Microsoft Says That Piracy Also Cost Empire State 7,800 Jobs

NEW YORK, Nov. 2, 1998 — Demonstrating that software piracy is not a victimless crime in New York, Microsoft Corp.’s New York office today released economic data showing that software piracy caused the loss of an estimated 7,800 jobs in the state and more than $860 million in combined lost wages, tax revenues and retail sales in 1997.

Microsoft released the economic data as part of an educational effort to raise awareness of the fact that software piracy – the theft of software through illegal copying of genuine programs or through counterfeiting and distribution of imitation products – hurts more than just the software industry. International Planning & Research Corp. of Redmond, Wash., utilized data from a 1997 international piracy study published by the Business Software Alliance (BSA) and the Software Publisher’s Association (SPA) along with additional data and analysis of piracy in New York.

New York’s software piracy rate of 28.8 percent in 1997 resulted in a loss of over 7,800 jobs and nearly $336 million in salaries and wages that would have gone directly into workers’ pockets and back into the state’s economy, according to Microsoft. In addition, the data shows that New York lost more than $25 million in tax revenues that could have instead been used for local and state improvement projects. New York lost more than $476 million in potential retail sales.

“High technology is a leading contributor to the economic health of New York state, and software piracy is like a disease,”
said Bob Jones, general manager of Microsoft’s New York office.
“Unscrupulous merchants and counterfeiters are preying upon honest businesses and unsuspecting consumers. We need to step up the fight against software piracy and work with the industry to inoculate ourselves.”

Microsoft announced the economic impact data at the annual trade show of the New York New Media Association (NYNMA), which starts today and serves the entrepreneurial, creative and business professionals leading the new media industry in New York’s
“Silicon Alley.”

“As a premier producer of content for all types of new media, New York has an especially keen interest in protecting the intellectual property generated by this important industry,”
said Alice O’Rourke, executive director of the NYNMA.
“New York leads the way on many fronts and protecting intellectual property must be one of them.”

Microsoft is increasing its efforts in New York to support the identification and prosecution of software pirates and will make some related announcements in the near future, Jones said.

“This economic data should debunk the myth of software piracy as a victimless crime,”
said Howard Greenstein, technical evangelist in Microsoft’s developer relations group.
“I know firsthand from work with top Web developers that piracy in the digital age can have a serious chilling effect on creativity, innovation and, of course, the bottom line.”

Over the next several months, Microsoft will release statistics on the negative impacts of software piracy for every state in the United States.

The software industry is a significant driver of the current economic prosperity in the United States, accounting for the creation of more than 2 million jobs, $102.8 billion in software and software-related services, and payment of $7.2 billion in taxes. However, software piracy threatens the ability of the industry to continue to contribute to the American economy. According to a 1997 study by Nathan Associates Inc. of Arlington, Va., commissioned by the BSA, software piracy in 1996 resulted in the loss of 130,000 jobs in the United States, $5.3 billion in wages and salaries and nearly $1 billion in tax revenues.

Microsoft encourages consumers to become familiar with the warning signs that can help identify counterfeit or illegal software.

  • Prices that are
    “too good to be true.”
    This may be counterfeit product, or product that has been misdirected, such as product authorized for distribution only to educational institutions but is being offered to the general public.

  • Back-up disks or CD-ROMs with handwritten labels or components that appear to be of inferior quality

  • Manuals that appear to be photocopied or are of inferior quality

  • Products marked with a phrase, such as
    “For distribution with a new PC only,” “Special CD for licensed customers only,” “Not for retail or OEM distribution”
    or
    “Academic price – not for use in a commercial environment,”
    that does not describe the transaction

In addition, when users acquire a new computer system, it will include operating system software. If that software is the Microsoft® Windows® 98 operating system, it will be accompanied by a user’s manual that incorporates a Certificate of Authenticity as the cover. The customer will also receive a CD-ROM with the software program. There must be an end-user license agreement (this may be seen online when the program is first run). If any of these elements is missing, the product is suspect.

Customers or resellers with questions about the legitimacy of Microsoft products should contact the Microsoft anti-piracy hot line, toll free, at (800) RU-LEGIT (785-3448), or send
e-mail to piracy@microsoft.com. More information about software piracy can also be obtained

by calling the Business Software Alliance anti-piracy hot line at (888) NO-PIRACY (667-4722) or sending e-mail to software@bsa.org.

Founded in 1975, Microsoft (Nasdaq
“MSFT”
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

Microsoft and Windows are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Other product and company names herein may be trademarks of their respective owners.

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