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Stomping piracy mandates IT hirings, increases jobs and revenues study concludes; everyone wins except the pirates

Piracy is stronger than ever in the digital world today.  Movies, books, and music -- none are safe from the reach of pirates. The media typically reports chiefly on the harmful effects of these crackdowns, but what good might they yield?  This was the angle taken by a recent study by IDC IT Markets, which investigated the possible beneficial financial impact of increased efforts to cut software piracy worldwide.

Software piracy, which Romania says is akin the foundation of its statehood, accounts for billions in lost revenue worldwide.  China has a piracy rate of 82%, while Vietnam has a piracy rate of a whopping 88%.  Reducing this piracy by only 10% would generate $40 billion USD in economic growth and $5 billion USD in tax revenue for the region, according to the IT firm helping with the study.

IDC analyst
Marcel Warmerdam states, "In a country with a high piracy rate like Vietnam, a local software entrepreneur is not going to develop software because it will be stolen. That means high piracy countries don't develop a local software sector and that's bad because software helps companies become more competitive."

The IDC study also covered 42 other countries.  If piracy was cut in these countries by 10% over the next four years, the study estimated that it would generate 600,000 high-tech jobs in the U.S. and abroad.  It would also generate
$141 billion USD in new revenue and provide $24 billion USD in new global tax revenue.

Countries could hire IT experts to help fight piracy, which would both strengthen their economy and foster a high-tech industry, the study states.  It points out that if China cut its piracy by 10%, the additional IT personnel needed would allow it to surpass the U.S. for the largest IT workforce.  It points out that if Russia did the same, it could surpass India in IT force size, possibly bringing relief to the economic-stricken nation.

On the home front, a percent reduction would lead to
32,000 new jobs and add an additional $41 billion USD to our economy.

The study does note that most of the jobs created from fighting piracy will be overseas.  Since Asia has by far the highest piracy rates, it would have the largest job influx with
435,000 new jobs stemming from the theoretical reduction.

While the study is certainly in the realm of theory, it provides an interesting perspective on the benefits of cutting piracy in a time when public sentiment remains very sympathetic towards pirates.

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Some serious questions on methodology
By killerroach on 1/24/2008 10:06:40 AM , Rating: 5
In the case of China and Russia's piracy problems, the question is whether they have the stability in their law enforcement and government systems to even do much of anything with respect to tackling the organized crime syndicates that are behind a fair share of the industrial-level piracy.

Secondly, it seems to make the assumption that these jobs will just magically come out of the ether, rather than the more accurate assumption, which is that these will impose additional costs on the people of these developing nations, some of whom may end up turning to the black market to meet more of their needs if they are unable to obtain things through legitimate channels anymore. To wit, there's the possibility of both said piracy being driven further underground as well as the possibility that these "piracy fighters" come from other sections of their economy, in effect just shuffling personnel around rather than the actual "creation" of jobs.

That being said, it seems as though, by focusing on the IT jobs that could be created, that the study is more apt to be looking at casual-level piracy, which, while potentially pervasive, lacks the scale and scope of the more organized rings, which would require more positions in law enforcement rather than IT... I get the feeling that some researcher here is trying to throw this theory of his out there to see if gullible American politicians will accept this as part of an "economic stimulus"...

RE: Some serious questions on methodology
By Master Kenobi on 1/24/2008 10:20:32 AM , Rating: 3
Well in honesty, theres nothing economic about this. China as a country (government level on down to corporate level) steals everything from competitors. This is how they have been able to achieve such a technological increase in such a short period of time.

RE: Some serious questions on methodology
By Targon on 1/24/2008 11:54:48 AM , Rating: 2
You have to love how the governments around the world have been willing to continue doing business with China even when this kind of thing is hurting the overall economy. There really should be a push to change where things are manufactured from China to other countries that respect IP laws.

By rcc on 1/24/2008 12:47:35 PM , Rating: 4
Unfortunately, the consumer wants cheap. That is almost totally incompatible with manufacture in a country that respects IP.

RE: Some serious questions on methodology
By eye smite on 1/24/2008 2:04:41 PM , Rating: 4
China may be the worst but everyone pirates. If they can't get sites ot p2p clients to fiter the content right, it deserves to be downloaded for free and become public domain. The key always driving piracy is the companies greed. I have to wonder how much piracy came down here in america when they started the $5 dvds at walmart. People see a new movie, it's $19, naw can't afford that, oh hey I can download it free over here. That was 6 yrs ago when gas was $1.21 a gallon, now days it could be worse, I don't know. I suspect though that it has reduced because of dvd prices coming down. Let's cut to the chase though, this is more greedy people whining about the money they aren't making and doing very little about it............but whining. Ok, time to get back to WOW.

