They hear from the snitch you copied that disk, they send in the marshals to bust your ass. No joke.
An old, baggy-eyed, Einstein-haired Frenchman, wearing a white lab coat and orange polyester pants, sits typing at a desk. He peers up to see a chic, statuesque woman in her late 20s, wearing a fringed black miniskirt, who materializes, as if in a dream, before him. "Salut," she says softly, her red lips mouthing the words, ever so slightly out of sync. Meanwhile, the eye of the camera travels over her neck, pans down the curve of her shoulder, along the slope of her belted waist, and rests on a fringed hip. Then she thrusts her hands into the old man's coat, slowly unbuttoning his shirt. "Je peux ... rendre service chez vous ou dans le bureau," ("I can service you at your house or at the office") she willfully promises.
My Gawd, I'm thinking, I've seen a lot of bad corporate propaganda videos in my time, but this thing is so bad it's almost good. It's more French than French, more allegorical than Aesop. The story is simple: the woman, representing the Whore of Illegally Copied Software, tries without success to seduce the old man into putting her on his hard drive.
Eventually, realizing that she cannot succeed, she asks what she can do to work legally. He hands her a card bearing the number of the Software Publishers Association. "They can help you," he sighs. On the video cover, the title La Pirate looms over a cartoon of two men in an office, one of whom is passing a floppy disk to another. The cover doesn't give any hint of the cavorting that is depicted on the magnetic tape within. The back cover, translated, reads: "The Software Publishers Association Europe is a European professional association promoting the interests of microcomputer software publishers."
My French friend Dominique had tipped me off to this videotape. Though I knew that the Washington, DC-based Software Publishers Association produced "educational videos," I was especially interested in this one, specifically made for the European market.
As it turns out, producing "educational" videos like La Pirate takes up only a fraction of the SPA's activities. The 49-employee, 1,150-member trade association is a veritable octopus, whose tentacles extend into practically every arena of the PC software industry. Its members (from Microsoft to Joe's Shareware and just about everyone in between) pay SPA anywhere from US$700 to $100,000 in annual dues, depending on the company's software sales.
In return, the SPA publishes market data and lobbies Washington on behalf of the software industry when it comes to GATT or such encryption technology as the Clipper Chip. It also publishes a member newsletter, sponsors three annual conferences, and holds its Excellence in Software Awards ceremony each March.
But the work for which the SPA is most famous is that of fighting software piracy. And piracy is big business: the SPA estimates that revenue lost to software piracy in the US during 1993 was $1.57 billion. For years, the SPA has played the software-industry's hired Batman to corporate MISers' evil Joker. Prior to 1992, the Software Publishers Association busted some 200 companies - including such software publishers as Platinum Software of Irvine, California (which was forced to pay $89,000 in damages), or Health Line Systems of San Diego (it paid $17,500).
Yet the SPA isn't exactly the beloved, do-gooder organization it bills itself as. The association takes the bulk of the money it makes from software raids and pours it back into its own anti-piracy fund, rather than returning it to the software manufacturers whose products were supposedly ripped off in the first place. And its executive director, an outspoken, tough, and litigious lawyer named Ken Wasch, apparently has the entire industry cowed.
What's more, the SPA is now under siege within its own domain: fighting software piracy. Three years ago, a group of the SPA's largest members - Microsoft, Lotus, WordPerfect, Aldus, and Autodesk - dissatisfied with what they saw as the SPA's ineffectiveness, pulled their anti-piracy efforts from the hands of the SPA and passed it to another Washington, DC-based anti-piracy group, the Business Software Alliance.
Many vendors who've moved their piracy-fighting efforts to the BSA still maintain membership in SPA for other benefits the organization offers. And to be sure, the SPA still remains the most well-known anti-piracy organization in the US. But it has been losing ground internationally to the BSA; and as is the case with most turf wars, the SPA-BSA struggle centers on power, influence, and, most of all, money. The SPA's annual report claims that "nearly 80 percent of the industry's piracy losses occur outside our borders"; these billions in lost revenue are the prize that the SPA and the BSA are tussling over.
