Preventing software piracy, is the end goal that is achievable? Even native code can be De-compiled or cracked. The multitude of warez available online (even products like Windows and Photoshop) is proof of that.
This is a question we get asked a lot, and the answer is simple.
One thing to keep in mind is that you want to do this in a way that makes business sense. To do that, you need to define your goals. So, exactly what are your goals?
How does one go about preventing software piracy?
If you can't prevent piracy, then how about merely reducing it? This, too, is misguided. It only takes one person cracking your code for it to be available to everyone. You have to be lucky every time, the pirates only have to be lucky once.
I put it to you that your goal should be to maximize profits.
You appear to believe that stopping software piracy is necessary to this endeavor, It is not.
Profit is simply revenue minus costs.
Stopping software piracy increases your costs, and so reduces that side of the equation.
Protecting your product also does nothing to increase your revenue. I know you look at all those pirates and see all the money you could make if only they would pay your license fees instead, but the reality is that this will never happen.
If pirates are unable to crack your security, they'll either find a similar product that they can crack or do without. They will never buy it instead.
Additionally, securing your product actually reduces revenue.
There are two reasons for this. One is that a small percentage of customers will have trouble with your activation or security, and will therefore decide not to buy again or ask for their money back.
The other is that a small percentage of people actually try a pirated version of software to make sure it works before buying. Limiting the pirated distribution of your product (if you are somehow able to succeed at that) prevents these people from ever trying your product, and so they will never buy it.
Moreover, software piracy can also help your product spread to a wider audience, thus reaching more people who will be willing to pay for it.
A better strategy is to assume that your product will be pirated, and think about ways to take advantage of the situation.
What can be done to minimize piracy?
It is something that will probably never be eradicated. However, from a Microsoft perspective, we focus on three key areas, the three E’s – Engineering, Education and Enforcement. In engineering we try to make our products safer and more difficult to copy; Education is a critical piece because I think there are a lot of consumers who are being caught out because they do not know the software that they are using is pirated or from illegal copies.
And here we are not talking about just the street seller who walks around with copies of a program. It happens when a consumer buys a PC from a re seller and they are not aware that the software they are being sold is illegal. Microsoft is putting more and more effort into creating awareness.
Consumers need to be made aware of where they can buy genuine copies and they also need to be taught the risk involved with installing illegal copies. And then the last pillar, Enforcement, is where a lot more has to be done in terms of working together with the private sector, rights holders such as Microsoft and law enforcement officials to clamp down on the people who distribute the software to consumers.
What risks are involved with running pirate software?
Very often, the people who are involved in this sort of thing are not necessarily interested in making money off the sale of the copy. The software that makes the PC vulnerable is then used to gain access to their personal information, banking details and much more. So where they make the real money is that they gain access to your PC, to confidential information and either sell that information or perpetrate commercial crimes.
In 78% of the cases of test purchases and case studies conducted, web-based programs installed tracking cookies or spyware on PCs. That is a phenomenal amount, and the study also showed that 36% of the cases web-based programs installed Trojan horses or adware, and 28% of cases the programs downloaded system performance issues. It is really high, and you would not even play Russian Roulette with those odds. Also, in 26% of the cases an actual virus was detected, and in 17% of the cases it caused the hard drive to be formatted, so that means data loss.
In a lot of cases, software piracy has often been seen as the soft underbelly of organized crime. The people who perpetrate these sort of crimes, are very tech savvy, run very sophisticated operations and do it with the ultimate goal to access PCs. It is a difficult crime to police, it is a growing crime, and its one that is seen as lucrative.
Where are all the pirate software copies coming from?
The origin of a lot of these high-quality counterfeit is, and has been for some time, from China – and that is a reality. Increasingly we have seen one or two other countries, but that is predominantly where it comes from.
Where it goes to, is the African countries, who are a prime target – not only in Africa, but this is a worldwide problem. But certainly in Africa, the piracy rates were quiet high, as Nigeria is at 82% of the BSA rate, while Kenya is 78% and Botswana 80%. It’s incredibly high when you think around 80% of all software in a country is pirated. That represents a huge financial loss not only to software vendors.
What is Microsoft doing to fight piracy?
In terms of what we do in South Africa, we have a number of programs running concurrently, and some of them are as informal as education and awareness pieces directed at consumers and some of those are more formal and often joint partnerships with the Intellectual Property Office in a particular country. In South Africa we work very closely with the companies and the CIBC. So there is an outreach to consumers and an outreach to government as well.
We also work very closely with law enforcement officials and agencies across the continent. Typically, in each country, the IPO will have a division that deals with the enforcement of intellectual property rights.
On the engineering side, programs like Office365 – that require a download from the Microsoft site, is certainly one way to fight piracy.
A Global Problem
As you might expect, software piracy is a much larger problem proportionately in emerging markets than in North America and Europe, according to the BSA study. Countries topping the list according to the BSA's latest study are Georgia, with a 93% piracy rate, followed by Zimbabwe (91%), Bangladesh (90%), Moldova (90%), and Yemen (90%). Countries with the lowest piracy rates include the United States, Japan, and Luxembourg, all with 20%. Here are the top ten countries with the highest and lowest piracy rates:
|HIGHEST PIRACY||LOWEST PIRACY|
So even among the countries with best records a fifth to a quarter of all software is pirated. And these percentages don't tell the story of which countries are responsible for the highest total dollar amount of pirated software: Leading the pack are the United States, with $9.5 billion and China, with $7.8 billion. China has a piracy rate of 78%. Here are the top countries in terms of dollar value of pirated software:
|COUNTRY||COMMERCIAL VALUE $M|
Surprisingly, the piracy rates for 2010 actually dropped in 51 of the 116 geographies studied in 2010 and went up in only 15. "But, crucially," reads the report, "regional average rates rose by 1 point in both Asia-Paciﬁc and Latin America—two economic hotbeds of the developing world." The BSA report notes that, "at the current pace, it would take until 2049 for the average piracy rate among today's emerging economies (69 percent) to fall in line with that of today's developed economies (26 percent)."
Numbers like that make staunching the enormous level of software piracy worldwide a daunting proposition. Surprisingly, though, the BSA study also surveyed people worldwide and found that the vast majority actually supported intellectual property rights: "Seven PC users in 10 support paying innovators for their creations to promote more technology advances, while just three in 10 say no company or individual should control technologies that could beneﬁt the rest of society." So at least there's one glint of hope in an otherwise bleak picture.