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Report: Piracy hits job growth

A Business Software Alliance report indicates that software piracy has become a major impediment to job growth and a drain on government tax revenue.

The Business Software Alliance is aiming to draw more attention to software piracy by releasing a report that indicates software piracy has become a major impediment to job growth and a drain on government tax revenue.

The report, by PricewaterhouseCoopers, examines the software industry's record in creating jobs and revenues around the world, and also points out how these gains are undermined by software piracy.

The BSA said software piracy saps software companies of millions of dollars in licensing fees. Companies are also less likely to hire people to develop new products if they believe they will only feed the black market, according to the report released yesterday.

"Piracy is deterring growth in this global industry," said Robert Holleyman, president and CEO of the BSA. "Governments now see the direct correlation between software jobs and government revenue, and how this can be [jeopardized] without further reductions in piracy."

As previously reported, the BSA estimates that 40 percent of business software used or sold worldwide in 1997 was pirated, a market value of $11.4 billion. The report estimates that reducing piracy to "reasonable levels" could produce 1 million additional jobs by 2005--200,000 in the United States alone--over and above those the industry is already projected to create.

Holleyman said he hopes the politicians in this country get the message loud and clear. "The United States could have more jobs if more reductions in software piracy were made."

Formed in 1988, the BSA is a global organization that promotes the interests of business software publishers. Its members include Adobe Systems, Microsoft, and Novell.

The report also shows that software piracy results in lost government revenues, pointing out that successful efforts to eliminate piracy by 2005 could allow the software industry to raise nearly $25 billion in additional government revenues worldwide. For example, in 1996 and 1997 the software industry paid more than $28 billion in tax revenues to world governments. Of that amount, $7.2 billion was paid to U.S. federal, state, and local governments, according to the report.

Software industry revenues outside the United States will reach $116.9 billion by 2001, according to the report. Industry growth will produce an additional 323,463 jobs by 2001, providing employment for 1.06 million people outside the United States. For the U.S. economy, direct employment in the software industry will reach 1.03 million jobs by 2005.

The BSA said that the industry has enjoyed notable policy successes this year which could lead to significant reduction in the rate of software piracy. In particular, the organization points to Congress passing the World Intellectual Property Organization copyright bill, which would impose new safeguards for software, music, and written works on the Net, and would also outlaw technologies that can crack copyright protection devices.