Flawed BSA Piracy Study

[BJ_M]

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.


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.

[BJ_M]

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!

[BJ_M]

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.

[BJ_M]

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%3D5...hl=en&ie=UTF-8

http://tinyurl.com/amdup

[lumis]

*golf clap*

i believe you hold the record for most replies to your own thread, without anyone responding first.

[BJ_M]

they were apart to the main body of the post - but different aspects of the main piece --

posting in separate posts breaks it up in a easier to read flow

[BJ_M]

for MOST people anyway :P

[vitualis]

Well, The Economist isn't publishing anything that isn't widely known... but it does gives a nice weight behind the arguments of common sense.

Regards.

[MackemX]

I like his replies as it was a good conversation on an interesting topic

[MackemX]

yes it is an interesting topic isn't it, so what's your take on it?