"Shiver me timbers!"

According to BSA figures billions of dollars are lost to software piracy every year, when people use cracks and keygens to run counterfeit software rather than buying properly. BSA is talking about $50 billion to be exact, give or take a billion. How did they come up with that figure? One cannot help but wonder, but as I have my own piracy data for xplorer² I thought I should cross confirm the BSA statistics.

Is software piracy something that should be accepted stoically as a fact of life doing business in software or can we do something about it? Nowadays we can put a brake on the distribution of pirated software through file sharing websites using DMCA notices to remove illegal downloads from rapidshare.com etc. But would that make any difference? If just people from poor countries 'shop' from rapidshare, then we won't gain much simply because people that don't have money cannot become paying customers. But what if not-so-poor people do it too? Forcing the latter to the straight and narrow could boost an ISV's profits considerably.

Pirates of the carribean
Where do pirates come from? According to BSA figures for 2009 (table 2) 43% of worldwide software use was unauthorized. The problem is more severe in poor countries as you would expect but even in rich nations like in North America the piracy rate is a significant 21%. Let's see how that compares with my own measured data.

As all software xplorer² has its illegal downloads. There are patches that circumvent the DRM completely and keygens that output (supposedly) perfect unlock keys so that people can use xplorer² without paying. The fact of the matter is that these keygens are not perfect and xplorer² can tell the difference between a legally bought key and a counterfeit one, and plays a few tricks to the freeware-enthusiasts. I tracked the IP addresses of these people over a short period to get a statistically significant sample (NB no private data were collected).

Data: Piracy on the map
Using an IP lookup service I compiled a list of countries of xplorer² users (~2000) who didn't buy the program, preferring to use one of the known keygens. This is an underestimate of the problem as there are more illegal xplorer² versions in circulation — which I cannot track.

Country % 1. china 13.4% 2. united states   13.2% 3. taiwan 9.3% 4. germany 3.3% 5. brazil 2.9% 6. france 2.9% 7. spain 2.8% 8. india 2.7% Table 1. Top 8 countries of origin Many would have guessed who came top country, but would you imagine that 13% of all xplorer² piracy comes from the wealthy USA? Figure 1 shows the global distribution; more than half of the people using counterfeit versions of xplorer² come from the first world where people should be buying software.

Figure 1. Piracy by continent

Data: Piracy rates
What is the percentage of xplorer² users that try a keygen? I can (under)estimate this figure as I know how many people are installing the software and from the data above how many people get it from a warez download website. The total piracy rate (warez/installs) for xplorer² is (at least) 53%, much above the 43% estimated by the Business Software Alliance (BSA).

The rates by continent can also be estimated if I approximate the (unknown) geo-location of people who install xplorer² from the spread of the website visitors around the world. Table 2 indicates an agreement between my measured data and those reported by BSA for 2009, but for most cases my figures were worse (increased piracy)

area measured   BSA data asia 90.3% 59% north america 22.7% 21% europe 42.9% 49% south america   83.4% 63% others 41.0% 59% world total 53.4% 43%

Impact on sales
We are in this business to make a living, so I will try to translate these piracy figures in money lost. To put this into perspective I can reveal that the vast majority of xplorer² sales come from a handful of countries, whose citizens mostly purchase software — by a combination of wealth and education. These are the usual rich countries of north america, western europe, Australia and Japan.

Country % 1. United States 54.3% 2. United Kingdom   6.5% 3. Canada 5.5% 4. Australia 4.4% 5. Germany 4.3%

USA is by far the best customer and on its own amounts to more than half the xplorer² sales. At the same time quite a few people in the USA use xplorer² without paying (see table 1 above). Let's say that by waving a magic wand we convinced all these users to purchase a license, assuming the same conversion rate (purchases/installs) as any normal customer. The result? 20% increase in sales, from USA alone!

Of course some people are allergic to buying software so even if there were no warez versions to download they would just move to the next competitor file manager. However there are people who only need a slight push to keep them honest, so eliminating the illegal downloads could easily add 20% to your income!

Conclusions
In this article I used real life geo-location data for xplorer² piracy rates. Here are the hard facts to take away:

• 53% of total installs are illegal warez
   
• 59% of these come from countries that pay for their software, and could conceivably be converted to sales
   
• 0.53*0.59*{# of installs}*{conversion rate} could give you 30% extra sales on top of what you earn!

Using specialized tools like crack tracker you can limit the availability of illegal downloads of your software and make more money. As for the pirates, I regret any inconvenience caused <g>

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