Do People Pirate Software Because It Is Expensive?

Why do people pirate software? You might think it would be because they can't afford it. To test this theory, I did a little research and found that cost of software did have a lot to do with it -- but that was not the whole story.

In a study done of several countries*, the relative cost of software is compared to the piracy rate in that country. Relative cost is defined as the cost relative to monthly earnings (gross domestic product per capita, to be more exact). In Vietnam (which has the highest piracy rate of any country at 94%), that's the same as spending 16 months of gross domestic product/capita -- in other words, it would be like an American spending over $48,000 for Office and Windows XP!

Piracy rate is based on data by the Business Software Alliance (BSA).

Curious to see if there was a relationship beyond that example, I plotted the data from the report:

(click to see graph)

While in general the lower the relative cost, the less the incidence of piracy, this is not always the case. It's true that in the well-off US, where software costs little compared to what people earn, piracy rates stand low at 25%. In poor Nigeria, the same software purchase feels like over $60,000 and the piracy rate shoots up to 71%. But drawing a straight line between the two ignores significant exceptions that suggest other factors at play. For example, in oil-rich Bahrain and Kuwait, the same software feels like a mere (!)  $1,621 and $1,231 respectively but the piracy rates are still among the highest (over 75%). Could it be that in some countries piracy laws, if they even they exist, are not enforced? This could lead to a culture of piracy where the norm is pirated software and someone who pays full price is seen as a sucker.

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*Ghosh, Rishab Aiyer, License Fees and GDP per Capita: the Case for Open Source in Developing Countries, First Monday, November 2003

Comments

[Tim Sheridan]

A friend of mine is currently creating a web based cad application. Is there a market for web based cad products opposed to buying a cad software application?

[Mike Ahearn]

I have worked for some large software manufacturers in the United States. It is my opinion that piracy exists simply because it is very difficult to get access to the software technology. In fact, I sold a 7.6 million dollar deal to a very large oil and gas company and my company struggled providing our customer their software licenses. The concept of selling perpetual software licenses is a dying business model. Web services are the way of the future! Pay by the drink.

Mike

[Mark]

My family is entertaining an exchange student from Brazil during this school year. It is as you described, "piracy laws are not enforced". He laughed a tells me that I am being "ripped off" when I subscribe to Napster2Go and fill up my MP3 players for $15/mo. He says that all software, music, and movies are pirated; either via internet or merchants who sell burned copies for as little as $2US. He also tells me that technology is very expensive (an iPod that sells for $250 here sells for $1200US in Brazil).

In Malaysia, I read that their government is asking MS to remove the anti-piracy measures they recently deployed because it is "embarrassing" for a businessman in Malaysia to show a presentation while a "tattoo" on the screen reads, "This Windows OS may be counterfeit".

It is a global problem with no perfect solution.

[ralphg]

I see different software packages having different values.

I was happy to pay $25 to WinZip, $60 to Eudora email, $40 to ZoneAlarm, and so on, because I use them on a daily basis.

OTOH, I do try to get the software legally for as cheaply as possible. For instance, I needed to buy PageMaker about 12 years ago. Adobe had a competitive upgrade special for Microsoft DTP software. So I bought the MS software just to get the upgrade price, the total of which was still less than half the retail price of PageMaker.

OTOH, I get really ticked off when I invest in software (to use the marketing term), and then the developer orphans it, such as PageMill and PageMaker, both from Adobe.