RE: Some serious questions on methodology
By qwertyz on 1/24/08, Rating: 0
By rcc on 1/24/2008 7:00:05 PM , Rating: 2
Exactly which world do you live in?

What were the Windows vs. Linux stats?

RE: Some serious questions on methodology
By Talcite on 1/24/2008 1:37:25 PM , Rating: 1
Another question that this methodology raises is that it assumes you need to sell copies of software to make money.

This is not true.

Canonical gets profits by providing commercial support for its free ubuntu software. Many other companies do this too. Novell is another example where a large portion of its revenue is from providing commercial support for its open source software. Granted, they're not exactly Fortune500 companies, but they're formidable nonetheless.

Piracy is a huge problem these days, but instead of fighting it directly, software companies should change their business models and adopt open source policies. No one cares if Linux or any other open source program is 'pirated'. It's intellectually open and you only run into problems if people start charging money for things that were free in the first place. That doesn't have bearing on the topic though, because that's easy to prove and that's easy to fight.

Another point is that you also can't pirate support. The open source business model doesn't fit into conventional business models or even conventional economics models of 'incentive', but that doesn't mean it doesn't work. Perhaps it's about time someone redefined those models.

RE: Some serious questions on methodology
By rcc on 1/24/2008 2:53:35 PM , Rating: 2
The problem with your analogy is that "Canonical" doesn't actually produce anything. They depend on someone else's free work.

If MS, Apple, etc. adopted this approach, OS development would stall. After all, how many people actually need to call the developer for support?

RE: Some serious questions on methodology
By ElrondElvish on 1/25/2008 3:02:08 AM , Rating: 2
You have no idea what you're talking about.

Canonical sponsors a ton of projects financially, as do IBM, Red Hat, Novell, etc, etc. Its not just 'depending on someone else's free work', its sponsoring much of it financially and otherwise.

As for OS development stalling if others took the same approach: you mean like Linux development has stalled? Oh, thats right, not only hasn't it stalled, its thrived for seventeen years.

By rcc on 1/25/2008 1:24:17 PM , Rating: 2
Yes, I know Linux is wonderful. But, it's nowhere near where it needs to be for widespread commercial/industrial/home use, outside of some server applications.

So, you can either pay for a "mostly" complete OS, or you can get it free, and pay someone like this to make it work for you.

By Jedi2155 on 1/24/2008 3:31:33 PM , Rating: 2
I can see a flaw in the idea of shuffling of jobs. You said that the jobs will be created at the cost of personnel from other fields, but the fields that are now empty of he personnel will still need new workers.

Thus the creation of new jobs, albeit not in the area that was implied by the article. This of course assumes that the workforce is not already strained and that the workforce is growing.

Of Course!
By GaryJohnson on 1/24/2008 10:32:15 AM , Rating: 3
In a country with a high piracy rate like Vietnam, a local software entrepreneur is not going to develop software because it will be stolen.

Because what with the internets and all you can't develop your software in, for example, the U.S. or Japan and still have it stolen and pirated in Vietnam.

Oh, and rather than develop software and make some money off of it, the developer will just choose to be unemployed.

RE: Of Course!
By AlphaVirus on 1/24/2008 11:48:34 AM , Rating: 2
Oh, and rather than develop software and make some money off of it, the developer will just choose to be unemployed

If you developed a software and it cost you $500,000 and you sold $100,000 worth of that software, which is some, how would you feel?
Earning 'some' does not cover what has already been expensed. This is the type of stuff that does make people either switch companies or even careers. It sucks but its the truth.

I seriously wish this study could become a reality, I get tired of all the pirating because it causes less products to hit the market. If the publishers dont make money, how can they create a new product.

These scum who pirate may think they are having fun now by getting something free, yet illegal, when there is nothing to pirate they are going to hate themselves.

RE: Of Course!
By rcc on 1/24/2008 12:51:28 PM , Rating: 2
Look at the state of the PC gaming industry. Most of the really successful and profitable games are on-line based, because it's harder to pirate.

Like most of the free (and semi free) market, everything will adjust itself eventually; but in the meantime the pirates are hurting those who are willing to pay for their entertainment.

RE: Of Course!
By Spuke on 1/24/2008 6:53:27 PM , Rating: 2
but in the meantime the pirates are hurting those who are willing to pay for their entertainment.
Theoretically, I would agree with this but, in reality, what products are we missing as a result of piracy? Microsoft still makes OS's and Office. Symantec still has their crappy software. The REAL impact is hard to quantify.

RE: Of Course!
By rcc on 1/24/2008 7:02:47 PM , Rating: 2
Please note that I was addressing the PC gaming industry.

RE: Of Course!
By MatthiasF on 1/24/2008 5:51:53 PM , Rating: 2
If you take Eastern Europe and even Russia as an example, instead of marketing your skills to locals you'd instead learn a foreign language well enough to sell your program overseas in a market less prone to piracy (like the US).

