Contact: David Tremblay, Research Director, ext. 317
Ken Wasch, Executive Director, ext. 310
Sally Lawrence, Communications Director, ext. 320
(202) 452-1600
February 24, 1995 (Washington, DC) -- The Software Publishers Association (SPA) is releasing its latest global statistics on software piracy today to coincide with Vice President Gore's remarks before the G-7 "Information Society" Conference. The three-day meeting, which begins today in Brussels, will broadly address issues surrounding the development of the Global Information Infrastructure (GII). The SPA report details high double-digit piracy rates in countries from all regions of the world. The report serves to underscore the threat large scale intellectual property theft poses to the development of the GII. Intellectual property rights are becoming increasingly critical in international trade negotiations as well, as evidenced in the recent stance taken by the USTR on intellectual property violations in China.
The SPA statistics released today summarize 1994 global software piracy activity. In 1994, the personal computer software industry lost $8.08 billion due to illegal copying of business application software alone. The SPA estimates that just under half (49%) of the business software in use in 1994 was pirated. The estimates do not include illegal copying of operating systems, education, entertainment, or personal productivity software.
"The good news is that we see a decline of $1.9 billion in revenue losses from theft of business software from 1993," said Ken Wasch, Executive Director of the SPA. "The bad news is that drop is due entirely to declining prices of business software in country after country. Therefore, as sales volumes have increased and prices have declined, the volume of pirated units have nearly commensurably risen. Overall, the number of units pirated actually increased 14% in 1994. These figures clearly show that while some countries have shown improvement there is still a major problem in international markets."
Of the countries for which the SPA is able to estimate piracy losses, China has the highest piracy rate at 98%. Russia at 95% and Thailand at 92% are close behind. All three countries' poor records of protecting software copyrights led the SPA to cite them in its 1994 Section 301 filing with the US Trade Representative. Software industry losses to piracy in these three countries in 1994 were $187 million in China, $144 million in Russia and $55 million in Thailand.
"China, Russia, and Thailand deserve credit for enacting copyright laws that specifically protect computer programs and other software," said Wasch. "But the astronomic levels of software piracy in these countries illustrate what the SPA has learned in the US and abroad -- that the law is just the first step toward legal software use. Another crucial step is education -- teaching software users why they should not make illegal copies. We invite the governments and software users in China, Russia, and Thailand to work with us in sending that message."
Piracy losses to software publishers in Japan were $1.31 billion in 1994, higher than those seen in any country of the world. While the loss in Japan was down from $1.66 billion in 1993, this decline was largely due to price declines. The number of units of software pirated fell only 6% in Japan between 1993 and 1994.
Piracy losses in the US fell from $2.08 billion in 1993 to $1.05 billion in 1994 - a nearly 50% decline. In spite of having one of the lowest piracy rates in the world, losses in the US are among the highest, however, because of the sheer size of the US personal computer hardware and software markets.
Piracy losses in Western Europe declined sharply in 1994, falling to $1.65 billion from $3.65 billion in 1993. Once again, however, much of the drop was due to the decline in software prices from 1993 to 1994. The rate of software piracy remained at a fairly high 45% in Western Europe in 1994. Piracy losses in France amounted to $482 million in 1994, and were the highest of all countries in Western Europe. While most other Western European countries saw 10-20%+ declines in their piracy rates between 1993 and 1994, France's decline from 66% to 62% can only be called disappointing.
Results in other countries varied widely. Some countries, notably Switzerland and Finland, had among the lowest piracy rates in the world in 1994, while others, such as Spain and Portugal, had piracy rates above 70%. Of all the countries in Western Europe, the results in Italy in 1994 were the most distressing. Strong anti-piracy actions by the Italian government in early 1993 led to a much reduced piracy rate for all of 1993, and created great expectations for 1994. Unfortunately, these actions did not carry through into 1994. As a result, piracy in Italy was upin 1994, with the rate increasing from 66% to 68%. Although dollar losses in Italy fell from $283 million in 1993 to $264 million in 1994, the decline again was entirely due to price declines. The number of applications pirated in Italy rose 4% between 1993 and 1994.
Of the eleven Asia/Pacific Rim markets for which SPA is able to develop piracy estimates, only two (Australia and New Zealand) had piracy rates below 50% in 1994. The software industry lost $2.03 billion to pirates in this region in 1994, as the overall piracy rate was 62%. While this was a 25% decline from the $2.72 billion loss (75% rate) of 1993, the decline was again due to the fall of application prices. The number of applications pirated increased by 1%.
