scaremongering' and criticized for sketchy methodology. For example a 2003 report was attacked by noting that if BSA's analysis held true, than countries like South Korea and the Phillipines, which have substantially strenghtened their anti-piracy laws, would have seen MUCH higher growth rates. In the latest round over the 2005 report, the Economist has taken a swing in an article simply titled "Dodgy Software Piracy Data." For those of us without a subscription, Coronte excerpts part of the article and gives commentary. I took a look at the report itself, and found this point of methodology somewhat startling:

"Piracy Effects--the method by which the study calculates the impact of piracy on an industry measure. The study calculated different effects from piracy on software, services, and channel spending and employment, and tax revenues. In the case of software, IDC used a linear relationship between a falling piracy rate and growing software spending. (E.g. If a country has a 50% piracy rate and $100 million software spending, lowering the rate to 0% would create a theoretical $200 million in software spending).) While not every piece of formerly pirated software will be purchased if piracy rates go down-some will be substituted, some not used-at the same time lower piracy rates yield more economic activity that stimulates more software production and purchase. The two countervailing forces seem to cancel each other out. This is the conventional assumption for most previously published piracy studies."

So for every dollar lost from software piracy, the report assumes an additional dollar in software spending. WHAT??!! In less developed countries like China and Russia, I think this assumption can hardly be held up. It would be nice if they, say, footnoted or cited such "previously published piracy studies." I'd be suprised if much of the pirating population in developing countries were actually realistic prospects for selling software to... an example in the States is colleges: a lot of college students like to use programs like Dreamweaver and Adobe Photoshop for what amounts to basically playing around with image and web design. If you cracked down on their illegal use, it would not equate in these students going out and purchasing $800 dollar software tools- they would simply not use the programs. The same is true for many businesses in Russia and China- they're piracy is motivated by a lack of purchasing power... as well as the availability of pirated software.

This availability is what I believe the BSA should focus on. Piracy is stealing, don't get me wrong, and organizations that exist to pirate software ought to be stopped. But to assume that tax revenue and jobs will skyrocket isn't just unrealistic, it can be harmful to developing countries to focus on restrictive anti-piracy laws. I remember a couple of years ago reading an article on Russia in Foreign Affairs on how seemingly high levels of corruption, cronyism, and authoritarianism were widely exaggerated when comparing Russian against other middle-income countries. The point is that piracy, like gaft and cronyism, might just be part of the growing pains of a developing country.

If that's the case, than JUST implementing stronger anti-piracy laws won't help, because the root of the problem goes much deeper. Laws are only helpful in an environment that can enforce them. Suggesting the narrow, corporate-minded solutions of the BSA does little to help guide countries in economic growth or overcoming piracy. A more workable legal structure, and a stable IT industry, needs to exist before nations can benefit from such solutions. Stronger anti-piracy laws isn't a predicator of stability, it is a reflection of it... and to argue otherwise is an uphill battle, especially when your methodology sucks.