Estimations of software piracy rates worldwide and inside Russia

In May 2009, the results of the Sixth Annual BSA and IDC Global Software Piracy Study were published, which had been conducted by the US Business Software Alliance (BSA) in cooperation with the International Data Corporation (IDC). Since 2004, the Alliance has been monitoring, on an annual basis, the rates of piracy and the scope of associated losses in individual countries and across regions.

According to the BSA’s estimations, between 2004 and 2008 the share of personal computer (PC) software piracy in Russia dramatically dropped – fr om 87 to 68 %. As a result, in 2008, among the 110 countries under study the Russian Federation shared the 49th – 53rd places with Bulgaria, Brunei, India and Macedonia (where this index was recorded at the same level), while in 2004 it had been seventhh in this rating. For a second year in a row, this country has been demonstrating the most rapid decline of the piracy rate in the world – by 7 % and 5 % in 2007 and 2008 respectively. It is important that these data have been recorded by an international organization which is strongly influenced by US software companies.

As in the studies previously conducted by the BSA and the IDC, the experts named the main factors responsible for the declining rate of software piracy in Russia, the most important among these being the large-scale purchases of licensed software products for government agencies, improvement of legislation in the sphere of protection of intellectual property rights, the activity of copyright holder associations, and the growing efficiency of law-enforcement agencies.

Despite the dramatic decline of the overall piracy rate in this country, with the most noticeable results having been achieved with regard to the rate of PC software piracy, in the US Trade Representative’s Special 301 Report released on 30 April 2009 it is stated that Russia remains on the Priority Watch List because, according to US estimations, the intellectual property rights of US IPR holders are still inadequately enforced there. The US envisages introducing certain trade and economic sanctions against such countries, which may result in multi-million losses for Russian exporters and producers, because in the List Russia comes second after China.

The criteria applied by the US Trade Representative in placing Russia in the “priority watch” category are by no means linked directly to the software piracy rates - they have to do with “double standards”. This circumstance has been indirectly testified to by the example of Ukraine, where the PC software piracy rate is much higher (84 %, according to the BSA) than in Russia and is declining far more slowly, but in the US Trade Representative’s Special 301 Report it is placed on the Watch List among those countries wh ere the violation of US IPR owners’ rights is less significant.

According to the Sixth Annual BSA and IDC Global Software Piracy Study, the financial losses of foreign software producers from piracy in Russia increased from 1.6 to 4.2 billion USD in the period between 2005 (8th place in the BSA’s rating) and 2008 (3rd place after the USA and China). Growth of PC software producers’ losses alongside the declining overall software piracy rates in Russia occurred due to significant expansion of the Russian IT market, as well as (in part) to the strengthening of the ruble/USD exchange rate in the period under consideration.

As stated by the BSA, the effect of the economic crisis on software piracy rates will be estimated more reliably after the new monitoring data for 2009 are released. Nevertheless, presently it can be concluded that crisis does not inevitably results in increased piracy rates with regard to every type of software products and every user category. At the same time, Russian market participants have reported diminishing sales volumes of certain licensed PC software products in 2009, which may be an indirect indication of increasing application of counterfeit products by certain users.

The proactive position of the BSA in its struggle against software piracy can largely be explained by its desire to defend and promote on the Russian market the interests of its members, among which there are some big transnational software producers. The BSA’s methodology for conducting global-scale studies involves studying the actual piracy rates among users and determining the resulting costs by treating the sales of non-licensed software products directly as losses incurred by IPR owners and by public budgets.

N. P. Volovik – Head of the Department for Foreign Trade,
Yu. A. Potanina – Senior Researcher, Center for Foreign Trade Studies of the ANE