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Rough Waters Ahead for Software Pirates

By Kenneth Hess (Send Email)
Posted Oct 15, 2009


We all know software is expensive. New copy of Windows are priced from $200 to $300; the latest office suite will set you back more than $400; accounting software retails from $200 to $1,000 or more; and your favorite design software is on sale for just over $600. And these are all per copy prices. It's easy to see how for even a small number of computers, the software tally quickly approaches the price of a new car. If you need specialty software or have more computers, the costs soar to near CEO salary levels. It doesn't take a mental giant to figure out that software is a major business expense. Large companies negotiate special volume license deals to compensate for the high price of software licensing, but what about smaller companies that have to pay retail or near-retail prices for their software?

Cover Your Assets: If you think a few hours of unscheduled downtime is bad for your business, compare that to a few years of down time for software piracy.

The price of a fully loaded, ready-to-count-beans accounting computer might creep into the $5,000 range. In engineering companies, a single design computer easily nudges the $15,000 mark. Startup companies must face these high prices prior to doing any business. Is it any wonder that with those prices, and our sluggish economy, people make illegal copies of software? The operative word in that sentence is illegal. Piracy is a global problem to the tune of more than $50 billion in lost revenue per year. $50 billion could put a lot of people back to work.

To find out more about software piracy, its effect on your business and the global economy, I had the pleasure of conducting an interview on this very subject with Business Software Alliance (BSA) Compliance Marketing Director, Rodger Correa for the background on this article. The BSA is an organization created to protect the copyrights of its members. The BSA represents more than 80 percent of the world's commercial software development companies, so it's likely that if you're pirating software, it's from one of its members.

Although often criticized for its tactics, the BSA has a job to do: Prevent copyright infringement. It carries out its charter through its web site, its many education programs, investigating piracy and enforcing copyright law.

Battening Down the Hatches

Did you know that, as a business owner, you are responsible if an employee installs unlicensed software on your computers? The definition of pirated software might surprise you. It is the copying, distributing, selling, sharing or giving of software without payment to the company that owns the software. This means that if you hand someone a CD or DVD and he installs the software, you've both committed a crime. The crime is federal copyright violation, and it carries stiff penalties. For each violation, the penalty can reach $150,000. That means each unlicensed copy of that expensive office suite won't cost you $400 — instead it will cost you $400 plus a fine of up to $150,000. Realistically, a licensed copy costs much less than the fine and needs no explanation, excuse or investigation. And no one ever paid a fine for having legitimate copies of licensed software.

Your best protection against accidental or malicious piracy is to have an explicit software policy in place that each employee reads, agrees to and signs. Periodic software audits prevent any violations of the policy and maintains an inventory of licensed products.

Preserving Those Pieces of Eight

If you think your company's good name and bank account are more valuable than the risk of making illegal copies of software, you're right. Piracy's most egregious violators end up on the BSA's "faces" page where their schemes and faces are laid out for all to see and hear. You'll also find out how much jail time and money they owe.

So if $150,000 is too much to pay for a copy of Microsoft Office, how do you protect yourself? The BSA has a page of software audit tools to assist you in finding unlicensed software on your systems. A monthly software audit keeps your systems free of pirated software and gives you the confidence that your systems will not suffer from malware-infested programs.

Keeping Shipshape

Beware of software that ordinarily costs several hundred dollars to buy that you're seeing discounted 90 percent or more. There are black market sellers that mass produce legitimate software onto inexpensive media. Fortunately, their cheesy web sites and shoddy media make them easy to spot. The more difficult to spot scams are the ones called "gray market," where you receive a legitimate copy of the software, including a license, for that same deep discount price. The transaction and software seem legitimate but aren't because that software was originally bundled with a system or part of a volume license deal. The software is legitimate, but the license is not.

Buy your software from reputable dealers that offer legitimate software with official licenses. If you have any questions about your software's license, contact the software company or the BSA. Remember, it isn't the media (the CD or DVD) that makes the software genuine, it's the license.

Protect your assets and your hard-earned booty with proper licensing. Keep track of where you purchased your software, and store copies of your licenses and software media in a fireproof cabinet. Most software licenses allow you to make backup or working copies of media so that you can preserve the integrity of the originals.

Pirates aren't the swashbuckling heroes that you see at the movie theater, and Jack Sparrow will not rescue you in the nick of time. Piracy is a crime-on the high seas or on the 23rd floor corner office — always has been, always will be.

Do you have any good piracy stories to tell? Write back and let us know.

Author's note: The United States has the world's lowest software piracy rate, estimated at 20 percent.

Ken Hess is a freelance writer who writes on a variety of open source topics including Linux, databases, and virtualization. He is also the coauthor of Practical Virtualization Solutions, which is scheduled for publication in October 2009. You may reach him through his web site at http://www.kenhess.com.

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