Few economists dispute these economic realities.
It naturally follows then that poor IP protections do real damage to entrepreneurs, businesses and investors, and enhancing such protections will provide economic benefits.
A new study from the Business Software Alliance and IDC titled “2010 Piracy Impact Study: The Economic benefits of Reducing Software Piracy” offers some striking and important findings. These include:
• “Globally, IDC estimates that the piracy rate for PC software last year was 43 percent, meaning that more than four out of 10 software applications installed on PCs were unlicensed. The commercial value of all that unlicensed software totaled more than $51 billion.”
• “IDC calculates that the $45 billion worth of unlicensed PC software in the 42 countries covered here caused total losses of revenue, employment and taxes from related sectors in excess of $110 billion.”
• “IT spending is pegged to grow nearly 60 percent faster than the rest of the economy in the 42 countries covered in this study.”
• “IT spending supports roughly 1.2 million companies that sell or distribute hardware, software or services in the 42 countries studied, and those companies employ roughly 13 million people.”
• “More than 21 million additional IT professionals work in-house at other companies and organizations that use IT as part of their operations.”
• “The IT labor force is expected to grow three times faster than the overall, non-farm labor force in the 42 countries studied. It will add 5.5 million new, high-skilled, higher-paying jobs by 2013.”
• What if the piracy rate for PC software were reduced by 10 percentage points in two years? It would generate an estimated $193 billion in economic activity by 2013, and $43 billion in new tax revenues in the 42 nations studied.
• In addition, nearly 500,000 new jobs would be created with a 10-point reduction in the piracy rate.
• As for the U.S. economy, it would accrue $52 billion of that increased economic growth, along with $8 billion of the accompanying increase in government revenues.
• Also, 25,000 of those new jobs would be in the U.S.
So, what are the means for improving IP protections? The study suggests the following:
• Improving education and public awareness of the value of IP and the negatives of piracy.
• “In 1996, in direct response to the growing threat of Internet piracy, members of the World Intellectual Property Organization (WIPO) concluded new copyright treaties to enable better enforcement against digital and online piracy. … To ensure protection of copyrighted works in the digital age, countries need to update copyright laws to implement their WIPO obligations. Among other things, these measures ensure that protected works are not made available online without the author’s permission and that copy protection tools are not hacked or circumvented.”
• “Strong copyright laws are essential — but meaningless without effective enforcement that crosses international borders and extends to all computing platforms.”
• “IP laws should also provide for clear protection against and vigorous enforcement of misappropriation and infringement of new software innovations, such as cloud computing technologies.”
• “Too often, software thieves are not treated as seriously as other criminals and the punishment is too insignificant to be an effective deterrent.”
• “Because governments are the largest users of software in the world, one of the most effective mechanisms for public persuasion stems from governments actively managing their own software assets and sending a clear message that they will not tolerate piracy.”
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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