The piracy industry is made up of people and organizations which profit from selling illegal or bogus copies of genuine software. The nature of the internet today means that counterfeiting is likely more profitable than simply selling copied software. The true costs of piracy to both the software industry and society are heavily disputed.
Software manufacturers use a variety of techniques to combat the piracy industry. The most common is requiring a license key, a specific number which makes a specific copy of the software work. Often, such software must be registered online so that the same license key can’t be used twice.
Ironically, the piracy industry is less likely to thrive online than in the physical world. That’s because many illegal copies of software are available through distribution methods such as peer-to-peer filesharing, particularly torrent systems, where it is difficult or impossible to charge downloaders any money. Most people who consider using pirated software to be morally acceptable will prefer to get copied programs free of charge.
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It’s arguable that the piracy industry actually makes most of its money from counterfeiting. This is where software is passed off as legitimate and customers do not always believe it is copied. In some cases the product sold is a copy which is sold at below retail price but still makes a large profit for the pirates. In other cases the software is completely bogus and will not work. This is more common in online sales, particularly across international borders where customers will find it difficult to seek redress.
The cost to legitimate software manufacturers from the piracy industry is disputed. Figures released by the Business Software Alliance in 2009 said piracy worldwide cost $53 billion US Dollars (USD). This figure was based on the estimated number of pirated programs and their full retail value. However, critics argue this is unrealistic as many people who use pirated program would not have paid for it in any case. But there are also other associated costs to piracy such as third-party retailers losing business, and governments losing tax revenues from legitimate sales.
Some American officials have claimed the piracy industry funds terrorist activity. It’s unclear if this is strictly true as, although some piracy is carried out by large-scale criminal gangs and some gangs fund terrorism, there have been few, if any, direct links between piracy and terrorism made public. This has led to accusations that officials exaggerate the link as a way of scaring computer users away from using pirated software.