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1/29/2009 3:20:00 PM

Software Piracy in a Recession - Getting Kicked When You Are Down

by John Gunn

There is no escaping the blunt force trauma of the global recession. The fallout dominates headlines everywhere and it is the most frequent conversation starter in business circles. Where it will end and how to ameliorate the impact of the downturn is a subject of much debate and little action. What is not debated however is the real hardship it is imposing on enterprises and people worldwide – job losses, service reductions, and business failures.

An unfortunate consequence of most downturns is a rise in crime. The majority of people won’t steal under any circumstance but the numbers of those who do grow and the frequency of their crimes increases in response to hard times. In an October story, Reuters reported that, “most of the criminologists, sociologists and police chiefs interviewed by Reuters forecast a rise in crimes in certain categories… opportunistic crimes like theft.”

A FAST (Federation Against Software Theft) survey conducted at the start of the downturn queried company directors and found that 79% believed that businesses would be more likely to try to save costs by not securing appropriate software licenses. When budgets are cut sometimes corners are too.

More recently, in a two-month global poll that just concluded, Aladdin asked technology users and software publishers if they felt the recession would ultimately result in greater instances of software piracy. 73% said they believed software piracy would increase.


[View detailed Survey Results]

Whether you believe the absolute accuracy of Reuters, industry associations, Aladdin or even surveys in general, the damages inflicted by piracy on software vendors becomes much more critical in times of economic crisis. Software vendors are under attack at their greatest moment of weakness; sales are down because of recession-induced reductions in demand, and they are reduced further because of increases in theft (software piracy).

The result is more job losses and more hard times. For some of our brethren in the software community, the ones that will be teetering on the edge of survival, software piracy will be what pushes them over the edge and out of business. Sorry, I don’t have the usual funny or witty close for this entry – just a sobering frontline observation about the growing body count from the piracy wars. 



Great and helpful information.

Kyron Wylie


John - You nailed it! I hope Obama spends some of the rescue money going after those &^%$ pirates and the networks that they use. It will be a double win. Someone can make money catching those rats and I can get more money by actually getting paid for all of my software. if I actually sell more I can hire more programmers.



Piracy will alsways be around. You can't wipe it out. Hackers will always find a way to take what they want.

no name


Give up! Piracy is the world's second oldest profession.



I completely agree with you John. People turn to desperate measures in desperate times. History has shown this to be true. And in our current economy I see people and companies beginning to do things that they otherwise wouldn't normally do to help relieve the strain of financial hardship.

This includes cutting corners as you mentioned in various ways such as licensing and software distribution.



I'd like to start on the ending of John's piece, adding some steps software companies should take assuming that customers will pay less attention to compliance. Piracy impacts new sales and also payment of maintenance. To preserve maintenance revenue, do not let go all of the sales/support staff that know the history with customers - and hope that you have really good records. Start negotiations with the client proactively. Even managing to last year's levels, or discussing maintenance on all active licenses is a significant amount and a good negotiating position for the software company.

Next, create an audit team and start sending it out. It doesn't take long for that team to pay for itself and more in found revenue from new sales and maintenance. It doesn't have to ruin relationships, that depends on how settlement negotiations are handled.

Jenny Schuchert


I once went to a presentation where the marketing mgr from the software company said he wished that his software was pirated - cos that meant that it was popular!

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XML Spy has a 'call home' feature where they log the ip of the person using the program and monitors for suspicious use of their app. I know someone who's been done by that.