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Software companies have had a long and conflicted history with those who misappropriate and misuse their intellectual property. There are many common myths about software piracy have convinced software executives that piracy is not a significant problem. Today we’ll discuss one of those myths.

Software Piracy is a Form of Viral Marketing

We often hear software vendors say that they like software piracy because it’s a form of viral marketing. It’s getting their product out there, in the hands of their prospects. While misuse certainly grows your unlicensed customer base, its effectiveness as a viral marketing campaign is only measured by the rate those unlicensed users convert to paying customers. Much like a free trial version of your software, you need to be able to track and measure use and conversion to a paying customer for piracy to be an effective marketing tool.

“Hope” Is Not a Viable Strategy

Back in 1998, Bill Gates had a similar feeling about software piracy, “as long as they’re going to steal it, we want them to steal ours. They’ll get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade.” There is an inevitability of software piracy and misuse, but there is not really a plan to tackle the problem (or as we look at it, capitalize on the opportunity).

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We hear many software companies take a similar stance – let them use our product for free, they’ll really like it, and then hopefully they’ll eventually pay for it. Well hope is not a viable strategy for converting unpaid users into paying customers. And 16 years after Bill Gates made this statement, the software piracy rate is only growing. According to a BSA Global Piracy study, the total worldwide piracy rate has actually increased from 36% in 2003 to 42% in 2011.

Since then, Microsoft has taken various steps to protect its customers and battle piracy including partnering with the BSA, issuing hundreds of thousands of takedown notices each month, working with various legal and government agencies, and introducing their Windows Genuine Advantage program to enforce online validation of product licensing.

Make Unpaid Use Work For You

The common myth that software piracy is a form of viral marketing can be true, but only if you have a strategy in place to convert unlicensed users into paying customers.

There is significant revenue opportunity for software companies that can track, identify, and convert unpaid users. First mover software companies that lead the industry with an institutionalized unpaid user conversion strategy are already enjoying a significant competitive advantage over their slower moving rivals by increasing their top line revenues up to 25%.