The Real Reason People Pirate Software

Pirate symbol 2Last May the Business Software Alliance (BSA) released its biennial global report on software piracy. The report gives an overview of the level of PC software piracy in 116 markets (111 countries plus 5 rest-of-regions) by calculating the piracy rate per country. The piracy rate is defined as the share of unlicensed software packages in the total number of installed software packages. The associated street value of unlicensed software is calculated by multiplying the number of unlicensed software by the average street price.

This year’s study showed a significant 4% point piracy drop from 43% in 2013 to 39% in 2015 and a drop in the commercial value of pirated software of more than $10 billion: from $62.7 in 2013 to $52.2 in 2015. Although the BSA has reason to have a small party it is quick to point out that “… despite these positive developments, for 72 of the 116 markets covered in the study, more than half of the total PC software deployed in 2015 was unlicensed; in 37 markets, 75 percent or more was unlicensed. There is still much more to be done.”, and the 4 point drop (which is still a 10% decline!) was merely a “modest decrease”.

During the 14 years that the BSA has released its piracy study it has changed its tone of voice and the angle of the study. They smartly moved away from the hard accusing and confronting tone, stressing high piracy rates and staggering numbers of dollar losses caused by piracy. This change coincided with the consumer transition from PC to smartphones and tablets. For businesses and governments this transition is still happening but not as fast and intense. As the consumer PC-base is collecting dust the impact of consumer PC software piracy on the total rate is declining. The BSA accordingly refocused its piracy curbing efforts to businesses and governments only. Using the proven method of creating fear, uncertainty and doubt (FUD) the BSA informs us:

  • How much piracy there is. Quantifying the magnitude of software piracy is elementary to show the graveness of the problem and helps generate the necessary attention.
  • What the consequences of pirated software can be. Addressing the consequences (FUD factor) is important to make businesses aware of the potential operational, legal, financial and reputational consequences when using pirated software.
  • What the solution is for organizations. Putting in place an efficient software asset management system and educating your employees will free you from the hazards unlicensed software can cause.

The usefulness of this advice is based on the assumption that organizations want to focus making money of their core business and would happily avoid anything that could threaten this. The bottom line is: you can make more money by avoiding unlicensed software.

But with all the benefits of properly licensed software and the potential disasters of unlicensed software why would anyone pirate software? A fair question as in 72% of the researched countries half of the total PC software deployed was unlicensed.

The study “Intelligence and Crime: A novel evidence for software piracy” is an effort to explain the reasons behind software piracy. The authors of the study compare the results of the BSA 2012 piracy study with national IQ rates of 102 countries.

Intelligence and Piracy

Piracy  IntelligenceSource: Lynn &Vanhanen (2012); BSA (2012)

Their conclusion is “ … that intelligence has statistically significant negative impact on piracy rates. We also conclude that the estimates remain robust when we address potential endogeneity of IQ and for the existence of outlier countries in the sample.” This also means that their “… findings indicate that if ruling elite enforces policies to decrease software piracy, intelligence provides a credible proxy of the degree of consent of such policies. Indeed, agents with higher cognitive abilities are more politically active.” The last phrase is important otherwise ‘stupid’ countries would have no reason to lower piracy. There are however a couple of problems with this study. As for the IQ data:

  • The conclusion suggests that intelligence and IQ are the same. But IQ is actually a proxy model for measuring intelligence.
  • Intelligence tests only measure a person’s ability to complete intelligence tests relative to others at that particular time. The test and test environments vary by country, population and time. Merging them in one meta-data study ignores the local variations of IQ tests.

As for the piracy data there are some issues too:

  • The piracy rate is a composite rate averaging the rates from consumers, businesses and government organizations. However the IQ data in this study is based on individual IQ scores and not on group or collective intelligence.
  • PC software is a very heterogeneous product category ranging from simple 5$ games to complex 3D CAD software costing over $2500 per seat per year. The issue here is that some software is just more pirated than others.

While intelligence is pretty much a homogeneous concept there is an ongoing and heated debate about IQ, its composition, use and interpretation. The PC software piracy rate on the other hand compounds a broad range of products and (groups of) users resulting in one single rate. By comparing  these two data sets the authors are simply comparing apples and oranges.

CorrelationCorrelation: 0,992082

The study sets out to prove that intelligence is an important factor in explaining software piracy. To back up that theory the reports reference list shows a considerable number of studies that also use intelligence as a explanatory factor. The study however is still about correlation and not causation. At best we can say this study captures spurious correlation. As a result it does not provide insight into the motives of people and organizations using unlicensed software. That should not surprise us since people and organizations pirate and/or use under-licensed software for various reasons; or, if they are unaware of the fact, for no particular reason at all. Maybe the unsatisfying answer to why people pirate software is … because they can.