The commercial value of pirated software in SA in 2009 was R2.4 billion, and the country's piracy rate remained unchanged at 35%, according to a study by the Business Software Alliance (BSA) and the International Data Corporation (IDC).
This is the seventh annual software piracy study done by the BSA and IDC, which tracks PC software piracy rates in more than 100 economies.
“From 2008 to 2009, installations of unlicensed software on PCs in SA remained static, at 35%, while the commercial value of this illegal software amounted to $324 million, or R2.4 billion,” says BSA chairman Charl Everton.
World Wide Worx MD Arthur Goldstuck says the figure of R2.4 billion needs to be balanced against what proportion of that value represents actual lost sales, or installations by people who would consider paying for the software if they were unable to get pirated copies. “In many cases, once people are cut off from pirated software sources, they go with freeware rather than pay up,” he explains.
Static rate
The study mentions that, despite the global economic recession, piracy rates have dropped in 54 economies when expectations were for them to increase and SA's rate remained static.
Goldstuck attributes this to a decrease in the sale of PCs during this period. “This has a lot to do with fewer people buying computers, or upgrading computers during the recession. The result is that fewer people are looking for new software, and there is reduced piracy as a consequence.”
In a 2008 white paper, called “How to Reduce Software Piracy in the Middle East and Africa: The Case of SA”, IDC estimated, with respect to SA specifically, that reducing the 35% software piracy rate of 2008 by 10 percentage points over four years (2.5 percentage points per year from 2010 to 2013) would create an additional 1 181 IT jobs and contribute $819 million to the GDP. This would also represent an increase in total revenue for the local IT industry of $569 million and additional revenue for federal, regional, and local governments of nearly $89 million in taxation.
Economic impact
“Pirates do not contribute to the economy; they suck money out of it. They send the money out of the country overseas, so it does not contribute to the economy,” says James Lennox, CEO of the South African Federation Against Copyright Theft.
He adds that because of this, piracy prevents sustainable economic growth and has a significant impact on the ability to create high-quality jobs. He says that smaller businesses are affected and sometimes forced to shut down.
“Legitimate businesses can't survive, then prices go up and you just have a death cycle. It impacts on investment decisions as well.”
Goldstuck adds that the impact of piracy is one that can't be quantified. “It creates a culture of piracy and of disregard for intellectual property, which then extends into other areas of property.”
According to Robert Holleyman, BSA president and CEO, there are other related impacts of piracy. “Piracy is limiting IT innovation, job creation, local economic growth and is robbing governments of vital tax revenues. Our report makes it very clear that governments around the world must redouble their efforts to combat software theft.”
Reducing piracy
“This study makes it clear that BSA's efforts to reduce software theft in SA are still of vital importance. A piracy rate of 35% is far from acceptable,” says Everton.
The study found that factors that drive down piracy are “vendor legalisation programmes, government and industry education campaigns, enforcement actions, and technology shifts, such as the increased deployment of digital rights management and greater use of software asset management”.
Lennox says the first step in fighting piracy is education. “People need to understand what piracy is and be made aware of its effects so that they can change their behaviour.
Everton agrees, saying: “As we emerge from the most severe global economic recession in 20 years, it is essential that we continue to engage with government, businesses, and consumers about the risks of stealing software - and to educate the market on the true impact that software piracy has on the South African economy.”
The government is having a positive impact in terms of enforcement, but there is room for improvement here, according to Lennox. “More can always be done and needs to be done in enforcement, but we are moving in the right direction. Legislation also needs to be updated.”
Goldstuck feels the government needs to improve its vigilance in this regard. “We have seen the state go backwards in its ability to keep up with copyright law, for example, and we need a more active approach that takes full account of the concerns and needs of software and content creators.”
Piracy drivers
The study found that “factors driving piracy rates up included rapid growth of the consumer PC market, and greater activity in the installed base of older computers where unlicensed software is more prevalent, and the increasing sophistication of software pirates and cyber criminals”.
Lennox says that what drives piracy is the simple fact that criminals make money out of it. “Criminals can make lots of money and get away with it. That is what drives piracy. No legit product can compete with stolen products. A legitimate product will never win a price argument.”
Everton adds that, as long as there are new software products, there will be piracy. She says piracy rates can increase or decrease in the future, but it all depends on how the economy performs and what happens in the market.
“The hope is that it [piracy rate in SA] will reduce. The figure of 35% was maintained from 2008 and 2009 instead of increasing and that's a positive sign.”
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