If youre a small or medium-size company, theres a good chance youve heard from the Business Software Alliance about getting your software compliant with its licenses. If not, you probably will. The group is well into a nationwide letter and radio campaign to do just that.
But what you probably dont know is that, like so many of the companies that stuff your mailboxes with junk mail, the BSA, which represents such software giants as Microsoft Corp., Adobe Systems Inc. and Apple Computer Inc., has no intention of following up on its letters—regardless of how threatening and personal they may seem. It wont phone. And it wont pop in for a surprise audit.
Instead, an eWeek investigation reveals, the BSAs campaign is primarily a marketing effort essentially designed to scare people into buying more software. But for many enterprise customers who are quickly becoming fed up with the groups hardball tactics, the campaign is having the reverse effect: compliance, then departure to alternative products, like open source.
The reason the BSA Truce Campaign is more bark than bite is simple: As part of each Truce Campaign, the group sends out hundreds of thousands of letters at a time to businesses in a handful of cities. For the month of July, for example, it mailed 700,000 letters to businesses in five cities between New York and Portland, Ore. As such, it would be virtually impossible to contact even a sample of those companies to check up on their progress or lack of progress.
Indeed, one of the only ways the BSA is gauging the success of the Truce Campaign is by the size of the spike in software sales for various cities as the BSA passes through, which so far total 19.
“Everywhere weve run the Truce Campaign, were seeing dramatic increases in sales,” said Bob Kruger, vice president of enforcement for the BSA, in Washington. “So its being successful.”
But a deeper look into the Truce Campaign, as well as an ongoing and almost identical anti-piracy campaign by Microsoft, a founding member of the BSA, reveals something more complex: the possible beginning of an entirely new business model built around anti-piracy and fear. The bottom line: Theres money in anti-piracy, and plenty to go around.
To be sure, piracy results in major losses of revenue for the software industry. According to the BSA, $2.94 billion was lost to piracy in North America alone last year, while $11.75 billion was lost to it globally for the same period. But so far this year, those figures have declined.
Since the launch of its enforcement campaign in North America in 1993, however, the BSA has brought in about $70 million in settlements, a mere drop in the bucket compared with the overall total. Now it seems the industry, with the help of the BSA, is taking a new tack, with its focus on generating revenue the old-fashioned way.
Consider the following: Microsoft has been busy constructing a network of support services through distributor and licensing partners to assist customers in assessing and auditing their software to comply with their licenses.
One Microsoft partner, License Online Inc., of Bellevue, Wash., tracks where the BSA is headed and rounds up as many of its 36,000 registered channel partners as it can for those cities to swoop in and sell licenses.
“When we know what area the BSA is going into, were going in scrambling to piggyback on their marketing efforts,” said Sharon Erdman, vice president of marketing for License Online.
License Online offers its partners across the United States a 12 percent commission on any licenses they sell through License Online. To get the contractors rolling, the company supplies them with a list of companies Microsoft has sent its anti-piracy letters to. In addition to commissions, the contractors are told the companies contacted have the potential to become “long-term” customers.
“Microsoft has absolutely partnered with businesses who can address the concerns,” according to Devin Driggs, a Microsoft spokeswoman in Lake Oswego, Ore. “It feels a responsibility to its customers to address any issues with compliance they may be experiencing.”
As far as the anti-piracy fight becoming a business unto itself, Driggs said Microsoft views the subject as an industry issue.
Kruger acknowledged that the BSAs letter campaign is a direct marketing campaign designed to encourage users to get in compliance and not directed at any company in particular. The group uses common mailing list companies such as Dun & Bradstreet Inc. to generate the lists.
Microsofts campaign is more deliberate, company officials said.
“I dont think were doing anything thats random,” said Nancy Anderson, associate general counsel for the company, in Redmond, Wash. As part of Microsofts licensing agreements for its products, Anderson said, “the customer agrees to assure us they are current. The obligation is on them to assure them and to undertake an audit if requested by Microsoft.”
Not surprisingly, however, the hardball tactics are having a negative effect on customers.
