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Software Piracy Cut Could Add Billions to Global Economy

19 October 2012

Software Piracy Cut Could Add Billions to Global Economy

Reducing software piracy by 10 percentage points in four years would inject more than US$142 billion into the global economy, create nearly 500,000 new jobs and generate close to US$32 billion in new tax revenues for governments, according to a new study from the Business Software Alliance (BSA) and the market research firm IDC. Moreover, the groups said, achieving the 10-point reduction in piracy in the first two years of the same four-year period could boost the economic benefits another 36%.

The United States, the world’s largest software market, could add more than 25,000 jobs, nearly US$38 billion in new economic activity and US$6.1 billion in tax revenues by reducing piracy 10 points in four years. And it could boost the new spending and tax revenues another 38% by achieving the piracy reduction in half the time.

Currently, more than four out of ten software programs installed on personal computers around the world are pirated. “Most of this unauthorized software use occurs in otherwise legal businesses that buy too few software licenses for their employees’ computers,” the study says. “In other cases, criminal enterprises sell counterfeit copies of software programs at cut-rate prices.”

Cutting the prevalence of this theft sends ripples of stimulus through the economy, the new study shows, by generating new spending on related information technology (IT) services and distribution. That spending, in turn, creates jobs and delivers new tax revenues – and the faster the reduction, the greater these returns.

“Now more than ever, governments must act quickly to address PC software theft within their borders,” said BSA president and CEO Robert Holleyman. “At a time when economies around the world are emerging from one of the worst recessions in decades, this study clearly shows that aggressively fighting software piracy today means greater economic benefits tomorrow – for the entire global economy, not just the software industry.”

The new study, The Economic Benefits of Reducing Software Piracy, documents the economic impact of reducing PC software piracy rates in 42 countries.It finds that more than 80% of the benefits associated with lowering software piracy accrue to local economies around the world.

The study also finds that the economic benefits are compounded by reducing software theft at a faster rate. For example, the “BRIC” markets (Brazil, Russia, India and China) could add nearly 328,000 new jobs, almost US$29 billion in new spending and more than US$6 billion in new taxes by reducing piracy 10 points in four years. They could boost the spending and taxes another 32% if they achieve the reduction in two years.

Bringing down a country’s piracy rate 10 points in two years is ambitious, but achievable in many markets. Russia did it between 2005 and 2007, for example. And Iceland and Ukraine have both scored 5-point drops in a single year. But no matter what the piracy reduction or the time period over which it’s achieved, front-loading the gain compounds the economic benefits, providing incentive to address software piracy sooner rather than later, the study said.

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