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Software piracy put at $11.4 billion

An annual study for two software trade groups estimates that 40 percent of new business applications installed last year were pirated copies.

Applications worth $11.4 billion were pirated in 1997, two software trade groups said today.

An annual study for the Business Software Alliance (BSA) and Software Publishers Association (SPA) estimated that 40 percent of new business applications installed last year were pirated copies.

"This is a pretty bleak picture, although there have been some improvements in some countries," said BSA spokeswoman Diane Smiroldo. "Educational efforts need to be stepped up, we need stronger copyright laws, and we need better enforcement of those laws."

SPA president Ken Wasch urged ratification of the WIPO Copyright Treaty, which would provide remedies against software piracy tools.

The piracy figures covered 26 categories of business applications, noted Wasch, who estimated billions more were lost to piracy of educational and entertainment software.

The survey, conducted by International Planning and Research for the two software groups, found that globally last year 228 million business applications installed in 1997 were pirated, out of 574 million total copies installed.

That represents a slight increase over 1996, when 225 million applications were pirated out of 523 million installed.

By dollar losses to piracy, the United States market was the worst at $2.7 billion, followed by China at $1.4 billion, then Japan, Korea, Germany, France, Brazil, Italy, Canada, and the United Kingdom. Total losses for those countries were $7.8 billion, or 68 percent of worldwide losses.

U.S. software piracy rose from $2.3 billion in 1996 to $2.7 billion in 1997, and 1997's piracy rate was 28 percent.

With $3.9 billion in piracy losses last year, Asia remained the region with the greatest dollar losses, up from $3.7 billion in 1996. Asia's highest piracy rates were in Vietnam with 98 percent; China with 96 percent; and Indonesia with 93 percent. Piracy in Japan cost $752 million and $582 million in Korea.

Eastern Europe again had the highest piracy rate of any region, with 77 percent of new software being pirate copies--but that rate was down three percentage points over 1996. Bulgaria had a 93 percent piracy rate, followed by the Commonwealth of Independent States (without Russia) at 92 percent and Russia at 89 percent.

In Western Europe, losses to software piracy in Germany were $509 million, $408 million in France, and $335 million in the U.K.

Latin America's piracy rate declined by six percentage points over 1996, down to 62 percent. The Middle East and Africa had the second-highest regional piracy rate at 65 percent, but that figure was down nine percentage points from 1996.

In the past, some critics have claimed the piracy survey overstates losses because it makes the questionable assumption that every pirate would have bought software, but SPA spokesman David Phelps defended the methodology.

"The moment we begin to make allowances in the numbers we provide, that could be seen as imprimatur for software piracy," Phelps said, stressing the groups' "zero tolerance" of piracy. "One of the reasons BSA and SPA commissioned out to an independent group was to make these numbers as realistic and reasonable and irrefutable as possible."

The full report is available on the SPA and BSA Web sites.