Gauteng Business News

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INFOTECH: Software Piracy Costs a Fortune


Recent Gauteng Business News

Preventing software piracy and protecting intellectual property rights is becoming a global challenge in a world where most information is free. The main form of software piracy in SA involves people buying a single copy of software and installing it on multiple computers.

At 35%, South Africa has one of the lowest business software piracy rates in the developing world. However, decreasing this rate further could result in valuable economic benefits for the country, says AxizWorkgroup business unit manager, Sally Berimbau. The commercial value of unlicensed software installed on personal computers in 2010 was valued at over R3,6-billion.

“Reducing software piracy could result in a number of benefits for the South African economy in terms of fostering IT innovation and job creation. Reducing software piracy creates a ripple effect throughout the economy, generating new spending on related IT services and distribution. That spending, in turn, creates jobs and delivers new tax revenues,” explains Berimbau. “Reducing software piracy is an opportunity to inject much-needed stimulus into the economy. For every US$1 spent on legitimate packaged software, an additional US$1.25 is spent on related services, such as installing the software, training personnel, and providing maintenance services. Most of these benefits accrue to locally-based software services and channel firms – meaning the greatest proportion of the economic benefits from lowering software piracy stays within the country. With more and better job opportunities, a stronger, more secure business environment, and greater economic contributions from the already robust IT sector, reducing software piracy would deliver tangible benefits to the local economy,” says Berimbau.

Software Piracy Rates High in South Africa

At 35%, South Africa has one of the lowest reported business software piracy rates in the developing world. Russia has a 67% piracy rate, Mexico 60%, and Brazil 56%. South Africa’s rate was also lower than many European countries: Greece, for example, had a 58% rate, Italy 49%, Spain 42%, and France 40%. However, other African countries average software piracy rates of more than 80%, with Zimbabwe at 91%.

The high rates of software and media piracy in the developing world are a result of high prices for media and software goods, low incomes and cheap digital technologies. Given access to cheap digital tools, but charged large amounts of money for legitimate versions of content, users choose piracy. “While licensed software is more expensive, what many buyers overlook is that licensed software provides the additional benefits of access to technical assistance and protection from hackers and malware,” says Berimbau.

The global software piracy rate is 42%, and continues to rise as emerging economies foster piracy rates of 2,5 times higher than those in the developed world. Emerging economies now account for more than half the global value of PC software theft, at $31,9-billion.

SA Faces Huge Media and Software Piracy Issues

In addition to software piracy, South Africa also faces media piracy including a substantial pirated DVD and music market. South Africa has become both a destination market and a transit point for CD and DVD smuggling into other African countries. Industry accounts attribute much of this traffic to disc production in Southeast Asia—especially Malaysia.

“Prior to 2010, connectivity in and out of South Africa was limited to a single undersea cable running down the west coast of Africa (the SAT3 cable), resulting in very limited bandwidth and high prices. Over the next few years, however, this bandwidth shortage is expected to end as new undersea cables come into service. With computers and other digital storage and playback technologies also becoming more widely available, South Africa is likely to play rapid catch-up in the global digital-media economy—in both its legal and illegal forms including sorting out issues such as software piracy,” concludes Berimbau.

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