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Software Piracy May Have Peaked as Recession Changed Habits, Industry Says

Piracy of software made by companies including Microsoft Corp. and Symantec Corp. may have peaked last year as the recession led to changes in consumer behavior that kept illegal copying in check, an industry group said.

A slowdown in personal computer sales, combined with consumer education and enforcement efforts, spurred a drop in piracy in 54 of 111 countries studied by Washington-based Business Software Alliance and market researcher IDC. Piracy rose in 19 countries, according to the report released today.

Driven by the growth of PC sales in China, India and Brazil, global piracy climbed to 43 percent of all installed software, up 2 percentage points from 2008. The rate represents $51.4 billion of goods, unchanged from the year earlier when currency fluctuations are taken into account, the group said.

Software piracy “continues to have significant repercussions on both the global economy and national economies,” Robert Holleyman, chief executive officer of the software trade group, said in an interview. Unlicensed software allows “companies in high piracy markets to compete unfairly against companies in low piracy markets like the U.S. that are paying for their software.”

Georgia, Zimbabwe and Bangladesh led the list of the nations with the highest rates, each with more than 90 percent, according to the data. The U.S. has the lowest rate at 20 percent, followed by Japan and Luxembourg with 21 percent each.

China, India, Brazil

An estimated 79 percent of software installed in China is unauthorized, at a potential commercial value of $7.58 billion, the group said. The piracy rate is 65 percent in India, representing $2 billion in value, and 56 percent in Brazil with a cost of $2.25 billion, according to the study.

“We just see this huge increase into the market in China of PCs but nothing close to that in legitimate software,” Holleyman said. “That’s the gap we have to close.”

There’s no guarantee that the software makers would have realized those sales. Still, it’s estimated that, for every $100 of software sold, an additional $75 worth of unauthorized versions enter the market. A typical scenario is a business buying a single legitimate copy and then installing it on dozens of computers to avoid paying licensing costs.

The Business Software Alliance is a lobbying group representing major software companies including Microsoft, the world’s biggest maker, Adobe Systems Inc. and Symantec, the biggest maker of security programs, including the Norton series of software. IDC is a market researcher based in Framingham, Massachusetts.

Quantifying Piracy

The study attempts to determine piracy rates in 111 countries, looking at programs used for security, productivity, operating systems and games installed on personal computers.

A report by the Government Accountability Office last month cautioned that it’s difficult to quantify the economic effects of counterfeit and pirated goods even as it said “the problem is sizeable.”

Holleyman said the purpose of his group’s study, now in its seventh year, is to attempt to quantify the problem as part of lobbying governments and to determine if industry efforts to slow unauthorized use of its products is working.

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.

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