Increase Your Commission by Reducing Software Piracy

By Geoffrey James
Most software sales reps know that software piracy is a problem, but few realize how big that problem has become. Fully one third of the software installed worldwide is pirated, representing a global loss to the software industry of $33 billion a year, according to the Business Software Alliance (BSA), an international association of software developers.
While there are some regions of the world, such as China, where virtually all of the software is pirated, more than one-fifth of the software in the United States is unlicensed, representing a whopping $6.6 billion in lost revenue. While much of that loss involves shrink-wrapped products normally sold through retail outlets, a significant percentage of the lost revenue comes from software licenses included as part of a solution sale. In other words, approximately $1 billion in commissions is lost each year. “Every copy of software used without proper licensing costs tax revenue, jobs and growth opportunities for burgeoning software markets,” says BSA CEO Robert Holleyman. If you’re selling high-priced software, it’s even more likely that your customers have pirated copies, according to David Thomas, vice president of the software division of the Software and Information Industry Association (SIIA), another trade group.
Even though you might be suspicious that a customer isn’t completely on the up and up, you can’t rush in with accusations, at least not if you want to keep your customer happy. So here are some alternate approaches.
If you’re reasonably sure that piracy is happening but don’t want to confront the customer directly, consider letting the SIIA handle the situation. Any company that’s bootlegging your software probably is bootlegging software from other vendors. If the piracy looks large enough, the SIIA might be willing to file a lawsuit on behalf of the software industry. At any one time, the SIIA has between 150 and 200 lawsuits in progress, according to Thomas.
A second approach is to watch for software piracy arrests and convictions against companies that your customer would know, such as local businesses or competitors in the same industry. Pass the information about the arrests and/or convictions to your customers to give them a heads up that they might be at risk. Needless to say, you’ll have to be diplomatic and position yourself as being helpful rather than pointing fingers: I know that sometimes things fall through the cracks, but the software industry is getting more litigious, so you might want to do an audit of your licenses.
Some software companies have reduced piracy by implementing things such as a USB dongle device that must be inserted into a computer before the software can run on that computer. Similarly, some application implementations require a network registration across the Internet to check whether the software copy is valid. Unfortunately, such actions are effective only temporarily. There isn’t a copy protection scheme or antipiracy software code that can’t be reverse engineered. In some cases, the hack to get around a security feature appears on the Internet within hours of the software’s commercial distribution.
Long term, the only way to ensure that companies – and you – get paid is to sell software that’s not installed on the customer’s own computers. “If you offer your software as a service across the Web, you have complete control over who uses it and when,” says Thomas, “Barring somebody breaking into your site and stealing your source code, there’s no way that anybody can pirate hosted software.”