The rise of broadband Internet access and cheap storage, along with the growth of digital content, has enabled digital piracy to flourish around the world. Piracy enables the unauthorized distribution of music, movies, television programs, software, video games, books, photos, and periodicals quickly and easily, to the detriment of creative artists and legitimate rights holders.
The problem of making illegal software copies has been recognized in the computer industry for decades and has increased to match the growing use of computers (Wood 1998). The study highlights the unique market dynamics of digital piracy, where the existence of a large number of suppliers willing to provide pirated content at virtually zero price pose new and difficult challenges to copyright owners and policymakers in combating that piracy.
Digital piracy cost the country economy money, jobs, and tax revenue. For example, Malaysia’s software piracy last year declined by one percentage point to 58 per cent but the commercial value of losses from pirated software rose to US$453 million or RM1.457 billion, the Business Software Alliance (BBA) said.
According to BBA’s partner International Data Corporation (IDC), the Asia-Pacific continued to be the region with the highest dollar losses from piracy.The United States, Japan and Luxembourg continued to hold the lowest piracy rates of economies surveyed with rates of 20, 21 and 21 per cent respectively. (Bernama 2010).In the United States lost more than 100,000 jobs and over a billion dollars in tax revenue in 2000 due to software piracy (Anonymous 2001b; Johnston 2001). A study of Internet software auctions by the Software & Information Industry Association in March-April 2000 found that illegal copies accounted for 91 percent of the software being auctioned (Anonymous 2000a). It is predicted that if the rate of piracy continues unchanged, the U.S. economy will lose a total of 175,700 jobs and $1.6 billion in tax revenue by 2008.
The available data on software piracy understates the total losses because the data is limited to corporate users and does not include illegal software used in homes and
smaller business enterprises worldwide (Weiss 2000). The National Retailers Federation estimates total retail sales at $3 trillion and places the total for all categories of inventory shrinkage (employee theft, shoplifting, vendor fraud, and errors) at $25 billion (Anonymous 1999a). The United States Census Bureau’s economic census places the total revenue for software publishers at approximately $62 billion (Anonymous 2000b) and the Business Software Alliance has found that the worldwide cost of software piracy reached $11.75 billion in 2000 (Anonymous 2001c). Thus, the theft of software as a percent of total software revenue far exceeds inventory shrinkage as a percent of total retailsales.