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Can price fix software piracy?

The pirates are approaching! Okay, I'm not quite referring to the ones from the Caribbean. I'm actually talking about software piracy. In its latest study on software piracy, the Business Software Alliance (BSA) revealed that the average piracy rate in the Asia-Pacific region grew by just 1 percent to 55 percent last year. But, software revenue losses as a result of piracy spiked by 44 percent to US$11.6 billion--US$3.5 billion more than 2005.

That amount is just about enough to distribute a dollar each to half of the world's population.

According to research house IDC, which was commissioned to conduct the study, the average selling price of software was one of several components used to estimate revenue losses. So, logically, increases in software prices would inflate revenue losses. However, Walter Lee, IDC's Asia-Pacific vice president of consulting, was hesitant to draw that conclusion, noting that some software vendors increase their prices when they bundle several applications and offer these as one software package.

While I see his point, it would be interesting to do a year-on-year price comparison of software--specifically those popular among pirates--that has remained unchanged in terms of how it has been packaged so that the variables are kept constant, though there are factors such as inflation, to consider as well.

Some have long argued that piracy can be dramatically reduced if only software vendors were more willing to bring down their prices and make software more affordable to the masses. As it is, some of Asia's developing markets find it tough to cope with rising hardware requirements.

In an interview last year, Microsoft's head of antipiracy program Michala Alexander, expressed doubt over whether "fairer" licensing practices would discourage people from pirating software. "There will always be people who don't think they should pay Microsoft. Even if we dropped prices, people would still counterfeit the software."

Incidentally, Microsoft's revenue for its latest quarter, ended Mar. 31, grew 32 percent over the same period last year to US$14.4 billion, pushing operating income to some US$6.6 billion over the three-month period.

I forget, again, how much did software piracy cost the region in revenue losses last year?

Do you think lower prices would reduce software piracy?. You may post your comments below.

By Eileen Yu, ZDNet Asia
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