The BSA needs a time machine, not copyright reform
(First published on IT World Canada blog)
The BSA (Business Software Alliance, or Bad Statistics Alliance, depending on who you talk to) have released yet another one of their comical studies. I have been verycritical of these studies (See: Lies, Damned lies, and IIPA/BSA/etc statistics). What I recommend people do is skip to the methodology section and see what they are measuring, and decide for themselves whether what they are measuring is harmful or beneficial for the Canadian economy.
Brian Jackson wrote an article that quotes Michael Geist indicating the study was “shockingly misleading”. I will go further and suggest that what the BSA is really asking for is a time machine, not copyright reform.
Twenty years ago the software marketplace was different than it is today. A tiny few companies, primarily those who make up BSA today, dominated the software industry as people perceived it. There was “one true” business model: software was sold the same as computer hardware, distributed via brick-and-mortar retail channels, charging royalty for boxes or software pre-installed on a computer.
Advancements in communications technology have brought about change, and the BSA study is ameasurement of that change, not some alleged benefit of turning back the clock 20 years. If you take a closer look at the methodology section of the BSA study you will find that many of the things thatthe BSA is claiming is harmful and in need of a legislative fix are are actually positive developments in the software marketplace.
More and more software is distributed in ways that do not involve brick-and-mortar retail channels, being pre-installed on a computer, or even charging royalty fees. While the BSA calculates this as a loss due to “piracy” in their studies, this should be recognized as a positive development that reduces software costs and benefits the economy. We do not want to go back in time, and most reasonable people would consider the growth of online software distribution to be a good thing. Many people are predicting that the “app stores” that have been part of the Linux software distribution system for decades (centralized repositories with one-click download/installation), and have recently been added to mobile computing for Android and Apple iOS, will become the norm for all computing platforms.
We are slowly migrating away from desktops and laptops to mobile devices from the cell-phone to tablet and other form factors (embedded in televisions). IDC competitor Gartner expects that Symbian and Android together will account for 59.8 percent of the total worldwide mobile OS market by2014, Symbian with 30.2 percent, and Android with 29.6 percent. Both Symbian and Android are open source mobile operating systems, with open source being acompetitor to the software production, distribution and funding models promoted by BSA. It is far more likely that the trend that we see in mobile computing will migrate its way back to older form-factor computers than the very outdated methodologies used for desktop software trying to be mangled into the mobile space.
Without the complexity of the legacy retail system, it has allowed for the growth of the independent software marketplace. Being independent means separate from the incumbent software vendors that make up the BSA. This growth in the competing software marketplace will quite appropriately register as a loss for BSA members. This includes software professionals that participate in the growing commercial Free/Libre and Open Source Software (FLOSS) marketplace, as well as the smaller software vendors that make a great living through App Stores without having the overhead of maintaining a retail distribution system themselves.
Here are a few of the factorsin their study.
Estimating losses: Their methodology doesn't adequately differentiate between infringing software and people using legal alternatives. IDC, the company they hired to create this study, is notorious for under-estimating the usage of FLOSS and other non-BSA software. When the study claims that Canada's infringement rate was 29% in 2009, that could be 9% infringement and an under-estimation by 20% usage of competing software for all we know.
Multiplying by software-related services market: The methodology is focused on services provided by or on top of BSA members, including outdated overhead such as pre-Internet retail. This also incorrectly suggests that someone not paying royalty fees for software is not going to hire value-add services from competitors, something that makes absolutely no sense to suggest. The only thing lost when someone doesn't pay a royalty to a BSA member is the royalty to the BSA member. Nothing else can be extrapolated from that, so this multiplier has no legitimacy in the methodology. In fact, the opposite is likely true. Money spent on software royalty payments is money that is then not available for value-add software related services. This means that increasing royalty payments to BSA members actually subtracts that value-add to the software user, reducing their productivity and thus their profitability.
New jobs: This is linked to the false claims from the services market, but also linked to thefact that royalty payments leaving the country may theoretically create jobs in some other country, but won't benefit Canada. In fact, the more money that is leaving the country in the form of royalties, the less money that is available to pay Canadians.
Note that I am not excusing infringement, just putting this “study” into a more valid perspective.
I will agree with the BSA that reducing software copyright infringement would be a good thing. The easiest and most long-term beneficial way to do this is to encourage people to switch from illegally free software to legally free software. While twenty years ago it was valid to claim that what the BSA members offered didn't have viable alternatives, that is no longer true. People who aren't evaluating competitive software are doing so based on nostalgia, not valid technological or business reasons.
Some representatives of BSA members have admitted that while their first choice is people payed them money, their second choice is people infringe since they least want people to switch to competing independent software. If you look closely at their legislative suggestions they are also primarily aimed at reducing competition, not reducing infringement.
The IDC study makes some pretty classic statistical mistakes. For instance, they suggest that it has been found that countries that they have received higher amounts of royalty payments from are countries that are richer. This is a correlation, not a causal relationship. Most reasonable people would believe that being a richer country is the cause, and royalty payments is the effect, but the study makes the ludicrous jump to suggest the opposite : that higher royalty payments would make the country richer.
The study claims that “IDC has concluded that software revenues lost to software piracy would be recouped dollar for dollar if piracy rates were lowered”. This is not a conclusion, but the assumption upon which their entire methodology was built. IDC can't tell a correlation from a causal relationship, and they can't tell an unfounded assumption from a conclusion. I hope that the politicians that these “studies” are aimed at will take the time to look at the methodology, and understand just how wrong the claims made really are. We need policies which promote these advancements in the software marketplace, not policies that seek to turn back the clock to thedays when the tiny number of companies represented by the BSA practically owned the marketplace.
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Russell McOrmond is a self employed consultant, policy coordinator for CLUE:Canada's Association for Free/Libre and Open Source Software, co-coordinator for Getting Open Source Logic INto Governments (GOSLING), and host for Digital Copyright Canada.