Analysis: The price of ignoring software piracy

It seemed like a clear case of the good guys versus the bad guys. The good guys being the IT industry and the bad guys the pirates whose counterfeit software costs the industry dear -- estimates for 1997 put the global figure at round $11.

It seemed like a clear case of the good guys versus the bad guys. The good guys being the IT industry and the bad guys the pirates whose counterfeit software costs the industry dear -- estimates for 1997 put the global figure at round $11.4bn. However, when ZDNet exposed a clear cut case of piracy the responses from software giants like Adobe and Microsoft were guarded to say the least. In fact they crept round the issue like it was a sleeping baby.

Loot, a paper which carries advertisements offering copied software programs, was keen to play the issue down. It claims to do its best to make sure no illegal software is sold through its pages. But with the latest versions of Adobe, Microsoft, Quark and other leading software available for as little as three percent of official retail prices, surely the industry would condemn such practises? Not so it would seem.

As business operations director of Adobe and chair of the British Software Alliance, Anne Edmonds-Smith has a double interest in the issue, but had surprisingly little to say on the matter. "All I can say is we are working towards encouraging Loot to apply editorial policy," was as strong as the condemnation got. "Condemn is the wrong word," she added. But Adobe products are being sold for as little as £30? "I would be interested to see evidence of this," Edmonds-Smith replied.

Perhaps Edmonds-Smith's role as Adobe employee and chair of the BSA was dividing her loyalties. She claimed not, but when questioned about the possibility of legal action in future, she changed her mind. "I can't speak on behalf of Adobe," Edmonds-Smith was keen to stress, before discussing the legal implications of piracy.

Surely industry heavyweights Microsoft would have more to say? Perhaps even throw its weight behind a campaign to stop Loot publishing adverts for ludicrously priced copies of Windows and Office. "We say to people if the price is too good to be true, it probably is," Anti-piracy Manager, Dave Gregory offered helpfully. But what is Microsoft doing practically? "We are considering the possibility of running ads warning people of the dangers of piracy," seemed to be the extent of it. Gregory was keen to distance Microsoft from the problem altogether. "It is an industry issue, not a Microsoft issue," he claimed.

Perhaps it is not so much a case of the good guys versus the bad guys, rather the big guys making a strategic decision to turn a blind eye to small scale piracy. In such a rich industry, writing off small ads pirates as a permanent nuisance that it is probably better to turn a blind eye to, rather than wasting too much management time on it, is clearly the position of many companies, even if they will never publicly admit to this. The recording industry has more or less given up on trying to stop individuals copying records for thier own use, and low level piracy of software may go the same way. For consumers prepared to pay retail price for software, president of the Software Publishers Association Ken Wasch had a stark message. "These companies can recover the cost of piracy through the people who buy it legitimately," he warned.

The cost of crime is always passed on to honest people, and in the case of software it is the people who purchase the software legitimately who are subsidising all those bent copies that are floating around. In the business world, firms that use pirated software to run their businesses have an unfair advantage over those that purchase the software legitimately.

Research from Price Waterhouse predicted if piracy in Europe was reduced to 27 percent (the average at the moment is 43 percent) an additional 200,000 jobs would be created. Microsoft estimate that in the UK alone 30,000 jobs could be created. Piracy can also inhibit the flow of investment funds to software developers and start up companies, for who would want to invest in a product that was going to be stolen as a matter of course, if nearly half of all copies in use would generate zero revenue.

The problem for the industry in dealing with the pirates selling through Loot may be a legal one and the word 'litigation' has always been enough to tighten the lips of even the richest organisations. Carrying advertisements for illegal software is not an offence in itself and a paper cannot be sued for it. As Jenny Pierce, lawyer with city firm Charles Russell, put it. "It is a very grey area indeed". The BSA has threatened Loot with Trading Standards but even this carries no legal clout. Peter Strange, senior trading standards officer, explained. "If Loot carried an advert saying 'get your pirated software here' there might be a case. It may also be possible to say a paper carrying illegal ads was conniving at an offence, but it would be straining the law somewhat."

So is there nothing that can be done to stop these small-time thieves? Following information from ZDNet News, Microsoft, Adobe and Macromedia intend to contact Loot about the problem. If the issue began the week as a sleeping baby, perhaps it has just woken up.