Jolly Software Pirates Yo Ho Ho

I like the Pirates of the Caribbean as much as the next person. I’ve enjoyed the ride version when visiting Disneyworld. I saw the first of the movies, and liked Johnny Depp’s Captain Jack character.

And what the heck, what can you do about piracy anyhow?

Back in the old days, when Palo Alto Software had fewer than 10 employees and somebody first posted a copy of Business Plan Pro on a public database, our development manager was incensed. How could they do that to us? Didn’t they realize it was stealing? He was in his twenties. He was young, the Internet was young.

We learned, slowly, to do what we could to prevent it, but not to get too bent out of shape. We rationalized that the people who hacked our stuff weren’t going to buy it anyhow. We added what checks and balances we could, without getting into those onerous heavy protection schemes that we hated as much as anybody else.

Eventually we beefed up our serialization and activation, following in the footsteps of the major software companies. 

I don’t read much about software piracy these days, but there was a study released last week — more on that below — so it made me look again. I came up with what I consider "amazing" facts about how bad it really is.

Before I get to the study, I decided to share some facts about piracy as measured by one software company, Palo Alto Software. I know this one example very well because I’m president and founder. It’s been around for 19 years, has 40 employees, and no outside investment.

I include the background because I think sometimes people justify software piracy with the image of Microsoft and the like, huge companies worth billions of dollars, housing thousands of employees on large high-tech campuses. That’s not this company.

Our main product, Business Plan Pro, is in its 11th version now, so as you might expect, we’ve developed an activation system to control piracy. When you buy you get a serial number, and then you either call a toll free number or go the Web to activate that number. It takes a few seconds.

Which brings me to what I consider "amazing facts" about piracy as measured by this one specific case. Our database counts the times that any specific serial number is used for an activation. When a serial number is spread around and copied, activation stops but the counting continues.

The number that has been attempted most has been attempted more than 50,000 times. Yes, that means that it has been downloaded illegitimately and installed and sent through the activation process by more than 50,000 people who didn’t pay for it.

That number plus the second and third numbers have been attempted more than 100,000 times combined. Does that sound like piracy still happens?

So this comes up because today I caught a report from the IDC Global Software Piracy Study. Apparently, even though we hear less about it these days, software piracy is still there. The study covers all packaged software that runs on personal computers, including desktops, laptops, and ultra-portables. This includes operating systems, systems software such as databases and security packages, business applications, and consumer applications such as PC games, personal finance, and reference software.

So it remains in 2006 that for every $2.00 worth of software purchased legitimately, $1.00 worth was obtained illegally. In half the countries, however, that ratio was reversed; for every $1.00 of software purchased legitimately, nearly $2.00 worth was obtained illegally. Additionally, in the highest piracy countries — those with piracy rates of more than 80% — for every $1.00 spent on PC hardware, less than seven cents was spent on legitimate software.

While the worldwide weighted average piracy rate is 35%, the median piracy rate is 62%, meaning half of the countries studied have a piracy rate of 62% or higher. In just under one-third of the countries, the piracy rate is higher than 75%. Although some high profile countries — China and Russia — saw significant drops in piracy, they also commanded a higher percent of the worldwide market, and this consequently prevented the worldwide average from dropping.

Yeah, thanks, I guess. What, me worry? 

3 thoughts on “Jolly Software Pirates Yo Ho Ho

  1. Good post. Pirates should think more about the small software publishers or the small recording artists when they're stealing IP. Yes, there are a few companies and artists that have been mega-successful but the fact of the mater is most IP owners struggle just to get by.

    Here in the U.S. – we should be especially vigilant about protecting IP because more and more it's the only thing we really produce. We don't build big things out of steel as much as we use to at the height of our industrial age – now we assemble bits to create value and drive our economy.

  2. "Yes, that means that it has been downloaded illegitimately and installed and sent through the activation process by more than 50,000 people who didn't pay for it."

    Could be. But it could also mean that it has been downloaded and installed illegitimately by people who paid a thief for it, thinking they were buying a legitimate copy. In this scenario, end-users are as much victims as are the originators of the intellectual property. That's an important point that lots of piracy discussions forget.

  3. Thanks Cale, good addition.

    But Sara, doesn't that just mush up the point? I had a friend whose bike had been stolen. A week later she saw somebody riding the same bike down the street. Should she have caught up with the rider and apologized? And when the rider claimed he'd bought it, whose bike was it? And, to nobody's surprise, that supposed other victim had bought a $500 bike for $20 from a teenager in a hurry. Do you suppose he was really that naive?

    The discussion here is about the theft, not the follow-up sale of stolen goods.

    The tens of thousands of serials in question were posted on hacker sites, or sold by spammers, or on ebay, for pennies on the dollar. People who download that stuff off those sites, or get the hundreds of software products that spammers sell on a CD for $10, they know what they're doing. They didn't just go into Office Depot to get a pirated copy. And they didn't pay a real price. I think these discussions assume it's silly to be naive about what's really going on.

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