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In July most thoughts turn to lazy summer days and vacations. But in Los Angeles last week, technology and entertainment heavyweights united to hammer out a compromise on high-definition video piracy. And in Washington, DC, one technology group’s collective mindset is also on piracy, but of a different sort: software piracy.

That organization, The Business Software Alliance (BSA), issues its annual piracy report this time of year, and uses its findings to make politicians, journalists, and the public aware of the epidemic. And the BSAs 2004 report, released July 7, contained some startling statistics. Among its findings: 36 percent of all software around the world was not paid for. The monetary losses for software piracy worldwide this year estimated to be a staggering $29 billion. And in countries such as China and Vietnam, a full 92 percent of all software is pirated. Believe it or not, it used to be worse in those countries, says Jenny Blank, director of enforcement for the BSA. Its actually getting better there.

Its not getting better overall, however. The software association’s efforts to confront the piracy problems in markets such as Asia, where the situation seems most acute, is laudable. But a fertile potential marketplace for legitimate software sales appears to have been summarily ignored: peer-to-peer networks. Whats more, these P2P networks may offer software vendors an untapped marketplace in which to sell their goodsan approach not yet taken by the software industry.

Software swapping on such networks is growing dramatically, according to Eric Garland, CEO of BigChampagne a company that tracks P2P file swapping similar to the way Nielsen tracks TV viewership. In June, software comprised 5.7 percent of all traffic on the major P2P networks, according to BigChampagne. That’s a significant increase from the 3.3 percent figure for March and 1.5 percent in June 2003. With more broadband usage and bigger hard drives, people are looking to P2P networks for more diversified kinds of content, Garland says.

Strangely, however, the BSA hasnt done much outreach or enforcement of its constituents products on these networks. We havent seen any demonstrated or concerted effort to mount a counter [swapping] effort online, says Garland.

We have a group of people working to find out piracy online, and issue cease-and-desist notices, says Blank. But the BSA hasnt been as aggressiveat least publiclyin fighting P2P piracy as have other trade organizations. For example, the group hasnt yet followed the Recording Industry Association of Americas path and sued individual users. Is that in the future? Never say never, says Blank. Clearly, the majority of file traffic on these networks is unsanctioned swaps of copyrighted materials, but a problem as enormous as software piracy needs radical solutionsand P2P networks present some intriguing opportunities.

The BSAs attitude toward P2Pone shared by most technology lobbying organizationsis that these networks are dens of illicit activity. And in practice, there’s a lot of truth to that. But there’s nothing inherent in P2P technology that makes it exclusively suited for such outlaw applications. At their most basic level, P2P networks are marketplaces for consumers and potential customers. Its just that in most cases, the goods are free.

That’s not always the case, however. On Kazaa, for example, some music companies have started selling song downloads to combat piracy. Theres no reason why some of the affected software companies couldnt similarly offer legitimate software for sale.

On its face, offering to sell a piece of software in a forum where users can obtain the same product for free sounds like a futile endeavor. However, the illicit nature and reputation of these networks makes these sales more likely. Heres why: With the possibility for viruses so high when downloading a piece of software from these networks, consumers may be more likely to purchase software from a trusted source. If youre an intellectual property owner, you have to make it as easy to legitimately acquire your product as it is to swipe it, says Garland. People dont care if an MP3 file is Sony sanctioned. But if youre going to do your [finances] with a piece of software, you want to get the real McCoy.

Worldwide software piracy, as this most recent report makes clear, is out of control. To stanch the losses, organizations such as the BSA need to offer consumers a bit of carrot along with the necessary stick. Peer-to-peer networks seem like an unlikely candidate for a carrot in the form of an attempt to legitimize the market. But in fact, theyre a modern day examples of one of the oldest maxims in sales: Go where your customers are.

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