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Software Piracy Facts

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(updated on March 2023)

What is Software Piracy

Software piracy is the illegal copying, distribution, or use of software. It is such a profitable “business” that it has caught the attention of organized crime groups in a number of countries. Here are some alarming data: The software business lost $46.3 billion to theft and piracy between 2015 and 2017. This translates into losses of tens of billions of dollars for the software industry. However, there is good news. According to the Business Software Alliance (BSA), globally, the percentage of pirated software decreased to 37% in 2017 from the previous two years, a 2% decrease. However, during the Covid pandemic (2020-2022) software piracy increased  between 20 % – 30 %. 

Software piracy has become a worldwide issue, with China, the United States and India being the top three offenders. The commercial value of pirated software is $19 billion in North America and Western Europe and has reached $27.3 billion in the rest of the world. According to the 2018 Global Software Survey, 37% of software installed on personal computers is unlicensed software.

The same study states, “Dealing with the malware associated with unlicensed software can cost more than $10,000 per infected computer for a worldwide total of more than $359 billion.” It’s important to notice that a typical malware assault costs $2.4 million, takes 50 days to stop, and takes 243 days to find.

Software piracy doesn’t require a hacker or skilled coder. Any normal person with a computer can become a software pirate if they don’t know about the software laws. With such a widespread impact, it’s important to understand software piracy and its dangers.

When you purchase a commercial software package, it includes an end-user license agreement ( EULA )  to protect that software program from copyright infringement. Typically, the license states that you can install the original copy of software you bought on one computer and that you can make a backup copy in case the original is lost or damaged. You agree to the licensing agreement when you open the software package (this is called a shrink-wrap license), when you open the envelope that contains the software disks, or when you install the software.

Software piracy applies mainly to full-function commercial software. The time-limited or function-restricted versions of commercial software called shareware are less likely to be pirated since they are freely available. Similarly, freeware, a type of software that is copyrighted but freely distributed at no charge, also offers little incentive for piracy.

Malware from unlicensed software costs companies worldwide nearly $359 billion a year. (Software Management: Security Imperative, Business Opportunity)

Types of Software Piracy

It seems that illegal software is available anywhere, to anyone, at any time. The following are some of the methods by which illegal copies of software circulate among computer users.

Softlifting – The most common type of piracy, softlifting (also called softloading), means sharing a program with someone who is not authorized by the license agreement to use it. A common form of softlifting involves purchasing a single licensed copy of the software and then loading the software onto several computers in violation of licensing terms. On college campuses, it is rare to find a software program that has not been softloaded. People regularly lend programs to their roommates and friends, either not realizing it’s wrong or not thinking that it’s a big deal. Softlifting is common in both businesses and homes.

Hard disk loading – Often committed by hardware dealers, this form of piracy involves loading an unauthorized copy of software onto a computer being sold to the end user. This makes the deal more attractive to the buyer at virtually no cost to the dealer. The dealer usually does not provide the buyer with manuals or original CDs of the software. This is the main method to pirate operating systems like Windows.

Renting – Renting involves someone renting out a copy of the software for temporary use without the permission of the copyright holder. The practice, similar to that of renting a video from Blockbuster, violates the license agreement of the software.

OEM un-bundling – Often just called “un-bundling,” this form of piracy means selling stand-alone software originally meant to be included with a specific accompanying product. An example of this form of piracy is someone providing drivers to a specific printer without authorization.

Counterfeiting – Counterfeiting means producing fake copies of software, making it look authentic. This involves providing the box, CDs, and manuals, all designed to look as much like the original product as possible. Microsoft products are the ones most commonly counterfeited because of their widespread use. Most commonly, a copy of a CD is made with a CD-burner, and a photocopy of the manual is made. Counterfeit software is sold on street corners, and sometimes unknowingly sold even in retail stores. The selling price of Counterfeit software are far below the actual retail price.

Online piracy – The fastest-growing form of piracy is Internet piracy. With the growing number of users online, and with the rapidly increasing connection speeds, the exchange of software on the Internet has attracted an extensive following. In the past, bulletin board systems (BBS) were the only place where one could download pirated software. Currently, there are hundreds of thousands of “warez” sites providing unlimited downloads to any user. Often, the software provided through these “warez” sites is cracked to eliminate any copy protection schemes.

Client-Server Overuse – Similar to softlifting, client-server overuse is a software piracy type in which one legitimate software copy is used by more users than intended by the end-user license agreement. However, what distinguishes client-server overuse from softlifting is that the software installed on a local area network (LAN) is used on multiple computers within that network.

On average, this sort of online piracy represents willful infringement, and software pirates do it to cut costs. This can sometimes be seen in workplaces or group university projects, too.

The Dangers of Software Piracy

Software piracy may have a cheaper price point, but there are many dangers that software pirates should be aware of.

The consequences of software piracy are:

  • Increased chances that the software will malfunction or fail
  • Forfeited access to support for the program, such as training, upgrades, customer support and bug fixes
  • No warranty and the software can’t be updated
  • Increased risk of infecting your PC with malware, viruses or adware
  • Slowed down PC
  • Legal repercussions due to copyright infringement

“Using pirated software carries high penalties under copyright law for users caught in the act. In the United States, copyright infringement can lead to up to five years in jail and a $250,000 fine. The owner of the software’s copyright can also sue for damages, which can run as high as $150,000 per copy.

Keep your PC secure by only purchasing software from authorized dealers. Be aware of any software’s terms and conditions — make sure you agree and adhere to their guidelines.

How Companies Prevent Software Piracy

Anti-Software PiracySoftware piracy is a major issue affecting organizations and developers alike. Consequently, companies need to implement anti-piracy protection systems on their software-based products.

Legal protection – Most companies make sure their software is protected legally by a user agreement. Letting consumers know that making unauthorized copies is against the law will help prevent people from unknowingly breaking piracy laws.

Product key – The most popular anti-piracy system is a product key, a unique combination of letters and numbers used to differentiate copies of the software. A product key ensures that only one user can use the software per purchase.

Tamper-proofing – Some software programs have built-in protocols that cause the program to shut down and stop working if the source code is tampered with or modified. Tamper-proofing prevents people from pirating the software through the manipulation of the program’s code.

Watermarking – Watermarks, company logos, or names are often placed on software interfaces to indicate that products are legitimately obtained and are not illegal copies.

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