The Tilted Software Piracy Debate

Software piracy is a tricky topic, that requires some skepticism on the part of the reporter, though the media rarely show signs of that in their coverage. Here’s another example from last week’s Microsoft press conference in Indonesia, one of the prime culprits when it comes to counterfeit software:

JAKARTA (AFP) – Software piracy is costing the Indonesian economy billions of dollars each year and is stymieing the creation of a local information technology industry, a Microsoft representative said.

There is some truth to these statements, but it’s not really what Microsoft is interested in. First off, is it really the Indonesian economy that’s suffering because of piracy? One could argue the Indonesian economy is largely built on pirated software, as a kind of subsidy (like gasoline, which was until recently heavily subsidized.)

Secondly, when did Microsoft ever support the creation of a “local information technology industry”? That’s not their job — and I don’t blame them — but why hide behind this kind of argument? (Interestingly, there’s a lively Linux development community in Indonesia, but I’m not sure that’s what Microsoft is talking about here).

Some 87 percent of computer software on the market in Indonesia in 2005 was pirated, Microsoft Indonesia’s Irwan Tirtariyadi said citing a study from the Business Software Alliance, an organisation representing manufacturers.

That’s probably about right. It’s huge. It’s hard to find a company that doesn’t use pirated software. You can buy pretty much every program ever written, and I don’t know of a single person who uses a computer and who doesn’t buy pirated software. This is not to condone it, but I also only know of about half a dozen shops in a city of 12 million people which actually sell legal software. And forget buying online: Most companies won’t ship to Indonesia.

Lax law enforcement and widespread corruption contributed to Indonesia clocking in with the fifth highest rate of software counterfeiting in the world, he said, after Vietnam, Ukraine, China and Zimbabwe. “I’ve heard when police come to a shop (selling pirated software) it is closed. Basically information is leaking and this is an indication of the quality of law enforcement in action,” Tirtariyadi said.

This is part of the problem, it’s true. The malls are full of shops openly selling pirated software, often on the ground floor near the entrance, with policemen patrolling by. When a raid is planned, everyone knows about it, the shops quietly shut, cover their wares in tarpaulins and keep their heads down for a day or two. (Sometimes it’s hard to tell whether the imminent raid is from the police or some Islamic group cracking down on the counterfeit DVD stores, which often sell software too.)

Tirtariyadi told a gathering of foreign reporters that if piracy dropped by just 10 percent, it would add 3.4 billion dollars to the economy, according to figures cited by the International Data Corporation.

Could someone please explain to me how that figure came about? To me it sounds suspiciously as if the argument is based on a false premise: That everyone who buys pirate software would pay full price for legitimate software if there was no alternative. Let me think about that: $3 for brand new software — often a collection of software — against $50–500 for the same thing, in a country where half the population earn less than $2 a day. I don’t think so.

Counterfeiting also inhibited an “inventive culture” and the development of a strong local information technology (IT) industry here, he said. “Some students like to create new software but three months later they find it’s pirated,” he said.

True, there is definitely an inhibiting factor. I wrote a year or so ago about a guy developing a machine translation program which wasn’t bad, but which required him to spend at least half his time developing anti-piracy features in the software. But I still think this is a disingenuous argument. Let’s face it: Microsoft (and Adobe, and all the other BSA big boys) are mainly interested in quashing piracy of their products and building up their market share; I don’t see much sign of Microsoft actually nurturing this “local IT industry”.

Indonesia, Southeast Asia’s largest economy, has less than 100 IT companies, whereas neighboring Singapore, with a far lower rate of piracy, has between 400 to 800 such companies, he added.

This is not a useful comparison. Singapore is a highly developed country and one of the world’s technology hub. Though, interestingly, it’s not really a locally creative industry, with the exception of a couple of big names.

All this makes me realise that Microsoft et al still don’t get it. Piracy is massive; they’re right. But you don’t deal with it by sponsoring misleading press conferences and well-telegraphed police raids.

5 thoughts on “The Tilted Software Piracy Debate

  1. Boy, your comments couldn’t ring any truer. The entire culture here in Indonesia is steeped in the ideal that you must cheat to survive. Whether it’s parellel importing, smuggling, or DVD and software piracy, they are all necessary evils that actually help keep many Indonesians heads above water that otherwise would have no job. Sure, some of the major pirates are making absolute fortunes off all this free stuff, but I would argue the proliferation of cheap software is the number one reason this country has the level of IT aptitude that it has compared with other developing nations. This level of intimacy with cheap software actually helps promote hardware sales, software development skills and Internet growth. All good things, that would be stifled dramtically should the BSA have their way.

    The argument MS ID makes is just an absolute joke and we see the same nonsense stats pulled out in every anti-piracy campaign they come out with… The percentage of people that would actually pay for a $20 DVD, $150 copy of Windows, or $500 for a copy of Photoshop is negligible. Insisting that law enforcement step-up to the task of protecting their I.P. is an even more ridiculous notion. This country has more important things police need to be doing besides patrolling Mangga Dua and Glodok for pirate copies of the latest game.

    However, if Microsoft and the BSA really wanted to crack down, they certainly could do it… They’d just have to enter into the bribery bidding war with the brass of the police, which last time I heard are getting kickbacks in the neighborhood of $40K USD a month from the largest pirate distributors. Don’t want to pay? That’s when your shops and DVD/CD stamping plants go bye-bye.

    So there you go Microsoft… If you want Indonesia to play nice, you’re going to have to start paying an expensive monthly bill to replace what’s currently being shoved under the table. Sure hope you’ll make it back on all those legitimate sales you’ll be raking in… Good luck with that.

    You, and the country as a whole, would be FAR better served restricting your anti-piracy campaign and software raids to the major corporations here that are ripping you off… Let the small-timers have their pirated prize. You should also consider DRASTICALLY dropping the price of your products for this market. We don’t pay $10 for a shoeshine, We don’t pay $3 for a mango, and we sure as hell aren’t going to pay you $150 for Windows XP.

  2. This is a very interesting point of view. Personally, I was never complacent with the facts and figures that these firms supposedly lost because of piracy. Maybe because I am not convinced that they are the innocent party here.

  3. The most an Indonesian would pay for a legit copy of XP is $15 USD – thats about five times the cost of the pirate version over here.

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