Software Pirates Pile Up Profits In Afflicted Asia

Cheap CDs prove irresistible

Hunkered behind his sales counter, software pirate Amorn Srichawla is digging in for a fight: "My information is that there'll be a raid next week."

At Panthip Plaza, a shopping center specializing in computer gear, antipiracy raids are a seasonal affair. "The police come about twice a year, once in June or July and then before the new year," says Mr. Amorn, who owns eight software stores that sell mainly pirated compact discs. "We know because the police tell us."

For the software pirates of Thailand, cat-and-mouse raids are just part of their business. Copyright infringement, say the pirates, is here to stay. The incentives for buyers and sellers are just too great.

"It now costs as little as 50 cents to produce a pirate CD," says an American analyst here. For $10, computer buffs can pick up CDs bundled with thousands of dollars worth of illegally copied software. "You can buy Oracle's database system for $25, whereas it would cost you around $20,000 to buy the real thing," Amorn says.

Tumbling Asian currencies, creating huge price advantages, along with declining corporate profits, are conspiring to make software piracy in Asia more tempting than ever.

"There is a definite link between a struggling economy and increases in piracy," warns Alex Mercer, an Australian marketing executive at the Business Software Alliance (BSA), an international antipiracy lobby.

But while Asian pirates fill their pockets, American software developers complain that they are losing billions in missed sales. The BSA, an alliance of major American software companies, estimates worldwide losses to be around $11 billion. Asia alone accounts for a third of that figure.

"And it's getting worse," grumbles Huey Tan, a BSA spokesman in Bangkok. In Vietnam, for example, 99 percent of personal computers are thought to run on pirated software. In China, potentially one of Asia's most exciting markets, the statistics are scarcely better: 96 percent of all software is pirated there, says the BSA.

One problem has to do with perceptions. Many Asians are still fuzzy about the concept of intellectual property rights and see little wrong in hunting down a software product at the lowest possible price, even if it is an illegal copy.

"It's just not fair," Amorn groans. Software companies "should reduce their prices. If I sold the original software, I wouldn't even sell 10 percent of what I'm selling now.

"Look at [Microsoft Corp. chairman] Bill Gates; he's the richest man in the world."

Dhiraphol Suwanprateep, a Thai lawyer working for the BSA in Bangkok, agrees. "There is a feeling among some people that the pirate software dealers are simply engaged in competitive business practices against companies who are charging too much for their product," he says.

"Outright corruption is a factor, too," says an American analyst, who asked not to be named. "There's a bidding war between private software companies and the pirates. They're both trying to buy the police's support."

The BSA maintains that prices and piracy shouldn't be linked. "If you have the money to buy a car, then you should have the money to pay for the gas to run it," points out Mr. Dhiraphol. "With computers, it's the same. If you buy a computer, you have to plan for the cost of software."

Mr. Tan of the BSA puts the issue in even starker terms. "Whether the economic situation is good or bad, people should realize that software piracy is illegal," he says.

Supporting that line, the US government has been dangling antipiracy incentives. In 1993, the US Trade Representative named Thailand as a "priority foreign country" and withdrew preferential trade privileges on 16 items.

That hard-line approach brought quick results. By 1995, Thailand had a new copyright law stipulating penalties of up to four years in prison and fines of $20,000 for offenders.

The only problem is, the new law is rarely applied. In Thailand, BSA officials estimate that the number of stores selling pirated software at Panthip Plaza has actually risen from a dozen three years ago to more than 80 today.

Last April, US Trade Representative Charlene Barshefsky again put pressure on Thailand, placing it on a watch list for its widespread copyright infringement.

At the beginning of December, Thai officials opened a special intellectual property court, the second such institution to be set up in Southeast Asia (the other is in Hong Kong).

"It was partly as a result of external pressure and partly because the Thais have started to see their own products being ripped off by other countries in the region," explains an American expert here.

At their most extreme fringe, software pirates hit back at critics with nationalist arguments. "I don't see why we in developing countries should pay the same amount as Americans for software," said a Thai journalist, echoing their argument at a recent BSA press conference in Bangkok.

Realists say piracy will remain a problem for many years. "We are concentrating on both education and enforcement," Tan says. "The emphasis is on making people understand the value of intellectual property. Right now, we're focusing on businesses, government, and universities."

Just in case that message doesn't get through, the BSA has set up a hotline in Bangkok and is handing out cash rewards of up to $6,000 for information leading to the prosecution of pirates or companies using illegal software.

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