Stopping piracy isn't simple. Rather than track and catch pirates themselves, SPA members turn over limited power of attorney to the SPA to do audits against organizations suspected of illegally using their software. Whether or not to bring suit against companies suspected of pirating software is the SPA's decision, which it makes on a case-by-case basis. (The SPA tends not to go after individuals.) The organization's anti-piracy arm, headed up by one lawyer and a support staff, operates much like a prosecutor's office or a specialized law firm. A bust works like this: a snitch - most typically, according to SPA litigation manager Peter Beruk, a "disgruntled employee" wanting to wreak vengeance on a current or former employer - calls an 800-number hot line to report illegal copying of software. After conducting an investigation and concluding that action should be taken, the SPA either sends a cease-and-desist letter to the company, requests an audit (reminiscent of an IRS audit - the company has to prove that it bought and paid for every piece of software), or sues. In 5 percent of cases - those in which, according to the SPA, it's "obvious that the law is being deliberately ignored" - the SPA raids the company to catch the bad guys red-handed. After a federal district court issues an order, a tactical team of federal marshals carries out the raid, working in conjunction with the SPA's in-house staff and consulting attorneys. One-fifth of the SPA's employees work on anti-piracy activities.
Getting slapped by the SPA is one of the worst things that can happen to a company. Under the law, the SPA can force the busted company to pony up as much as $100,000 for each copyright infringement (i.e., per product, not per copy), plus legal fees. Aside from having to pay damages, or at least cover the cost of the software, raided companies also undergo the equivalent of an old-fashioned tar-and-feathering; the SPA uses publicity to humiliate companies. While the association keeps its audits confidential, Beruk points out, it issues press releases on actual raids.
According to Jeff Tarter, editor of the industry newsletter Soft*Letter and an outspoken critic of the organization, the SPA started out as a run-of-the-mill trade organization. But, Tarter says, Wasch saw lucrative potential in policing software pirates and the organization started hitting real pay dirt during the mid-1980s. "Wasch saw an emotional issue that the organization could make money on," Tarter asserts. "Today, the anti-piracy stuff underwrites a large part of the operations of the SPA. It's the single most profitable thing they do. Now they come out of every raid with a sackful of money. They turned piracy into a cash cow."
Indeed, playing software cop for the industry's members ain't a bad living, especially for a nonprofit. In 1993, SPA's anti-piracy efforts pulled in $3.6 million in litigation settlements. The money from litigation goes right back into its own coffers to fund the anti-piracy campaign (including the making of films like La Pirate and pricey, glossy press kits). As director, Wasch oversees the SPA organization; he even wrote part of the script of It's Just Not Worth the Risk, a propaganda video that's part poorly acted anti-piracy diatribe and part bad L.A. Law episode. About 40,000 free copies have been distributed to corporate MIS types. "There are more copies of that out than there will ever be of Wyatt Earp," Wasch laughs.
In hot water
I thought it might be instructive to see what a software bust was like, so I asked Beruk if I could go along for a ride. But for legal reasons the press is barred from raids. And, as it turns out, the SPA is conducting a lot fewer raids these days - in part, boast the SPA folks, because the organization has done such a good job of educating the public, and in part because cease-and-desist letters and audits are threatening enough.
Since firsthand experience of a raid was not in the cards, I tried instead to talk with companies that had been busted. I contacted two dozen companies whose names had either been given to me by the SPA, or whose names I pulled from press clippings. The SPA's "bullying" campaign - as Will Zachmann, president of Canopus Research in Duxbury, Massachusetts, calls it - has proved marvelously effective. Almost no one returned my calls; of those who did respond, all but one declined my request for an interview, even when promised anonymity.
One information-systems director with whom I finagled a brief conversation had a tremor in his voice when recalling the SPA bust. He said he might share his opinions about the experience but would have to get permission to talk to me. A few days later, I received a terse call from the company's corporate communications specialist "declining further interviews." I suppose they had endured enough public humiliation, thanks to press releases put out by the SPA and articles that appeared after the investigations.
After dozens of phone calls, I finally managed to speak to the president of one mid-size West Coast manufacturing company who requested that he not be identified. He said when his firm was found guilty of using illegal software after a raid in 1989, it wanted to hush up the whole thing as quickly as possible. "We just worked out some deal, and paid a five-digit figure to get our general absolution," he recalls. What about the raid itself? "It was - uh - a startling event," he recalled. "There was no warning. A group of 10 people in Brooks Brothers suits just showed up one day with a court order. They spent about two hours checking PCs and looking for manuals and then left." In retrospect, he wishes that his company had received a warning in the form of a cease-and-desist letter, or a demand for a software audit. "A cease-and-desist order would certainly have been more civilized," he sighs.
Nor were warnings in store for Snap-on Tools (now Snap-on Inc.) of Kenosha, Wisconsin - the only case the SPA has been forced to drop. After a tip from a former employee, SPA auditors and federal marshals showed up at the guard house of Snap-on with a warrant to search for illegal software.
The marshals spent three days searching 300 PCs for illegal software, moving from desk to desk to search hard disks. "It was worse than getting audited by the IRS," says David Heide, a public relations manager who was present at the time of the raid. "At least the IRS sends a letter of notice that it's coming," he adds. Snap-on spent days afterward documenting all the software, ultimately proving that everything was paid for.
Despite being exonerated by both the SPA and the Feds, the raid on Snap-on took its toll. The worst part of the experience, according to Heide, was the scarlet-letter effect. As a large employer in a small town, the notoriety damaged the firm's public image. "The effect is what you might expect," he recalls. "The SPA had never lost a case, and the common presumption was that if you were raided you were as good as guilty. People were nervous, and suddenly insecure about us as an employer. There was a lot of negative feeling built into the action. The onus is on you to prove that you're honest."
Although Snap-on had a basis for a lawsuit on the grounds of lost productivity and disruption of deadlines, according to an article in the local Wisconsin paper, the company didn't retaliate. "We didn't like the SPA's tactics, but we're sympathetic to the software industry," says Heide. "We don't want to be in the vanguard of attacking the industry trade organization." The only thing that really mattered was a correction to the public record, which was effected in the form of a press release put out by the SPA, patting Snap-on on the back for being a model company. How could the SPA have gone in to Snap-on without having its ducks in a row? "That was the only time we ever made a mistake," says Beruk. "We felt we had solid information from someone who was in the position to know. It was a gamble we took. By the time we got authority to bring the suit, they got clean. I suspect they were tipped off."
Told of this allegation, Heide waxed furious. "I've never heard of anything so ridiculous in my life," he retorted. "I'm surprised the SPA would say that, after all their help and cooperation with the press release retracting the action."
Turf wars
Five blocks from the SPA's headquarters, the 16-employee Business Software Alliance pretty much walks the same public-policy and anti-piracy walk and talks the same talk. With similar press kits full of similarly huge numbers about loss of revenues because of software piracy, the only obvious difference between the two organizations is that the SPA is larger, both in number of members and employees, and more diverse in its activities. Both organizations put the money they gain from litigation back into their own coffers, using it to fund anti-piracy efforts in the form of surprise raids and audits. Indeed, agrees BSA President Robert Holleyman, a former public-policy lawyer, "We have similar policies in place in terms of how we handle enforcement actions."
I'd never heard of the BSA, but chances are if I'd lived outside the US, I would have. During the 1980s, while the SPA was battling software pirates on the domestic front, it was paying less attention to the international side, where most piracy takes place. In the interest of pursuing international software piracy - and, perhaps smelling a lucrative opportunity to sell more software licenses abroad - five software vendors (Aldus, Autodesk, Lotus, Microsoft, and WordPerfect) banded together in 1988 as "a global alternative to the Software Publishers Association," according to one BSA member.
But unlike the SPA, a comparatively easy-to-join organization open to just about every programmer with a dream, the BSA is more like an exclusive big-boys club for software giants like Microsoft and Lotus. The cost to join? "Prohibitive," says BSA spokesperson Diane Smiroldo (who, when pressed further, would say only that cost "varies").
There's no love lost between the BSA and the SPA. Wasch claimed that Microsoft pays more than $3 million annually to the BSA, while its yearly dues to the SPA are $100,000. "You can buy a lot of influence for that kind of money," he says. Microsoft declined to comment on its BSA membership, but Lotus Development Corp.'s general counsel Tom Lemberg says simply, "We've found it easier to work with the BSA. We were better off creating our own organization."
The BSA is enjoying ascendancy on Capitol Hill, thanks to power and talent in all the right places. The organization has worked closely with Senator Patty Murray (D-Washington) to try to ease export controls on software with encryption capabilities, and with Senator Orrin Hatch (R-Utah) on international copyright issues. And the BSA has also developed an international anti-piracy organization: rather than taking the American-centric approach adopted by the SPA, BSA worked with foreign governments, software distributors, and others to set up regional sub-organizations.
BSA members who asked not to be named said that splitting anti-piracy efforts into two sides - the SPA acting as domestic software police, and the BSA doing the international crime-fighting - "worked well until around 1992." That was when the SPA began to sense that it had left its international anti-piracy market wide open to a competitor. "The BSA was in 55 countries and was doing a great job handling anti-piracy on a local basis," said a representative from a BSA member company that maintains ties to the SPA. "Then the SPA started going into these countries, wanting to establish anti-piracy efforts there, too. The larger publishers all thought, Why are we funding our own headache?"
