Several software vendors recently announced new licensing plans that tie software pricing to individual networks, regardless of the number of users.   Other vendors have announced amnesty plans that entice pirates to buy upgraded versions of programs they are using already without authorization.  The vendors waive prosecution if the pirates legitimize their use of the software through a standard upgrade fee.

It appears that these vendors have capitulated to the existence of software piracy.  They have quit fighting.  Worse yet, some have adopted policies which actually encourage piracy.  (Why pay for a legal copy, if you can get an upgrade at the same price as everyone else?) Such action is a mistake.  Every software vendor should take every reasonable opportunity to reduce or stop the pirating of their software.

Piracy is an illegal activity that has existed since computers switched from hardwiring to data cards. The level of legal violation ranges from a misdemeanor, such as copying an inexpensive program, to a felony with related liability for civil damages, such as distributing illegal copies at wholesale prices.  However, such penalties have done little to reduce the problem.

In many ways, software companies perceive loss to piracy as a routine cost of doing business, but a huge one:  The Business Software Alliance estimated that in 1996 the software industry lost $15.2 billion worldwide to theft.  If you are a software developer, some part of this loss is yours.  If it were within your power to stop piracy, what would you gain?  It is this question that you must answer before you can make rational decisions on whether to condone piracy or commit additional resources to fight it.

Ownership.  The end of piracy would affect ownership issues in three ways.  Piracy is typically viewed as one form of software theft. With piracy, you copy programs from one disk to another or from a disk to a computer.   “Software theft” or “infringement” is defined more broadly as any action in violation of the software owner’s rights.  It  is any unauthorized copying of a program by any means, whether in part (a lifted algorithm, for example) or in its entirety (such as rewriting an entire program).  Stealing a little is no less a theft than stealing a lot.

Without piracy, you must still establish ownership of a computer program. You cannot license, and thus profit from, what you do not own. Thus, issues of who created the software and whether it is an original work, a legal copy, or an infringing work would remain.

Even if you could assume that only authorized people were using your program, you would still have to carefully and accurately state the extent of authorization. At present, most software vendors convey usage rights by complicated and confusing written agreements. If  piracy ended, these contracts might become simpler and easier to understand. "Shrink wrap" licenses that do not require the end user's  signature might become common.

Finally, although many software vendors do not vigorously pursue pirates, many litigation cases related to ownership issues are still filed each year. These would likely decrease significantly if piracy ended.

Vendor Impact.   Even though the software industry seems to be quite healthy, the end of piracy would likely accelerate it to a new high.  If every pirate of computer software were forced to pay market price for software, vendors would surely reap significantly greater profits.

However, it is not realistic to expect a one-to-one conversion of pirated software to new vendor revenues. Many pirates, confronted with forced payment, will buy the software. Many will not. The big question is, how much more money would software vendors make? Based upon conversations with several software vendors as to the extent of their piracy losses, individual vendors may expect revenue increases which would range anywhere from 5 to 500 percent.  Factors that will impact the increase in revenues include the software's popularity, the nature of its application, the retail price, and the distribution area.

Clearly, this would be a boon for vendors. It could also lead to lower prices on commodity software products such as word processing, spreadsheet, and presentation packages.  In any commodity market, price is king. If the opportunity arises to drop prices and thus secure a larger market share, then prices will likely fall. However, vendors are just as likely to try and avoid price reductions by adding new program features that let them claim novelty and justify a higher price.

International Impact. The end of piracy would have its biggest impact on an international level. Piracy thrives in many developing countries, representing an industry in its own right. The end of piracy would have a dramatic effect in these countries.   In China, the government was forced to enforce foreign software ownership rights in order to avoid trade sanctions.  Pirate software factories were closed and replaced with legitimate distributors operating under government license.  This has directly led to the creation of an honest market.

Many software users in non-industrial nations may lose access to computer software because they cannot afford to pay license prices established in countries like the United States. This could lead to an even greater stratification between countries with technology and those without.   Software vendors must recognize this difference and be prepared to use different pricing structures that are appropriate to each country.  At the same time, software vendors might enter foreign markets they've avoided because of piracy. At present, many vendors refuse to conduct  business in some countries. (The current joke? In high-piracy countries you can always make one sale.) Without piracy, a worldwide market would exist, subject to the purchasing power previously discussed.

A Better World. The end of piracy would be like the end of the Cold War in microcosm. Barriers to international interaction would be substantially reduced, subject to continuing restrictions on technology with potential for military applications.  Software developers could boldly engage in a truly global commerce, without fear that their investment of time and money is constantly at risk. Once we achieved an honest market, our only piracy concern would be to maintain technical superiority over those who would prefer a return to lawless days.

Take Responsibility.  With a better picture of the benefits of an honest market, you can determine the investment you should make in ending piracy.  This investment should be made in new anti-piracy technology,  in establishing a “no tolerance of piracy” policy in your own work force and in your home, and in providing public education regarding respect of your rights and those of others engaged in creative pursuits.

Karl Dakin

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