The results from the Business Software Alliance's fifth-annual study on global software piracy revealed some statistics that would put a smile on any software company executive's face: Of the 108 countries that are covered in the recently released report, the use of pirated software dropped in 67 countries. In just eight countries did the piracy rate increase.\n\n\n MORE ON CIO.com\n \n BSA Ups Reward for Turning in Software Pirates to $1 Million\n \n BSA: More Police Action Needed in Singapore\n \n Outsourcing Software Development to China: Leaks in the Great Wall\n\n \n\nFor example, Russia's PC software piracy rate dropped seven points to 73 percent. (In the study, piracy rate is defined as the total number of units of pirated software deployed in 2007 divided by the total units of software installed.) "Russia's piracy rate is still high, but it is decreasing at a fast pace as a result of [software] legalization programs, government engagement and enforcement, user education and an improved economy," states the BSA study's findings. (A copy of the complete BSA study can be found here.) \n\nMany low-piracy regions, such as the United States, United Kingdom and Austria, showed decreases (though they weren't huge) in their piracy rates. The three lowest-piracy countries were the United States (20 percent), Luxembourg (21 percent) and New Zealand (22 percent). The study also found that many developed economies continued to show gradual declines, including Australia, Belgium, Ireland, Japan, Singapore, South Africa, Sweden and Taiwan. PC Software Piracy Rankings, 2007\nThe Business Software Alliance ranks the countries where software piracy is the worst for PC software vendors, and those where conditions are best.\n\n\nThe Worst\n\n\n\n\n\n\n\n\n\n1. Armenia\n\n\n\n\n2. Bangladesh\n\n\n\n\n\n3. Azerbaijan\n\n\n\n\n4. Moldova\n\n\n\n\n\n5. Zimbabwe\n\n\n\n\n6. Sri Lanka\n\n\n\n\n\n7. Yemen\n\n\n\n\n8. Bangladesh\n\n\n\n\n\n9. Libya\n\n\n\n\n10. Venezuela\n\n\n\n\n\n\n\nThe Best\n\n\n\n\n\n\n\n\n\n1. United States\n\n\n\n\n2. Luxembourg\n\n\n\n\n\n3. New Zealand\n\n\n\n\n4. Japan\n\n\n\n\n\n5. Austria\n\n\n\n\n6. Belgium\n\n\n\n\n\n7. Denmark\n\n\n\n\n8. Finland\n\n\n\n\n\n9. Sweden\n\n\n\n\n10. Switzerland\n\n\n\n\n\n\nMarket research company IDC conducted the study on behalf of the BSA, an international association that represents software vendors and their hardware partners, and pursues companies that use pirated software. The BSA's "Report Software Piracy Now" campaign, which promises up to $1 million reward for "qualifying reports," is one way in which it goes after corporate offenders. (See "BSA Ups Reward for Turning in Software Pirates to $1 Million" for more on the BSA's mission.) \n\nPC Software Piracy on the RiseNow, for what software makers don't want to hear: "However, because the worldwide PC market grew fastest in high-piracy countries," states the report, "the worldwide PC software piracy rate increased by three percentage points to 38 percent in 2007." (The median piracy rate is 61 percent.) Countries such as Armenia (93 percent piracy rate), Bangladesh (92 percent), and Azerbaijan (92 percent) led the way in software pirating. \n\nBy the end of 2007, there were more than 1 billion PCs installed around the globe, the report notes. Nearly half of them have pirated software running on them. \n\n"We are making much-needed progress in the battle against PC software piracy, and that's good news for governments, end users, businesses, and the industry," said BSA President and CEO Robert Holleyman, in a press release. "The battleground is now shifting, however, to emerging markets where many of our collective challenges remain."\n\n\nHow Much Does Piracy Actually Cost Software Vendors?For this study, the BSA relied heavily on IDC's "deep and broad information base from which to assess the market and estimate the rate of PC software piracy around the world," notes the report. (IDC and CIO.com share the same parent company, IDG.) \n\nIDC relied on proprietary statistics for software and hardware shipments gathered through surveys of vendors, users and the software sales channels; it also enlisted IDC analysts in more than 60 countries to review local market conditions. "Losses to the industry from piracy were calculated using the known size of the legitimate software market in a country or region and using the piracy rate to derive the retail value of software that was not paid for," according to the study. \n\nThe "retail" value of software that came bundled with a PC, the study notes, was considered to be the share of the retail price of the system attributable to software. (Software that was legitimately free, such as shareware or some open-source software, was not considered pirated.) \n\nIn total, according to the IDC's calculations, dollar losses from piracy rose by $8 billion from 2006 to 2007, which was a 20 percent increase, and now stands at nearly $48 billion. \n\nThat "losses" number, in particular, has been controversial over the years. "For many years, BSA has equated the value of pirated software to industry 'losses,'" notes the report. "This has led to questions as to whether these losses are real." \n\nIn a February 2008 post, Dave Taylor, an industry watcher, online strategist and blogger, takes issue with how the BSA calculates its losses. Taylor's fundamental problem is that the BSA "cannot assume that every illegal copy of software would have been otherwise purchased," he writes. "That's a complete fallacy and distortion of the situation and does a disservice to the companies that are represented by the Alliance." \n\nThis year's BSA report states that "while not every piece of pirated software would be purchased if piracy rates were to go down\u2014some will be substituted, some not used\u2014lower piracy rates yield more economic activity that stimulates more software production and purchases." \n\nThe BSA states that IDC has "confirmed this by analyzing the ratio of software spending to hardware spending for the countries in the study and finds that, as expected, there is a high correlation between piracy rates and that ratio," the report states. "The higher the piracy rate, the lower the ratio of software spending to hardware spending. Given the definition of piracy, that would seem obvious." \n\n\nWhat Has Changed and What Hasn'tEven with the billions of dollars in estimated losses for the software industry, the report does reveal that some anti-piracy efforts are working. "This study shows that government and industry anti-piracy efforts are working in many countries, however, their attention will increasingly turn to combating piracy in emerging economies," notes John Gantz, chief research officer at IDC, in the BSA press announcement.\n\nThe study found that a couple of market factors were contributing to an increase in the piracy rates. First were the market dynamics in the PC segment, where the fastest growth is in the consumer and small business sectors. "These are the hardest sectors in which to lower piracy," the report notes. Second was expanded Internet and broadband access. "With approximately 700 million people expected to go online for the first time between 2008 to 2012, 76 percent of them will be in emerging markets," the report states. "Access to pirated software will continue to shift from the streets to the Internet." \n\nOn the other side, the study found that several market factors were actually helping to decrease piracy rates. First was the increasing prevalence of globalization among countries in emerging markets. Second was the growth in technical protection measures (such as digital rights management, or DRM) that software developers are building into their products. And third was the rise in new software distribution models such as software-as-a-service. \n\n"Experience has shown that the 'blueprint' for reducing software piracy includes education, smart government policies, effective enforcement and legalization programs," the BSA's Holleyman said in the press announcement. "In short, we know what works, and we're going in the right direction through collaboration with governments. That said, it is important for BSA and its members to expand our campaigns and outreach, and government support and involvement is critical."