By Mark Cox
April 27, 2011 (eChannelLine) -- The Business Software Alliance (BSA) has been a long time stalwart in the fight against software piracy, and in their 2010 BSA-IDC "Piracy Impact Study: The Economic Benefits of Reducing Software Piracy," they maintained a 10% reduction in software piracy over a four-year period in the 42 countries studied would produce $142 billion in new economic activity, generate $32 billion in new tax revenues, and add 500,000 new high-tech jobs. Yet recently Robert J. Scott, Managing Partner of Scott & Scott, LLP, said that the study was misleading and inaccurate, and provides a skewed basis for understanding piracy and its impact.
Full disclosure here. Scott & Scott is not exactly a neutral observer on this topic. "They have built an entire practise on defending companies that we are in settlement conversations with," said Rodger Correa, BSA's compliance marketing director. But what exactly is Scott's case? And can he support it?
"The principal problem is the leap of logic that translates into an economic leap, that there is a direct correlation between the unlicensed software that is installed, and revenue," Scott said. "There is a fallacy in assuming all unlicensed software would be paid for buying the same product at the full retail price," noting that users could select a different product, which could well be cheaper or even free, or not use anything at all.
Correa said they don't disagree with this premise, but said the costs are still real.
"Every piece of pirated software does have an impact on someone else out there," he said. He said that IDC determines the metrics used in the study, not the BSA, and that they are complex studies with many multivariants.
"It's not something done up in the course of an afternoon," Correa said. "No one has come to us and said there's a better way to calculate it. IDC now uses 44 variables, and obviously it could be 47 or 40 or however many. Numbers are an approximation, just like GDP is an approximation."
The BSA report also says more than 4 out of 10 installed software programs are illegal worldwide (its 2 of 10 and the U.S., and 3 of 10 in Canada). Scott says that's highly misleading.
"I've represented over 200 companies in this, and there's simply no evidence of widespread piracy," Scott said. "Companies get in trouble for not keeping good records, or not being aware of complex licensing rules, like upgrade rights or downgrade rights. There are certainly examples of companies getting caught, but that's the minority of the cases I've been involved in. The BSA goes after primarily companies with a hundred computers or less, who have small 1-2 man IT shops, where the owners often have no idea or knowledge what's going on in IT, and have not been fully informed about the licensing by IT people."
The BSA's Correa says that companies can avoid these pitfalls by being aware of what's going on in their companies.
"If piracy rates in the US and Canada are 20 US and 29 percent, that means that 80 and 70 percent did manage to get it right," he said. "Most companies do have someone who specializes in licensing. We just ask companies to take some time and do their due diligence. Some don't, and the result is that not only underlicensing but overlicensing is common, where companies own licenses for software they don't use."
Correa said there is a SAM (software asset management) Advantage online program publicly available, that teaches companies how to manage their software, and that Gartner says that an adequately implemented program can reduce costs by 30%.
"The companies we deal with typically have someone in charge of IT, these are not one man companies. But they just don't give it the priorities," he said.
Scott says the complexity of licensing makes it impossible for most smaller companies to do this effectively, and that a key issue here is that it is BSA's own members are responsible for the complexity.
"This idea that 80% have it figured out I don't accept," he said. "I don't believe 80% have full understanding of licensing. It's a full time job to be an expert in Microsoft licensing with server and desktop rules and all the different options they offer."
Scott thinks the current licensing model needs to be rethought, rather than defended by the BSA.
"The current model is an extremely complex licensing model, and the industry and its members themselves have an obligation to do more to ease that burden, rather than just come after people and tell them to prove they are innocent," he said. "Instead of sending lawyers and paying reward money, the industry needs to find a simpler model at a lower cost, rather than relying on people not having the documentation to prove their innocence."
Correa's response was interesting in that he didn't deny that software licensing could be complex, only that it was not the BSA's role as an association to deal with that.
"They certainly are not the first people to say that software licensing is too complex, and there might very well might be some grounds for that, but at the same time. It has never been our policy to involve ourselves in the day to day business of our members," he said. "We represent the industry as a whole on issues like copyright and piracy."
The BSA 2011 report is reportedly not far from release. And it's likely that all these issues will then be revisited again.