Even in a region with many problem markets, China still stands out. Ninety-eight percent of the business applications software in use in China in 1994 was pirated.
"The Chinese government's unwillingness to take necessary actions to protect intellectual property has prompted the US government to cite China under Section 301 trade sanctions," said Mark Traphagen, Counsel for the SPA. "We fully support the administration's firm stance against China and hope that it will force the authorities in China to take steps to remedy their well-documented piracy and counterfeit problem."
SPA estimates are based on hardware sales figures from International Data Corporation, and on SPA and other industry software sales data.
"The SPA estimates now consider business applications used on home-based personal computers," said SPA Research Director David Tremblay. "In previous years, our piracy analysis did not consider the purchase and use of software on home computers. We could no longer ignore this use. In many markets, home computers accounted for 30 to 40% of personal computer sales. The addition of these PCs into the analysis is why our 1993 piracy estimates were recently revised upward from $7.45 billion to the current $9.96 billion estimate."
For a more complete overview of the losses and how they are estimated, see the attachments.
The Software Publishers Association is the principal trade association of the PC software industry. Its 1,150 members represent the leading publishers in the business, consumer, and education markets. The SPA has offices in Washington, DC, and Paris, France. SPA press releases are available on-line through CompuServe (GO:SPAFORUM), and from SPA's faxback service at 800 637-6823.
Piracy Rates Piracy Losses
(millions)
1993 1994 1993 1994
ASIA
Australia 64% 39% $235.1 $96.1
New Zealand 66% 34% $29.7 $8.1
China 99% 98% $317.6 $187.2
Hong Kong 78% 59% $50.3 $44.2
Japan 71% 56% $1,657.3 $1,309.3
Korea 86% 82% $189.0 $184.6
India & Pakistan 93% 87% $60.3 $54.3
Malaysia 86% 76% $53.4 $36.9
Singapore N/A 55% N/A $20.7
Taiwan 78% 62% $70.9 $36.4
Thailand 92% 92% $41.1 $54.8
TOTAL ASIA& PACIFIC 75% 62% $2,717.0 $2,032.6
WESTERN EUROPE
Netherlands 78% 56% $303.7 $141.5
Belgium/Luxemb. 65% 57% $99.6 $63.1
France 66% 62% $683.2 $481.7
Germany & Austria 51% 31% $721.3 $233.6
Spain 85% 76% $283.7 $137.8
Portugal 85% 71% $81.9 $42.1
Italy 66% 68% $283.1 $263.9
Denmark 69% 31% $114.3 $23.1
Finland 76% 26% $58.0 $9.5
Norway/Iceland 79% 52% $118.0 $43.7
Sweden 66% 52% $177.9 $113.8
Switzerland 62% 26% $155.5 $38.9
UK/Ireland 55% 31% $599.9 $236.8
TOTAL W. EUROPE 63% 45% $3,648.7 $1,651.1
LATIN & SOUTH AMERICA
Brazil 88% 74% $213.7 $161.1
Mexico 84% 67% $228.1 $95.2
Other 76% 58% $164.6 $105.5
TOTAL LATIN/SO. AMERICA 83% 66% $606.4 $361.8
US 40% 25% $2,077.1 $1,045.5
Canada 46% 26% $194.1 $83.0
TOTAL US/CANADA 41% 25% $2,271.2 $1,128.5
E. EUROPE & REST-OF-WORLD
Czech & Slovak N/A 84% N/A $76.9
Republics
Hungary N/A 83% N/A $38.9
Poland N/A 81% N/A $50.6
Russia N/A 95% N/A $144.5
Israel 93% 82% $58.5 $33.9
South Africa N/A 33% N/A $26.5
Other Rest of World 80% 95% $719.2 $2,529.9
WORLDWIDE TOTAL 57% 49% $9,962.5 $8,075.1
SPA's piracy loss methodology is based on comparing the number of personal computers sold in a year with the number of applications sold. Knowing the number of personal computers purchased in a year, and the average number of applications used on a PC will give the number of applications being used. Comparing that with the number of applications purchased will give the number pirated.
SPA made one change in its methodology this year, extending it to consider the use of business applications on personal computers in the home. Within the analysis, separate estimates are made for the amount of business software used in the home and business settings. The estimates are then totaled and compared with the amount of software sold.
We use four sets of data:
(SPA and member research and industry sources)
One assumption:
The analysis: