Software Piracy Drained Massachusetts Economy Of Nearly $900 Million in 1997

BOSTON, Dec. 2, 1998 — Microsoft Corp.’s Boston office today released statistics revealing that Massachusetts lost more than 4,300 jobs and nearly $900 million in combined wages, tax revenues and retail sales in 1997 as a result of software piracy.

The economic data was released as part of an effort to raise awareness that the detrimental effects of software piracy – the theft of software through illegal copying of genuine programs or through counterfeiting and distribution of imitation products – reach further than just the software industry. The data was supplied by International Planning & Research Corp. of Redmond, Wash., which utilized data from a 1997 international piracy study published by the Business Software Alliance (BSA) and the Software Publishers Association (SPA) along with additional data and analysis of piracy in Massachusetts.

With a 25 percent piracy rate, Massachusetts lost nearly $240 million in wages and salaries, according to Microsoft. Piracy also robbed the state of more than $600 million in retail sales and close to $11 million in tax revenue that could have contributed to state and local improvement projects.

“Software piracy creates a destabilized competitive environment and inhibits the ability of software firms to do business effectively,”
said Joyce Plotkin, president of the Massachusetts Software Council.
“We support the industry’s efforts to protect intellectual property by keeping the public informed and working to identify illegal activity.”

Microsoft announced the data regarding the economic impact of software piracy in Massachusetts at its annual Explorer Conference & Exposition, which is being held Dec. 1-3 at the Hynes Convention Center in Boston. The information was released as part of a nationwide effort to educate the public on the economic impact of software piracy in each state.

“These figures demonstrate unequivocally that software piracy is not a victimless crime,”
said Orlando Ayala, senior vice president of Microsoft Americas and keynote speaker at the Explorer Conference.
“On the contrary, the victims are the honest channel resellers, unsuspecting customers, and everyday workers and taxpayers across all industries. We all pay for the actions of unscrupulous merchants and counterfeiters through lost revenue, wages and product integrity. And we all must step up the fight against piracy to prevent further economic damage.”

“Massachusetts, and particularly the greater Boston area, is one of the nation’s leading information technology centers,”
said Boston Mayor Thomas Menino.
“The IT industry is not only a significant source of employment and wealth for our local economy, but also an invaluable source of innovation and development for the global economy. It is vitally important that we protect the intellectual property that is produced and utilized here if we are to see growth in the digital age continue unabated.”

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 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 that which has been 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 users 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. In addition, a list of authorized distributors and details regarding the Original Equipment Manufacturer (OEM) System Builder program is available at http://www.microsoft.com/oem/ . Consumers can obtain more information about software piracy 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.

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

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