Where's the Warez?

Illegally posted software is costing the industry billions of dollars.

By LAURIE LANDE
Staff Reporter of THE WALL STREET JOURNAL

Singapore college student Teh S. prides himself on owning the latest versions of software. He's even prouder of the fact that he didn't spend one dollar to acquire his collection.

"I don't go to sites on the Internet to buy software -- they are provided for free!" he says in an online exchange with a reporter. "I have never bought warez online."

Warez -- slang for pirated software posted on the Internet -- can be downloaded from thousands of Web sites around the world. These sites give users access to software and games for free or for a fraction of the original cost. Teh, for example, who asked to use only his first name, says a friend bought Microsoft Office 2000 from a warez site for $4, vs. the online retail price of more than $400. And, he boasts, warez software can be had without leaving the comfort of home.

"I call the Internet the home shoplifting network," says Bob Kruger, vice-president for enforcement at the Business Software Alliance, a Washington, D.C.-based organization that represents the software industry. "It's borderless, it runs 24 hours a day and it carries all the latest models."

Although Asia has long been associated with the production and distribution of pirated goods, the more significant long-term threat to the software and games industries comes from the thriving Internet sector in the U.S., trade groups like the software alliance now say.

Warez sites are popping up on servers throughout Asia as well, prompting copyright cops to launch a whole new type of enforcement effort in Asia in the last two years.

Steve Oh, a Seoul, South Korea-based attorney with Microsoft Corp., has been monitoring Internet piracy sites in South Korea since May 1998. That month, his staff found 704 sites by prowling Korea's top four Internet-service providers, punching in warez-related keywords. Since then, his monthly tally has ranged from 175 to 700 sites.

"I'm sure what I've found is just the tip of a huge iceberg," says Mr. Oh, noting that he only monitors a fraction of the more than 100 ISPs in Korea. To make matters worse, Korea's ISPs haven't been terribly cooperative when Mr. Oh has sent them "take-down letters," asking them to shut down warez sites based on their servers.

Peter Cho, a Microsoft colleague who monitors piracy in Taiwan and southern China, has had more luck in Taiwan. A more intractable problem, he says, is that 75% of the Chinese-language piracy sites he finds are hosted on U.S.-based servers, making it nearly impossible to shut them down. The software industry lost $11 billion in 1998 to cheap bootleg copies of pirated programs, but the "electronic distribution of copyrighted works over the Internet threatens to make this [physical] problem seem almost quaint by comparison," says Mr. Kruger. BSA doesn't track losses on Internet piracy because the necessary scientific analysis is nearly impossible to obtain, he says.

But as any Internet search under the keyword "warez" would show, the number of Internet piracy Web sites is steadily increasing. In Asia, technology centers such as Singapore, Japan and South Korea tend to be the locales where Internet piracy is most popular and Internet pirates abound.

Trade groups like BSA and the Interactive Digital Software Alliance send out upwards of 100 shutdown notices a month as their main enforcement tool. Yet it's unclear how much such publicized efforts deter would-be pirates. Teh, the 24-year-old Singaporean student, highlights BSA in one of his e-mail exchanges, noting: "Piracy is rife in Singapore ... . Weekly raids by the BSA can't stop 'em."

Teh's home page provides links to U.S.-hosted warez sites. He monitors the links routinely, changing them if the sites turn out to be hoaxes or dominated by porn material. Most of his friends also use warez sites, while others access them through his Web page, which is hosted on his university's Internet server.