Business Software Alliance (BSA) Piracy Impact Study Inflates Effect on Economic Growth

SOUTHLAKE, Texas, March 22, 2011 /PRNewswire/ -- The Business Software Alliance (BSA) revenue numbers reported in the 2010 BSA-IDC "Piracy Impact Study: The Economic Benefits of Reducing Software Piracy" appear to be inflated. Software audit defense firm Scott & Scott, LLP could not find support in either the current or 2009 Study by IDC for the conclusions the BSA reached regarding software piracy's economic impact.

"The economic impact of reducing software piracy is grossly exaggerated both in revenue and employment numbers," said Robert J. Scott, Managing Partner of Scott & Scott, LLP.

The latest study projects that 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. Scott notes that the tax revenue is $8 billion higher, the GDP contribution is $1 billion higher, and the number of jobs 100,000 fewer than previously cited by the BSA in its study released in January 2008.

The BSA-IDC's dollar and employment figures are based on an assumption that 100% of pirated software represents a direct loss of revenue to the software firms, and concludes that lost software revenues attributable to software piracy would be recouped dollar for dollar if piracy rates were lowered. "There is no evidence that 100% of pirated software would be replaced by a purchase of the legitimate version at full retail," Scott said.

In this same report, the BSA claims more than 4 out of 10 installed software programs are illegal, and that most illegitimate software installations occurred in otherwise legal businesses that may for example buy 10 licenses but then install the software on a 100 or 1000 PCs.

Mr. Scott says, "In our experience of handling more than 200 BSA software audits, we have not found clients intentionally purchasing 10% to 100% fewer licenses than needed. Rather, we believe that the complexity of software license agreements, lack of resources to establish costly compliance initiatives, and the BSA's $1 Million Reward Program may be strong contributors to most unintentional non-compliance."

Scott could not find documented proof of the study's conclusion that IT service and distribution firms on average lose $3.80 of revenue for every $1 of PC software sold. He asks, "What costs are being measured and how are IT services being valued?"

Software license compliance can cost large enterprises millions of dollars; smaller enterprises often face even greater costs as a percentage of revenue. Complying with the complex and ever-changing license agreements that publishers mandate requires enormous human and financial resources.

Further, business resources dedicated to compliance management are being diverted from potential business development, investments, R&D and innovation opportunities across all industries.

Scott & Scott believes that the Business Software Alliance should do more to lessen the compliance burden on American businesses, as they seek to adhere to complex license agreements and the challenging asset reconciliation process. In doing so, companies will have the resources necessary to invest in revenue-generating initiatives, as well as foster innovation that drives their businesses - and the economy.

About Scott & Scott, LLP:

Scott & Scott, LLP (http://www.scottandscottllp.com and http://www.bsadefense.com) is a boutique intellectual property and technology law firm with an emphasis on software disputes, technology transactions, brand management, and federal litigation. Our lawyers and technology professionals take a principled approach to each engagement, leveraging our experience to provide value. Our clients range from mature small businesses to publicly traded multi-national corporations who work proactively with us to creatively solve business and legal issues. We regularly work as part of a team of in-house and outside attorneys managing large-scale legal projects. We take the time to listen to a client's objectives and understand its business before developing a custom strategy and project plan designed to give the client visibility into the process and the potential outcomes.

Contact Information:

Anita Scott
800.596.6176, 214.999.2915 (direct)
[email protected]

SOURCE Scott & Scott, LLP