Most programmers need to learn English anyway to program, so this isn't so far fetched.

Some of the best Microsoft support utilities (for Exchange, SQL, etc.) are made overseas.

By amanojaku on 1/24/2008 12:32:02 PM , Rating: 5
Having been a software pirate in my teens (who hasn't?) I had a first-hand perspective on some pirates' motivations: low income. If you're broke honesty will not get you software. Now that I have a job I grudgingly pay for software, keeping in mind that I can only afford vital apps. That means no Photoshop, no Quark Express, no 3D Studio Max. Just Windows and Office, with the occasional game.

I doubt the high-piracy nations' populace makes enough money on average to buy much legally. Factor in the modern necessity of the computer and you have a situation creating pirates. I would bet the computer alone breaks the bank of these households. I'm not justifying piracy (I work for a software company; I need paying customers!) I'm just being practical.

RE: Income
By rcc on 1/24/2008 1:18:11 PM , Rating: 2
Having been a software pirate in my teens (who hasn't?)

I haven't, and doubt I would have today. However, it was more difficult when I was in my teens. Reels of tape and cards were a pain.

In the US, piracy is mostly a crime of convenience and opportunity. In developing countries they see it as a necessity, as you mentioned. However, it you want to undercut the industrial nations of the world in price, you can't always use the latest toys.

China for instance could actually pay workers a wage comparible to the EU or US, etc. And limit piracy of software, techniques, etc. But then they'd have to charge prices similar to those of the countries they are selling to.

what happens...
By Screwballl on 1/24/2008 1:28:10 PM , Rating: 2
... when all piracy has been stamped out? A worldwide police state where every aspect of every persons life is monitored and illegal actions can be immediately prosecuted remotely (hand becomes useless for 1 hour to a lifetime if you steal something, killer dies as soon as he purposely kills another human and so on). What happens to all these jobs now that piracy is stamped out? A portion will find jobs in other IT based sectors but many will become unemployed becoming criminals themselves.

RE: what happens...
By rcc on 1/24/2008 2:48:11 PM , Rating: 1
Oh please. Here's another option for you.

Piracy is reduced to a negligible level because people accept responsibility for their own actions and quit lying, cheating, stealing, and rationalizing their actiions.
Theft dwindles because people realize it's wrong and find other avenues for their creative talents.
Everyone can be more productive and happier because security requirements can be virtually eliminated.
And everyone finds jobs in the new utopia where crime and security don't walk hand in hand to stifle commerce and progress.

RE: what happens...
By Screwballl on 1/24/2008 2:59:21 PM , Rating: 2
yes but those same people would also have to become very religious very quick and that would cover the entire planet... I think my post has a better chance of becoming reality.

RE: what happens...
By rcc on 1/24/2008 7:07:15 PM , Rating: 2
lol, one does not need to be religious to discover civic responsibility. On a macro scale it's actually quite the opposite.

Assumptions used in study
By MandrakeQ on 1/24/2008 11:34:19 AM , Rating: 2
Does this study assume that people who stop buying pirated software will buy legitimate copies? If that is the case, it is a questionable assumption to make since I don't think people in developing nations can afford U.S. software prices (though some companies like MS are trying to change this).

RE: Assumptions used in study
By Martimus on 1/24/2008 12:09:42 PM , Rating: 2
The study assumes that 10% of the people who pirate would buy legitimate copies, which is a reasonable ammount.

RE: Assumptions used in study
By badmoodguy on 1/25/08, Rating: 0
RE: Assumptions used in study
By murphyslabrat on 1/24/2008 1:24:47 PM , Rating: 2
Often, the pirating market will make its money by selling cheap items on e-commerce sites, such as Amazon and E-Bay.

It was done with PS3's, but one possibility is for these ubiquitous services to require verification of possession. Currently, this is something that is difficult, at best, and would require people/sufficient automation to compare a series of photos (that can be doctored) and product-numbers to the manufacturer/publisher's specification.

2-d/multi-color barcodes could stand to gain a considerable amount of use in this department. These methods of product identification, potentially, provide enough permutations to be a viable way of identifying an individual product, as opposed to an SKU number. As a result, the potential seller has only to offer a detailed picture of the barcode, and it could be easily and automatically verified with the publisher. While not fool-proof (a vendor could sell multiple products under the same code), it would make inappropriate conduct much harder to detect.

