Numbers Game

By Ericka Chickowski Print this article Print

Is the Business Software Alliance really having an impact on software piracy? Do they often punish businesses that are trying to play by the rules?

Numbers Game
The BSA has tried to quantify this damage with a yearly global piracy study conducted by the analyst firm IDC since 2004, but that too has come under criticism. According to the most recent study, the BSA claims that the software industry loses $40 billion each year due to piracy. But critics say that the number is exaggerated because it counts each instance of piracy as a loss of a retail-priced license. Many industry analysts say that not every pirate would buy a legitimate copy if forced to give up their pirated copy.

“I agree with them that having consistent methodology from year to year may provide us with some visibility into some of the trends that are happening,” said DeGroot with Directions on Microsoft. “I really don't agree very much with the BSA’s numbers on how much the software industry is losing.”

When pressed by the New York Times in 2004, even the analyst from IDC who wrote the study admitted that the loss figures were likely 10 times higher than they actually were.

*Check out 12 companies that were fined in 2007 by the BSA.

The other interesting aspect to the numbers crunched by IDC is the fact that they both help and hurt the BSA’s agenda. The large figures of piracy and estimated industry losses act as a platform for the groups lobbying efforts, but they also call into question the group’s claims of enforcement efficacy. When the group started the study in 2004, it found the global piracy rate to be 36 percent and the United States rate was 21 percent. The latest report indicated that the global rate dropped by one percentage point, and that the United States piracy rate remained the same.

Big Time Influencers
In spite of the questions surrounding BSA’s industry loss estimates, they have done enough to turn heads in Washington. So have the $11.8 million spent on lobbying since 1998, or so says OpenSecrets.org, which tracks lobbyist spending habits. Some of the policies that the BSA has supported in the past include the passage of Digital Millennium Copyright Act and a passel of other attempts to strengthen copyright protections, laws to increase the number of H-1B visas granted for worker immigration, and proposed legislation to crack down on peer-to-peer networks used to infringe on copyrights.

The BSA couldn’t make a policy expert available for an interview, but its public affairs officer, Diane Smiroldo, did chime in with a statement on what this money has been spent on over the years.

“There have been countless BSA policy successes since our inception 20 years ago, including stronger laws for protecting intellectual property, trade agreements with leading US trading partners, relaxed encryption regulations in the US, and defeating many efforts to weaken copyright laws,”Smiroldo wrote in an email.“Currently, BSA’s priority policy initiative in the US is patent reform legislation which has passed the US House of Representatives and is currently pending in the US Senate.”

While the BSA’s push for legislation certainly helps its membership, some question the effect on the greater good when it comes to technology innovation.

“What they advocate is typically for two basic things: one, that the industry should self-regulate and, two, to maintain a lack of transparency in the underlying architecture of how applications are developed,” said Lillie Coney, associate director of the Electronic Privacy Information Center (EPIC). She believes that both agendas could be detrimental to privacy rights of consumers and of the ability for business customers of BSA-backed companies to secure their IT environments.

*Check out 12 companies that were fined in 2007 by the BSA.

Some also believe that in many ways Microsoft is using the BSA as a front to establish even more clout among lawmakers. “It is ironic that while the government was trying to break up Microsoft, Congress was giving them all of these statutory rights through the BSA because they convinced them that the biggest threat to American economy is piracy,” Ball said. “They convinced them that America was in grave danger if people used unlicensed software.”

BSA doesn’t just set out to influence American politics, either. The group is also active in European Union politics and it has tried to ingratiate itself within governments ruling over developing nations most responsible for worldwide piracy, such as China. In the EU, BSA is a well-known player in the political scene, so much so that it has been accused of cozying up too close to lawmakers.

In 2002 scandal broke out when it was found that a European Commission proposal on software patents was actually written by a BSA official, as discovered by whistleblowers who found evidence in the Microsoft. Perhaps the most visible recent effort abroad is its collaboration with the government in Qatar. BSA officials took their message out to the Qatar Ministry of Economy & Commerce in December in a forum designed to guide that Middle Eastern country’s 2008 plan to crack down on pirated software.

*Check out Baseline's in-depth reporting and advice on the Business Software Alliance:

12 Companies Caught Stealing by the BSA

8 Ways to Avoid a BSA Audit

What to Do When You Receive a BSA Audit Letter 

This article was originally published on 2008-01-25
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