Software Piracy Cost District of Columbia and Surrounding States More than $1.4 Billion, 10,000 Jobs in 1997

WASHINGTON, Feb. 3, 1999 — Microsoft Corp. today released statistics revealing that in 1997 software piracy caused the loss of an estimated 10,000 jobs and more than $1.4 billion in combined wages, tax revenues and retail sales in the District of Columbia and neighboring states. Microsoft announced the data in Washington, D.C., at its annual Explorer Conference and Exposition, which is being held Feb. 3-4 at the Washington Convention Center.

The information was released as part of a national effort by Microsoft to raise awareness that software piracy hurts more than just the software industry. The data shows how software piracy – the theft of software through illegal copying of genuine programs or counterfeiting and distribution of imitation products – adversely affects local businesses and economies, as well as the value placed on people’s ideas.

According to Microsoft, the 10,000 jobs lost to software piracy in the District of Columbia region translated into more than $426 million in wage and salary losses. In addition, the data shows that the region lost more than $71 million in tax revenues that could have instead contributed to federal and state improvement projects. International Planning & Research Corp. of Redmond, Wash., used 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 Washington, D.C.; Virginia; West Virginia; and Maryland.

“We in the mid-Atlantic region greatly benefit from a robust IT sector that provides good jobs, innovative products and a source of important research and development,”
said Brian Campbell, general manager of the mid-Atlantic district for Microsoft.
“But software piracy is the large storm cloud looming on the industry’s horizon. Piracy affects all of us, from the lone developer working at home to large resellers and corporations. No one is immune from this problem, so we should all continue to work together to stamp it out.”

In the mid-Atlantic region, the economic impact was greatest in Virginia, where piracy cost $234.6 million in wages, $629.4 million in retail sales and $40 million in federal and state taxes. In Maryland, piracy cost the state more than $142.3 million in wage and salary losses, $279.3 million in retail sales losses and nearly $24 million in taxes. In Washington, D.C., piracy translated into losses of $28 million in wages, $31.6 million in retail sales and $3.8 million in taxes, and in West Virginia, piracy cost $21.9 million in salaries, $10.6 million in retail sales and $3.5 million in lost taxes.

Campbell noted that the software industry is working through the Business Software Alliance to fight piracy and raise the level of awareness about the importance of protecting intellectual property in the digital age. Based in Washington, D.C., the Business Software Alliance is the voice of leading software developers before governments and with consumers in the international marketplace. BSA members worldwide include Adobe Systems Inc., Attachmate Corp., Autodesk Inc., Bentley Systems Inc., Corel Corp., Lotus Development Corp., Microsoft, Network Associates Inc., Novell Inc., Symantec Corp. and Visio Corp.

“Software piracy undermines the value of intellectual property, the protection of which dates back to the U.S. Constitution,”
said Bob Kruger, vice president of enforcement at the BSA.
“It is imperative that we uphold the incentive to innovate if we want the technology industry to continue to thrive. We hope that President Clinton’s Executive Order, which directs the federal government to prevent and combat software piracy, will provide a much-needed stimulus to start shifting the tide.”

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.

Steve Taylor, president of the Nation’s Capital Chapter of the Association of Microsoft Solution Providers, said that software piracy costs honest resellers between five percent and 10 percent of their revenues. Taylor said that resellers need to do more to educate their customers on the perils of piracy and the need to have compliant licenses.

“I would tell our customers that now is the time to get compliant,”
Taylor said.
“The IT industry’s strength is at risk from piracy.”

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. They 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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