4b. Advantages & Disadvantages of Piracy (Software Industry)

We have addressed the benefits and disadvantages of piracy on multimedia industry. Now, we shall further inform you about the pros and cons from the perspective of the software industry.

·        Software Industry

Piracy is not just a concern for software publishers; it also affects consumers and the economy as a whole.

Ø  Advantages

1. Many nations see software piracy as a less-expensive means of participating in the global economy, which requires advanced information technology. One can save a huge sum of money when downloading pirated software. Moreover, not all software is available at low cost. Most good software costs hundreds to thousands. So how do students afford this kind of software? How do students get their projects and assignments done without money to purchase original software? Therefore, pirated software cast significant benefits upon those who cannot afford at such great price.

Ø  Disadvantages

1. Software piracy slows the economic growth rates of developing because it discourages new software developers from entering the market and slows down the industry's ability to bring new and innovative solutions to consumers.

2. Legitimate software from these producers will not be able to compete with the cheaper pirated versions. This prevents countries from experiencing economic growth through the growth of software development as a new industry.

3. Unregulated file-sharing could reduce the appeal and quality of related industries. Software piracy stifles innovation. The cost of combating software piracy, plus lost revenues, could be spent on research and development to benefit users. That means that quality suffers. If you have no money to get better equipment, fresh people with new ideas, then how can the quality improve? The answer is: “It can’t.”

4. Downloading files illegally have a risk of viruses and Spyware! Pirated software can carry viruses or may not function at all.

5. Unlicensed users do not receive quality documentation. It also deprives consumers of the basic protections offered by properly licensed software like money-back guarantees, installation support, maintenance releases, and upgrade rebates.

6. Piracy can expose end-users to potential risks of identity theft if criminals who sell counterfeit software CDs obtain a buyer's name, address, credit card and other information during purchase. This increases identity theft risks.

Statistics
           Case 1:

Both the Software and Information Industry Association (SIIA) and the Business Software Alliance (BSA) estimate that up to 40 percent of installed business software worldwide, and 23 percent in the U.S., is illegally copied. Software theft and its related effects -- including lost jobs, wages and tax revenues -- totalled an estimated $8.7 billion in the U.S. in 2002.

Case2:

For software companies, piracy means lost in revenue, which in turn means fewer jobs, scaled-back operations and less tax for the public purse. This result in economic backlash which affects other industries, $1.37 billion in revenue was lost across the entire Australian economy. 6,100 jobs were forgone across the entire economy.

Case 3:

Economists Trisha Bezmen of South Carolina and Craig Depken of Texas found that countries with greater rates of software piracy have lower rates of economic development.

Statistics

As mentioned in The Straits Times newspaper in Singapore reported in May, 2010, software piracy cost technology firms around the world more than $50 billion in 2009. The newspaper cited an annual report by the Business Software Alliance as the source of the information.

With all these pros and cons over piracy, it is hard to determine whether piracy is beneficial or detrimental on the whole.