BSA | The Software Alliance: 2013 Global Study

Every year, BSA | The Software Alliance releases a new batch of “groundbreaking statistics” that they say point to a rampant software piracy problem. This year, in their 2013 report entitled Competitive Advantage: The Economic Impact of Properly Licensed Software, the results portray software piracy as an economic catastrophe that sends billions of dollars down the drain while proposing properly- licensed software as a stimulus package for economic prosperity. The report states that “increasing the amount of properly licensed software globally by 1% would add an estimated $73 billion to the world economy, compared to $20 billion from pirated software.”

However, the accuracy of these numbers being touted by the BSA is a source of much debate. Critics argue that the BSA | The Software Alliance reports are consistently inaccurate because their studies fail to account for basic economic theory. The statistics illustrating the economic impact of pirated software are fundamentally flawed seeing that they erroneously value a stolen copy of software as equivalent to a lost sale of a copy purchased at full price. The problem with this assumption is that, in reality, not all pirated software would be purchased if given the choice of paying full price or not having the software, and in any case certainly would not be purchased at full price. In fact, many pirated- software users simply cannot afford to pay full price, or are not willing to do so. By not taking into account the correlation between price and demand, the BSA widely overstates the dollar amount lost from pirated software.

Furthermore, BSA | The Software Alliance dramatizes the billions of dollars “lost” in the economy from pirated software, and portrays properly licensed software as an untapped source of economic stimulus. While it is true that software companies lose money from pirated software, the overall economy does not. The money not spent on purchasing full-price software does not disappear as the BSA statistics portray. Rather, this money is spent elsewhere in the economy, and, therefore, still contributes to economic prosperity. On the contrary, if all users had to purchase full-priced software, many would be forced to reallocate their spending in order to afford to do so, or would find less costly alternatives and the full value of the allegedly pirated software would not necessarily fall into the pockets of the software companies. BSA | The Software Alliance should be forthright and state what they mean. Specifically, these “lost” dollars may be a stimulus package for big software companies, but it does not benefit ordinary consumers, small businesses, or local economies.

Ultimately, the real economic impact of pirated software cannot be attained from the inaccurate and misleading statistics of the BSA | The Software Alliance report. Losses from pirated software do exist, however the impact would most certainly be less than the BSA report boasts, and the economy will not be crashing anytime soon because of it.

Dorman Bell is a business and technology focused law firm based in Dallas, Texas and has a dedicated section to defend organizations against software license audits from software publishers and their trade organizations, such as BSA│The Software Alliance and Software and Information Industry Association. For more information, call us at (214) 736-718 or visit our contact page and we will get back with you as soon as possible. We look forward to serving you!!!