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November 1st: Torsten Jacobi, CEO of Creative Weblogging, joins host Anita Campbell. Sponsored by Six Disciplines. Show details.
Tuesday, October 21, 2003
Midsize Businesses Target of Software Piracy Watchdog
Losses due to software piracy in the United States totaled over $6 Billion in 2002. That's according to the State Software Piracy Study by the Business Software Alliance. The losses take into account lost retail software sales, job losses, and tax revenue losses.

The Business Software Alliance is a trade group whose members include some of the world's leading software companies, like Microsoft. It assists the industry by acting as a quasi-policing agency. Last year it raised over $12 Million in fees from settlements with private companies.

In case you thought software piracy was a nefarious act done offshore --either in third world countries or places without reliable legal systems-- think again. According to the BSA, it is still a problem within U.S. companies.

The United States ranks lowest in the world in the level of piracy --and this rate has dropped for six straight years. Yet the BSA actively goes after U.S. businesses, with its hotline 1-888-NOPIRACY and its "Report Piracy" section of its Website.

What kind of company runs afoul of the BSA enforcement efforts? Typically it is a midsize regional business. Usually an ex-employee--perhaps in the IT Department, perhaps some other department-- failed to purchase the requisite number of licenses to cover all PCs using the software. Many times senior management is unaware of the violation. Problems often arise due to lax internal procedures and incomplete record keeping. An ex-employee (or sometimes a current employee) rats on the company. The BSA steps in and forces a settlement, much to the embarrassment of company leaders.

You may be wondering why midsize companies are most at risk. It's a combination of economics, staffing, awareness and self-policing.

Today most large companies have implemented strict internal licensing procedures, including periodic internal software audits. Occasionally a large company is nabbed by BSA, but not often.

Very small companies simply don't have that many computers. Violations are scattered and tend to be small-scale.

That leaves midsize businesses. They are large enough to have a volume of computers needing software licenses, but typically don't have the staffing levels to create strict internal processes with checks and balances. Often control of software license data is entirely in the hands of a single employee.

If you are a subscriber of the Wall Street Journal, read more about midsize business and software piracy here.
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