Software piracy: Love it or hate it

Fight against illegal software use heats up, though not all see a problem.

Big vendors such as Microsoft and IBM say that they're collectively losing billions of dollars a year in software sales because of piracy, and are working together and with government to address the problem.

But others argue that the problem is overblown and that piracy has its place in the industry.

The subject of software piracy, it seems, isn't as straightforward as it might appear.

Software piracy has been broadly condemned by large vendors, particularly through their participation in the Business Software Alliance (BSA).

The BSA's goal is to protect intellectual property and prevent individuals or companies from pirating or counterfeiting commercial software. The BSA has claimed some success in North America, where the percentage of pirated software hovers at about 22%, though the alliance faces a much bigger challenge in other parts of the world, such as China, where it says 86% of software was pirated last year.

The U.S. government also has been targeting piracy.

Led by Attorney General Alberto Gonzalez, the Department of Justice recently stepped up efforts by its intellectual property task force, which was instituted in 2004. The Justice Department now has 25 Computer Hacking and Intellectual Property units across the United States that investigate intellectual property crimes.

Software customers also are speaking out.

"We've seen the costs of software rise over the last several years," says Michael Sherwood, CIO for the city of Oceanside, Calif. "We attribute that or a portion of that cost increase to piracy."

But not everyone holds the opinion that software piracy is bad. Some open source advocates, for example, bristle at the likening of someone who makes a copy of licensed software for someone else to a pirate. Open source guru Richard Stallman, who founded the Free Software Foundation, once said: "Helping your neighbor is not piracy; piracy is attacking ships."

A recent posting on the Techdirt blog by Michael Masnick, president and CEO of the independent corporate intelligence firm, sums up the criticism of the BSA's method of estimating the financial damages from software piracy.

In the posting, he called the BSA's yearly software-piracy findings "bogus," because the BSA says every unauthorized copy is a "lost sale." Masnick's argument is that if someone isn't going to buy it, he isn't going to buy it, legal copy or not.

Further, pirated software helps some companies with tight budgets create innovative products and contribute to the overall U.S. economy, Masnick wrote.

Indeed, one IT support manager for a software company who asked not to be named says her company's product, which now is widely used in a niche market, would not exist if it had not been for software piracy.

Before being acquired by a larger organization, the company would send one licensed copy of server software to multiple locations, because it could not afford to purchase as many licenses as it needed to develop its product, she says. The company was eventually charged with software piracy, but its product was purchased by a larger company and is now extremely successful, she says.

"I wouldn't be where I was today without software piracy," she says.

Nevertheless, software customers say they aren't taking any chances with pirated software.

"We're acutely aware that software piracy is the same thing as theft," says one IT manager at a global energy company, who asked not to be named. "It's not just intellectual property [at stake]; it's theft. We do everything we can short of just stopping the business [to prevent piracy]."

These efforts include regularly sweeping servers to search for files and programs that don't belong on them. The company also recently updated its Microsoft System Management Server environment to provide much better reporting about what applications are running on the network, the IT manager says.

The organization also makes it easy for anyone with budgetary approval to buy software for people if they think it is necessary for them to do their job.

"We lower the threshold for people getting the software they need," he says, pointing out that this lessens the incentive for illegally copying software.

Oceanside's Sherwood says his organization is so careful about the software it runs in-house that even if an employee buys software legally, the software will be ripped out if the city hasn't approved it.

The BSA, which estimates North American software companies lost $6.9 billion from software piracy last year, recommends that software customers help fight piracy just by keeping track of their software.

"The most important thing a network administrator can do is know what is on his or her own network and know what he or she has bought," says Jenny Blank, director of enforcement at the BSA.

This is not always as easy as it sounds, especially with large organizations. Marcel Warmerdam, an IDC analyst, suggests using asset-management software, which is available for big-name companies and lesser-known ones.

"The advantage is two-way," he says. "It identifies what software there is and how much it is used."

However, the IT manager for the global energy company says asset-management software is difficult and expensive to install and maintain, and so might not be a viable option for every organization.

"I know companies that have spent an enormous amount of money trying to get a handle on it," he says. "Sometimes it would be easier to buy a lot of extra copies [of software] and hand them out than try to count them all."

The BSA offers a set of free tools and resources online that can help organizations enact policies and best practices to prevent software piracy, and train employees in the legal ramifications of pirating software.

Best practices for preventing software piracy
Install an asset-management program to identify your software resources and how often they are used.
If asset-management software is not an option, regularly audit the software resources on your network to identify what software you have and where it came from.
Make it easy for managers and IT decision makers to free up financial resources for software if they find it is necessary for the organization; employees won't pirate software if they can just as easily purchase it.
Educate employees on the legal responsibilities and ramifications that exist if they pirate software.
Implement a companywide policy for how to deal with employees who pirate software.

Copyright © 2006 IDG Communications, Inc.

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