Software piracy a booming Net trade

July 23, 1998 - Their names are often obscure — Zorgok’s Lair, the Legion of Krypt, XorcistX — and transient, changing without warning. They don’t do public relations, many don’t make money and their ‘proprietors’ are often still in their teens. The business of online software piracy has increased dramatically in recent years, vexing legitimate software makers.

“WHAT DO YOU want to pirate today?” reads a banner at one of the many sites that can be found by nearly any user doing a basic Internet search for the word ‘warez,’ the online term for unlicensed programs.

“The Internet lends itself to piracy,” said Peter Beruk, director of anti-piracy for the Software Publishers Association, a trade group based in Washington, D.C. “You can go anywhere you want, buy anything you want, and steal anything you want.”

The Internet, too, has fostered the demand for cheap software and the development of high-speed modems capable of quickly downloading large programs.

Written in a variety of languages, including Russian, Vietnamese and German, some sites provide software for free or trade while others charge a fee.

INDUSTRY LOSSES

According to the software industry, piracy is not only a violation of copyright laws but a crime that costs manufacturers millions annually in lost revenue.

A study published in June by the Business Software Alliance, which represents software vendors, and the Software Publishers Association, said the industry loses more than $11.4 billion a year worldwide to piracy. Although the group estimates that over 25 percent of software applications in the U.S. are pirated, the problem is far worse in developing areas of the world such as Southeast Asia and Eastern Europe, where piracy rates are said to hover as high as 95 percent or more of all applications in use.

“You’ll see just about every program that’s popular being offered and downloaded on the Internet,” said Bob Kruger, vice president of enforcement for the Business Software Alliance. “These people don’t appreciate the fact that what they’re doing inflicts injury on people. They think it’s a victimless crime, but it’s not.”

DEBATE OVER COSTS

While software piracy undoubtedly costs manufacturers revenue, some argue the figures are overblown. They claim the statistics are inaccurate because they discount the fact that many people who use pirated software would not have purchased a licensed copy in the first place.

“The numbers are very misleading,” said Jon Noring, founder of Omnimedia Digital Publishing, an online distributor of electronic books. “They’re right if you simply multiply the number of pirated copies by their selling cost. But the issue is really that in a piracy free world, what percentage of those copies would actually have been bought?”

Two years ago, Noring himself was the target of a software pirate who cracked his security code for the Kama Sutra, one of the more popular books offered by Noring’s company, and made it available over the Internet for free. Omnimedia charges a fee to download the complete copy of a book. At first, Noring was concerned the breach would impact sales; two years later, he said he’s seen “absolutely no net effect whatsoever.”

Noring argues that some users, including many in developing countries, cannot afford to buy licensed software and would not have purchased it if they didn’t have access to a pirated copy.

As one user from Singapore wrote in an online newsgroup, “Many Singaporeans support software piracy. Singaporeans know that it is morally wrong…so there’s no need to educate us. It’s those software companies that need to be educated. If they lowered their software prices, Singaporeans would be willing to buy the originals. Anything more than $30 for the original is daylight robbery for us.”

For many users, especially teens and college students, collecting pirated software has become a compulsive hobby. While no software pirates contacted by MSNBC would comment on the subject, Noring says many do it for fun. “They get a rush and an excitement out of it,” he said. “Their disks are piled with the stuff but it’s not on their computers. They just have it. It’s like collecting the whole set or something.”

COPYRIGHT VIOLATION

Regardless of the debate over costs or the reasons why people use unlicensed programs, software piracy remains a crime under federal copyright laws. The U.S. Copyright Act gives the owner of a copyright the exclusive right to control the reproduction or distribution of a particular work. Anyone who distributes the work without permission of the owner violates the law and is subject to damage awards up to $100,000 per copyrighted work, or actual damages suffered by the owner if they can be proven.

“If somebody has one piece of software posted on a Web site, that may not warrant a civil suit or referral for criminal prosecution,” said Kruger. “But if you have somebody running a mail order business and advertising on the Internet, we want to have that site shut down and the operators prosecuted.”

In order to counter the efforts of online pirates, investigators try to identify a particular site’s Internet service provider and have the site disconnected. Often the sites provide their ISPs with false names and addresses, making it difficult, if not impossible, to track them down.

HARM TO USERS?

Although supporters of piracy may argue it’s harmless and actually does people a favor, others point out that piracy hurts not just manufacturers but also users who download it.

“There are a number of benefits you get when you purchase legal software,” said Kruger. “You get guarantees that it’s virus free and will operate as it’s supposed to. You also get technical support, a manual and access to upgrades. If you download it from the Internet, you get none of these things.”

In addition, pirates need a place to store their ‘warez’ and often surreptitiously hijack third party servers to use as storage sites.

This problem is especially acute at universities. According to Beruk, software pirates are most commonly high school or college students with access to servers where they can store large quantities of programs. Campus servers often become the unwitting hosts for bundles of illegal software.

One of the more dramatic cases Beruk has been involved in was at Andrews University, a small liberal arts college in Michigan. Campus tech support noticed that one of the university’s main servers was running at close to 90 percent capacity.

After removing two ‘warez’ sites, the server’s capacity was back down to 20 percent.

“Those two sites by two college students were taking up 70 percent of the university’s server,” said Beruk. “That tells you how much software is being uploaded and downloaded on a regular basis. It tells you just how big the amount of traffic in illegal software really is.”