Tuesday, September 22, 2009

Software piracy: Fighting the pirates

Over the last 25 years, Pakistan has risen to become a global hub of audio, video and software piracy. International piracy watchdogs currently rank the country in the world's top 10 pirate nations. Piracy in Pakistan causes a loss off 2.7 billion dollars to the international firms especially since the majority of CDs / DVDs worldwide are exported via Pakistan.

According to Business Software Alliance—a trade group representing world’s largest software makers—currently the piracy rate in Pakistan in software alone hovers around 86 per cent. This is an increase of two per cent from previous year and has resulted in a loss of 159 million US dollars to Pakistan’s economy. There are some caveats in this report, since it automatically assumes that everyone who buys a CD worth Rs25 will buy the original software at 100 times the pirated price. The report also doesn’t account for the fact that piracy generates around 27 million US dollars for the domestic markets including jobs. However, the findings cannot be taken lightly.

In an environment which is highly prone to counterfeit or pirated software and content, the local companies especially those which are software-based are unable to compete on a level playing field. This lack of opportunity prevents them from competing locally and also in the international arena, which can pull much required investments in the country. Content firms also refuse to invest money in productions, citing fear of piracy. Piracy also results in huge losses not only to legitimate businesses, but also to the national exchequer in terms of lost taxes and duties. IDC, an international research company, reports that the economic benefits of lowering piracy in Pakistan by 10 points will deliver 11,700 new jobs, 23 million US dollars in tax revenue, and 160 million US dollars in economic growth through software alone.

In the IT Competitiveness Study by Economist Intelligence Unit in 2008 (sponsored by the BSA), ‘How technology sectors grow; benchmarking IT industry competitiveness 2008’, Pakistan ranked 62nd in competitiveness. It scored lowest on critical growth areas such as IT infrastructure, the research and development environment and legal environment.

Fortunately, efforts have been made to fight piracy. The government sector has taken some steps over the years to legalise government use of software and software procurement rules are in place to ensure that legitimate software prices are quoted with tender offers to supply hardware. Yet, more needs to be done.

For starters, the chief optical disc piracy problem in Pakistan involves the burning of pirate content onto recordable CD-Rs and DVD-Rs. This is despite the near eradication of factory-produced discs in Pakistan after 2005’s enforcement activities.

Copyright cases are also marred by procedural hurdles such as excessive documentary requirements and delays. The minimum number of criminal prosecutions and the low level of fines when cases do proceed to conclusion results in non-deterrence in the Pakistani market. In fact, the cases against optical disc manufacturing pirates who were arrested years ago remain pending.

It is well known that acquiring licensed software in Pakistan is a headache. There are no official channels (especially in retail) through which people can acquire genuine software. There is no proper support by major international firms (beyond liaison firms) to help those users who do acquire them (activating a licensed key requires calling an international number). Increasingly, many shops in Karachi are selling original software; the retailers buy them from Dubai and Singapore in bulk and resell them here. This is illegal under the Eula. So going legitimate is almost impossible.

Resource problems also occur. Checking piracy by raiding DVD shops would take the battle to every nook and corner of the country. No government can be expected to provide the resources or have the will for such a crackdown, nor are firms providing impetus for this undertaking.

Another interesting aspect is the rise in popularity of second-hand PCs in Pakistan. A large majority people buy second-hand machines which have been disposed of in the West. Most of these machines come with a pre-installed OS (usually Windows), along with a sticker of the original product key. They sometimes even have the cubicle number and the company they were in.

So when the machine running a pirated version of an operating system already has a license, the piracy issue is no longer so clear cut. Microsoft Pakistan claims that such licenses are ‘expired’ and have offered original licenses for these ‘secondary PCs’ for around Rs1,200.

Cost to consumer, however, remains a dominant reason why piracy exists. Not that the OEMs haven’t tried giving alternatives. Trade discounts exist on virtually every licensed software in Pakistan; some are actually huge (Rs990 for a popular legitimate antivirus software retailing for Rs4,200 on the official site).

On the consumer side, a Starter Edition of Windows comes for Rs2,800, while a Students and Home Users version of Office (three installations) costs about Rs8000. This is still high compared to markets like Thailand where both Microsoft Windows and Office together are available for 40 US dollars. However, it is a step in the right direction. Bizspark is another Microsoft’s initiative that provides technology startups with free software through MSDN subscriptions. This programme is for companies that can’t afford paid software and want to use Microsoft technologies legally.

Subscription-based licenses (also called multi-user licensing), which can provide shared access as well as decrease the price to the consumer by a huge gap also exist. However, they have yet to be explored by commercial entities and education of the consumer.

Piracy is a growing threat to our nation and it is high time that people need to be educated that it is a crime and that it is threatening us on multiple levels. Unless we change our mindsets, this cheap alternative will prove to be very expensive in the long run.


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