The study doesn't account for
By Chosonman on 1/24/2008 2:01:05 PM , Rating: 4
The money that is not going into the pockets of rich corporate executives often goes to other areas of growth in a developing country. When the people of Romania are not spending a large percentage of their wealth paying for overseas technology they can focus on other areas of economic growth. The results of this study is decidedly one sided. What's good for us isn't always good for them.

piracy and developing countries
By hemo200 on 1/24/2008 4:06:01 PM , Rating: 2
As a teen and a citizen in a developing country,the main reason of piracy is:lack the availability to purchase copyrighted materials,overprices products (a modern PS3 game is about 80-90$ in my country),lack the rules to fight piracy,lack of purchasing power to buy products and sometimes lack the way to pay (paypal is good but getting one is a pain in the neck).

RE: piracy and developing countries
By rcc on 1/24/2008 7:13:08 PM , Rating: 2
So, your point is that lacking the means to purchase the product, and the moral ability to do without a luxury item, that it's ok to steal or illegally procure it?

Or, did I misunderstand you somehow?

Where do the jobs come from?
By Targon on 1/24/2008 11:51:00 AM , Rating: 1
Is Microsoft going to run around east Asia, and the jobs come from the people going door to door and demanding money for the pirated versions of Windows and MS Office? Seriously, piracy isn't what stops the development of jobs, the culture and economy are.

RE: Where do the jobs come from?
By rcc on 1/24/2008 1:19:29 PM , Rating: 2
Seriously, piracy isn't what stops the development of jobs, the culture and economy are

Unfortunately for your argument, piracy is part of both the culture and the economy.

By mindless1 on 1/25/2008 5:50:15 AM , Rating: 3
They make the claim as if it's some important goal, but the truth is that we could apply the same random logic to anything. Stomping out people reusing toothpicks could also cause more jobs in that industry, including a police force to ensure all those dirty wooden things get put in the garbage where they belong.

The funny thing is when they write "lost revenue" they're basically confused. The truth is, IF a reduction in software piracy meant more people bought software, then the cost of the software is "lost" out of purchasers revenue. There is no lost revenue, it's just a matter of who has the money.

I'm not suggesting developers shouldn't be paid, I'm suggesting people who think pumping more money into the software industry instead of that money being pumped into some other industry (because truth be told, the money always goes somewhere or other) somehow magically creates jobs but if the money were applied to some other industry that wouldn't also create jobs. Actually it tends to be that dumping it into another industry creates more jobs because in the software industry the labor to create the software is more fixed per creation, while in industries where you don't just press another CD copy of the work will have a more direct need for more workers to service or create goods as the customer base and spending increases.

By therealnickdanger on 1/24/2008 9:58:49 AM , Rating: 2
We need more pirates. YEEEEARRRRRgh! Interesting read.

but piracy is a job
By Ronson on 1/24/2008 1:44:24 PM , Rating: 2
but piracy is a job in my country and those countries. As for development of a local software sector, it exists as customized systems & solutions from local firms.

No one can beat Microsoft in off-the-shelf software anyway.

By inighthawki on 1/24/2008 3:05:39 PM , Rating: 2
"If piracy was cut in these countries by 10% over the next four years, the study estimated that it would generate 600,000 high-tech jobs in the U.S. and abroad. It would also generate $141 billion USD in new revenue and provide $24 billion USD in new global tax revenue."

There is a MAJOR problem with this assumption. They are assuming that everyone who pirated the software would instead buy it. I know many people that would have absolutely no intention of buying a game if they didnt have it freely available to download, as well as people who HAVE purchased a game because they pirated it and liked it. If pirating didnt exist, i really don't think the change would be nearly as drastic as they say at all.

What would really happen
By mindless1 on 1/24/2008 3:52:57 PM , Rating: 2
If effective countermeasures are taken in countries with very high piracy rates, they will switch to free alternative software.

Once a large % have switched, the remaining customers that paid for their software will feel it's been devalued. IE- nobody else is running Office 2K7 anymore, they might as well use OOo for intercompatiblity if that's why they picked an office suite in the first place.

Certainly some will come along and say certain software is so much better with certain advanced features. That's a nice idea but the truth is the entire world managed to get along with older cruder versions of office apps than we have today, in truth the majority of what is needed in an office app was already covered by year 2000 software if not before then.

By Pirks on 1/24/2008 10:07:59 PM , Rating: 1
Here's an example: I wanna buy some cool games in Russia, but all Russian stores don't ship games abroad. Or I wanna buy some cool game in US - they don't ship to Canada. Whatever suckers, you don't want my money? Then screw ya iditots - where's my BT? Whoops - here it is downloaded and cracked. When I see some extremely attractive releases like S.T.A.L.K.E.R. then I can ask someone in Russia to send me the locally bought box with the game. But this is an exception, and top-notch PC-only games like S.T.A.L.K.E.R. are really really hard to find these days of console domination.

So yeah, if software industry is THAT dumb - it's NOT my problem, guys. They SCREW THEMSELVES, I'd buy a bunch of games in Russia IF I COULD, I swear! Screw ya, software industry morons, you hear me? Suck yourself, idiots.

"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain
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