A report by an anti-piracy group that claims potential improved economic conditions if software piracy were stamped out may actually show the effects of increased spending in the IT industry, according to critics.
The Business Software Alliance (BSA) – a group of major software vendors including Microsoft Corp., Adobe Systems Inc., and Symantec Corp. – released a report with IT consultant firm IDC Inc. that shows a bonanza of economic benefits if Canada could reduce its piracy rate by 10 per cent over two to four years. But the analysis may more accurately show what an increase in spending on legal IT products and services might do for the economy.
BSA pegs Canada’s current piracy rate at 29 per cent. If reduced by 10 per cent over four years, the BSA claims 6,445 high-tech jobs would be created, $3 billion would flow into the economy, and $1.5 billion in new tax revenue would be in government coffers by 2013. The benefits would be even better if the rate was reduced in only two years.
But the BSA says the report assumes a “dollar for dollar” value for reduced piracy equating to legal software sales, says Matt Reid, vice-president of communications with the industry group.
“What the study is looking at here is really if you’re reducing the piracy rate and increasing the legal software market by 10 points, this is what you’d see in terms of economic return,” he says.
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Positioning the study as representing the benefits of piracy reduction may be “nothing more than guesswork,” according to Michael Geist, an Internet law expert at the University of Ottawa.
“If this study is really nothing more than an analysis of a 10 per cent increase in spending dressed up as a 10 per cent reduction in piracy, that would be a shockingly misleading approach,” he writes in an e-mail response to ITBusiness.ca. “The suggestion that reducing unlicenced software use leads directly to great IT purchasing is demonstrably false, given the many examples where organizations lower piracy rates by turning to open source alternatives.”
Turning to free, open-source software is exactly what Oldcastle, Ont.-based A.V. Gauge & Fixture, Inc. did after the BSA hit them with a fine for unlicenced Microsoft and Autodesk software last year. The small firm now uses OpenOffice.org tools to replace Microsoft Office.
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Antosh Pieniazek told ITBusines.ca at the time that he was turned off by the strong-arm approach taken by the BSA and its member companies.
“It’s a joke,” he said. “They should take a page out of the other software companies out there and have reasonable prices.”
BSA research shows that a reduction in piracy does result in hefty economic rewards, Reid maintains. The group believes that for every dollar spent on software, $3 will be spent on support for that software.
“What we have seen is that when you reduce piracy, you do see a significant increase to the size of the legal software market,” he says.
Canada’s piracy rate has dropped by five per cent since 2005, according to the BSA. The Canadian IT sector grew by 8,000 jobs and $15 billion contributed towards GDP, the group says. But applying the same analytical model used in the new IDC study, the estimates would have undercut the actual growth.
BSA would have predicted 2,600 more jobs and $1.4 billion in GDP over that same time period if they’d applied the calculations in 2005.
The BSA and IDC study also didn’t take into account any potential economic benefits of software piracy, Reid says.
Perhaps they should have, Geist says, as unlicenced software can serve to hook users that will later pony up.
“While some are loath to admit it, there are definitely benefits to piracy, particularly in developing countries, where moving users away from open source – even with unlicenced software initially – could have long term benefits of keeping users on proprietary systems as their economic welfare improves,” he says.
This isn’t the first time that Geist and the BSA have butted heads. The lawyer has previously called out a 2008 BSA and IDC study as delivering questionable statistics. Those numbers claimed Canada’s piracy rate to be 32 per cent, but Canadian companies were never surveyed for the study.
BSA defended its methodology, saying it had surveyed Canada in previous years and extrapolated data based on similar markets.