I personally don't agree with the number published annually by the Business Software Alliance, but it is interesting to note that the Washington Post is reporting that this year's numbers are actually down (in terms of percentage of pirated software in use).

They mention that the "cost" of software piracy has increased, due to the continuing increase of software products. This is where I tend to have problems. I just don't believe that you can estimate software piracy "cost" on the basis of usage. Many people have or even use software that they would never purchase if given the choice of not using it or paying for it.

Some of this problem is akin to the music problem of being required to pay for stuff you don't want, but most are a mere question of financial benefit of software. Software companies charge what they can for software and base some of the price on the consideration of how expensive the software was to create. Hence, a program like Microsoft Word, which tries to be all things to all people, gets very expensive over time. However, there are people who state that they are being forced into buying software that does drawing (inside of Word) because Microsoft won't let them buy a lighter-weight version of the product that does what they need and no more. I don't condone such arguments, but I do see where they are going with them.

It's similar to the problem with CD's, there is a substantial portion of the population that would rather purchase a single song for 99 cents than purchase an entire album for $12-$15. In music, this is starting to lead to a change in the way the product is sold. Eventually, it may even lead to a change in the way that it is produced, allowing that not every song needs to be part of an album.

On the software side, Microsoft has been talking for years about the importance of component development, but they don't provide any substantial components for use in their own software. If they wanted to follow this road, they could sell a version of Word for $99 that does the basic editing and styles, and have add-on packages that allow for the more advanced functions such as reviewing, graphics, etc. Their software is certainly structured in this way internally, but it would cause a substantial change in their pricing structure if they were to do this, so the company (and they're not alone) continues to attempt to increase the price of software through bundling products and features together. Why buy Word for $350 if you can buy Office for $700.

This brings me to my second point. Some people just wouldn't buy the software if it cost them anything. They can either live without it, or they just don't have the money. These folks are an interesting demographic. Often, they are included in the money that is being "lost" by software companies, because the assumption is that the companies could get them to purchase software if they just had really invasive techniques. Chances are that the products just wouldn't be used. Instead, either open source or freeware solutions would be used instead for many of these cases. On the surface, that might look like a good reason to put more invasive copy protection into place. Why should these scofflaws use software for free that good hard-working people pay for. In the end, the question comes down to marketing and market share. If you have a commercial product and an open source or freeware competitor, do you want people using your competition or using your product, regardless of whether they pay for it? In the end, people who use software talk about it. If your product is good, then people say nice things about it and it is more likely that they will purchase the software (if they are among those inclined and with the resources to do so). If, on the other hand, the people are talking about an open source solution, not only did you lose the sale to the guy who was not going to pay for the software in the first place, but also to the people he recommends software to. In many environments, these people are influential, because they tend to have a large collection of software and are therefore considered experts, even though they haven't purchased the software in the first place.

So, the BSA will continue to publish their "lost sales" numbers and the RIAA will eventually do the same, with the MPAA following suit, but it won't change the fact that there will always be people who don't want to pay the price for product. In the world of hard goods, this is a problem that cannot be ignored, because there are significant costs and they are borne by the people least likely to afford them (the retailers), however in the world of intellectual property, the advertising value may well be greater than the value of having a non-customer use a different product and talk about that.

In the end, the more draconian (read: Palladium) that the copy protection and rights enforcement measures get, the less the public will appreciate the software that they pay for and the more they will feel oppressed by the software companies. This just doesn't sound like a nice future for software, music, movies, or the end-users or producers thereof.