“We were nailed for tens of thousands of dollars,” said Cary White, an IT manager at a financial services company in San Diego who acted on a letter from Microsoft. “We received a letter addressed to our CEO that they received a tip we were not compliant with Windows, Word and Excel. … That was a fishing expedition.”
“My company is to completely go away from Microsoft,” White said. “Were not going to buy any more Microsoft products. Its my decision. Theyre alienating their customers. I dont trust them.”
The fear factor
For the BSA and Microsoft campaigns to work, the fear factor is essential, according to letter recipients contacted by eWeek.
“[Fear] is the first emotion when you get the letter. Its like, Oh my God, the Gestapos coming,” said Robert Fuller, president and chief operating officer of R.E. Fuller Engineering Consulting, a one-man company in Camas, Wash.
The BSA has struck fear in customers minds through carefully worded, but threatening letters and an accompanying radio ad blitz warning businesses to beware of disgruntled employees dropping dimes on them.
According to the BSAs Kruger, the Truce Campaign is merely a 30-day grace period companies can use to get their software in compliance. If a company does use the time to get in compliance, it will avoid any potential future BSA investigation that may spring up as a result of its radio ad blitz.
But that doesnt explain the BSAs use of what many are calling threatening language. Whats troubling to businesses, besides not being informed on how they were selected for the mailing list, is the letters accusatory tone. For example, one line reads: “If youre caught [with unlicensed software], your organization could face penalties totaling hundreds of thousands of dollars.”
And while Kruger insists the Truce Campaign is not a vehicle for generating leads or tips, that contradicts the thrust of the BSAs radio spots.
For example, at one point, the announcer in a radio spot for the Truce Campaign currently running in New York asks Kruger how the BSA receives most of its leads. Kruger responds: “Most of the calls come from current or former employees. I would say to businesses that, unless you have no current or former unhappy employees, you are only one phone call away from becoming the target of a BSA investigation.”
“My managements concern was that there was almost a bit of paranoia about [the Truce Campaign],” said Peter Rassmussen, a technology manager at a Midwest retailer. “There were radio ads going on at the same time that sounded like Joe Stalin encouraging you to turn in your parents.”
As for Microsoft, Anderson said, its not in the companys interest to frighten customers. “We dont want to create anxiety,” she said. “Its not our interest.”
Misleading the pack
Exacerbating the anxieties for companies contacted by eWeek that have received Truce Campaign letters was the seemingly intentional vagueness of the letters, vagueness that is compounded by misleading information.
For example, though the Truce letter establishes a 30-day deadline for software reviews and includes a line that states, “If the BSA contacts you, just show your Truce Participation Number and software purchase receipts to take advantage of the Truce,” the BSA has no intention of contacting any letter recipient.
But at least one radio spot, the one currently playing in New York, implores letter recipients to “review your software installations and acquire the licenses you need before the Business Software Alliance returns to New York City!”
Still, Kruger insists: “We dont visit any of these companies. The ones getting the letters are not under investigation.”
When asked if these discrepancies were misleading or at least confusing, Kruger said any letter recipient who is confused can go to the BSA Web site or call the Truce hot line for information.
Also at issue is ironing out exactly what authority the BSA has to present deadlines, request software reviews or even conduct audits. According to Kruger, the only authority the BSA has, as power of attorney for its members, is to seek court orders on behalf of its members to conduct software audits on businesses suspected of using pirated or unlicensed software. But even then, the BSA does not seek such court orders frivolously.
“We only proceed on the basis of reliable information,” Kruger said. “We take pretty good pains here to make sure our cases are based on solid information before going forward.”
Indeed. Despite the tone in the Truce Campaign letters and radio ads to the contrary, the task of proving guilt lies with the BSA.
“The burdens on the BSA to prove itself to the court,” said Peter Baruk, director of anti-piracy at Network Associates Inc., in Santa Clara, Calif., and former vice president of piracy for The Software & Information Industry Association, another software advocacy group in Washington that conducts piracy investigations. “If youre contacted by the BSA and doing the right thing, you have nothing to worry about. So, why respond? You can and be a good corporate citizen. [But] theres no reason why youd have to react to a letter like this.”