Reseller News

Beating the bootleggers

  • Chris Bell (Unknown Publication)
  • 16 April, 2009 22:00

Writing a news story for this issue about three resellers settling with Microsoft after selling counterfeit versions of the company’s software got me thinking. My research took me beyond the confines of the cases in the news.

In its campaign to make public its current round of legal action, Microsoft is recycling research from the Business Software Alliance (BSA) and IDC from 2007, claiming 22 percent of software used in New Zealand is either non-genuine or used in violation of licensing agreements, and that it costs the New Zealand economy US$55 million in lost revenue.

Let’s be clear that the BSA is a trade group lobbying on behalf of the industry and has a vested interest in circulating numbers designed to substantiate its cause. It has been accused of aggressive tactics and employing propaganda to debunk so-called myths about piracy. But the same might be said of its opponents; for example, the Free Software Foundation (FSF), which rather pathetically complains that the word piracy unfairly equates copyright violators with murderers and thieves.

The truth lies somewhere in between the positions taken by these organisations. Because while piracy may be morally reprehensible, it’s disingenuous for industry bodies and vendors to claim it equates to billions of dollars in lost revenue. It’s unlikely that many (if any) of the people who use pirated software would otherwise pay for it. It’s the same flawed maths the music industry used in its bid to make people feel sorry for it when illegally copied MP3 files began to outnumber CDs sold through the stores. Neither example endears the public to the cause of industries with serious image problems.

The pirates have some high-profile defenders, although that alone shouldn’t serve to legitimise their actions. APC magazine quoted the president of Romania, Traian Basescu, saying “piracy helped the young generation discover computers. It set off the development of the IT industry in Romania”. In an effort to mitigate some of the lesser by-products of piracy, some commentators say improvements in the quality of free software helps to decrease the use of illegal copies and unlicensed applications.

A July article in the Economist last year (‘Look for the silver lining’) says Microsoft confesses that tolerating piracy boosts its long-term revenue because using pirated versions of its software turns illicit users into converts who subsequently buy Microsoft’s products. The article supports this fanciful-sounding claim by saying Microsoft admits piracy of its Windows operating system has helped to give it a 90 percent market share in China. It even cites Bill Gates, from a Fortune article, saying, “It’s easier for our software to compete with Linux when there’s piracy than when there’s not.”

The real problem with the way Microsoft treats violators is not that it’s attempting to prosecute them. No one would seriously argue that it’s wrong for software companies to protect their intellectual property. But when industry giants cite numbers such as those touted by the BSA, it calls their credibility — and therefore their motives — into question. A draft government report for the Australian Attorney General’s department described the BSA’s piracy statistics as “self-serving hyperbole” and “unverified and epistemologically unreliable”, as was reported in the Australian IT last year.

Even the Economist — hardly a bastion of radicalism when it comes to the business models championed by the FSF — concedes a certain amount of stealing is going to happen anyway. “The best way to profit from pirates is to copy them”, it quotes the author of the book The Pirate’s Dilemma, Matt Mason, as saying. A case in point was the composer Frank Zappa who, sick of his live concerts being recorded by bootleggers, copied pirated recordings then officially released them on his own record label as a series pragmatically called ‘Beat The Boots’. It saved him recording his concerts and cut off the pirates’ revenue stream by adding his stamp of legitimacy. The fans loved it.

Microsoft could use some of that love. It’s trying to spread it by pointing out that for every dollar it loses from software piracy, New Zealand resellers lose seven. It’s an emotive argument but, again, difficult if not impossible to verify.

If Microsoft’s main differentiation really were the absence of authentication on the bogus versions, it would still profit more from tolerating piracy than from clamping down on it. The truth is that the vendor has a much stronger card up its sleeve. People might switch to open source alternatives or use unlicensed copies, but Microsoft has the infrastructure to convince everyday users of the long-term folly of doing so.

Software, as we know, doesn’t always work as advertised and when it doesn’t, customers generally seek help. Microsoft should be playing up its existing strengths — online support that could potentially be provided via a massive installed base, as well as the maturity of its desktop products and breadth of its offerings — instead of trying to convince the industry that it’s being hard done by.