Opting for more control over their own public-policy and anti-piracy operations, the five software publishers that formed the BSA withdrew their support for the SPA's international and domestic litigation program in July of 1992, forbidding the SPA to litigate against anyone, anywhere, on their behalf, though they remained members of the organization.
Meanwhile, the SPA chased the BSA into the international market, stepping up enforcement activities in individual countries and producing $20,000 videos like La Pirate. The BSA claims that its 1993 worldwide settlements exceeded $5 million. Since it began its North American program in 1992, it has settled 400 cases, one of the largest of which totaled $260,000.
Estimates by both the BSA and the SPA put the numbers for international piracy well in the billions. BSA estimates that 94 percent of the software in Poland, 98 percent in Kuwait, and 99 percent in Indonesia is pirated. The SPA places the grand total of loss in revenue at $7.5 billion - an amount almost equal to that of 1993 revenues from legal PC business-application software sales.
Though BSA's Holleyman argues that fighting software piracy in some countries is a financial "black hole," he also confirms that fighting piracy in the US where laws are stronger is now "profitable."
Clearly, Wasch is not about to leave the enormous international anti-piracy market in the hands of the BSA. "There's no secret to what this is all about," he says with the kind of directness that one can't help but admire. "It's about money."
The lawyer joke
In researching this article, I spoke with dozens of people - not only information-systems managers, but also representatives of SPA-member companies and former SPA employees - who were clearly too frightened of Wasch to go on record discussing him. SPA members and outside observers who asked not to be identified repeatedly referred to Wasch as "greedy," "inflexible," "aggressive," "single-minded," and "dictatorial," even applying canine terms ranging from "terrier-like" to "pit bull." (Fearing what he described to me as "character assassination," Wasch contacted the legal counsel of one large vendor company to try to flush out my sources.) As irritating as Wasch's intimidating calls and continual interrogation may have been to me, when compared with the buttoned-down, well-handled, be-cooperative-but-say-little approach that BSA president Robert Holleyman politely offered, Wasch's stubborn in-your-faceness was almost refreshing. And, after all, the complaints about Wasch could also serve as compliments: If you were a software vendor and you felt you'd been ripped off, wouldn't you want your lawyer to be a bit "terrier-like"?
Still, the fact remains that weird videos like La Pirate and fiascoes like Snap-on don't do much to help the SPA's reputation. And Wasch has also lined up a slew of powerful critics, including industry influencers like Soft*Letter publisher Tarter. Some of Wasch's critics sit in high places, and would like to see him retire his black cape. But Wasch, fresh from his eleventh reelection in a row by a board of directors who firmly believe in his abilities, is predictably defiant. "This is a political job. So what would happen if I left?" he snorts. "The board would find someone just like me to take my place."
To hear Wasch tell it, the whole turf war with the BSA is about the Big Software Companies trying to dictate the rules of the anti-piracy game to the Little Guys, the game companies and others that make up the vast majority of the SPA's membership.
One of the "little guys" is my friend George Campbell, a white-bearded, gentle, hacker-writer guy who runs a shareware company called OsoSoft in Los Osos, a small town near San Luis Obispo, California. Campbell told me that he paid the $700 membership to the SPA "so I could put its logo on my stuff," but adds that it gets him the organization's marketing information and conferences, too. He also says that the SPA stuck up for shareware authors when they needed it. "When the videogame companies were getting their software rated, we wanted to have shareware rated, too," he notes. "But the $500 cost for rating was too prohibitive. The SPA went to bat for us, so they got the price of the rating knocked down to $25. That was positive."
While the SPA may have made its mistakes - spreading itself thin among too many members with different interests, barking up the wrong tree with Snap-on, or retaining a president with a pit bull reputation - the BSA appears to be a closed, élitist organization.
I concluded that they were more or less two sides of the same coin, and that the only thing that really separates them from each other is the color of their press kits. Ultimately, they seem to be two competing DC law firms, whose partners pass each other in the street. They smile while preparing to run over anyone who stands in their way to win the case. It's like that old lawyer joke: "How many lawyers does it take to screw in a light bulb?" The answer: "Two. One to screw in the bulb and the other to kick the ladder out from underneath."
