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Warez! Your Software License?

Rob Orstadius
October 7, 2001

What is it about software these days? You head out to Best Buy, CompUSA, or Babbages to find that all-important new game. You're so excited they have it and it is in stock, but the damn game cost you more then $50. $50? That is half of one hundred! That is a ton of cash!

Why are these software titles costing me so much darn money? Simple - Economy + WTC Attacks + Consumers not Spending + Warez = $50 for your game. The industry as a whole is suffering from a long list of problems, and piracy is at the top of everyone's list.

Piracy, in the old days was not as simple as it is today. Pirates used to run large galleon sailing ships, sailing the ocean in search of gold, diamonds and women. They lived a hard, death-filled life, and many never made it to an age much older than 30.

Today, pirates live a much simpler life. Pirates today live and work just like everyone else. They are your friends, parents, teachers and business partners. They look nothing like pirates of the old days and smell nothing like them either. But nonetheless, they are just as deadly and just as hot-tempered as the old pirates of the Caribbean.

So what are these pirates doing to cause the software companies to change everything we know about how software is sold and used in the USA? Why does this affect me and why the hell should I care? Well my friend, you should care, because it's costing you a ton of money and taking several freedoms away from you every minute of every day.

Lets look at a typical software company. Lets call them AIO Software. AIO produces computer games marketed towards adults. Their games are edgy, contain adult content, and make adult gaming much more enjoyable. The company was created 5 years ago, spun off from another company and ever since has been working on their first release, called "Murder at High Noon".

The company has several talented programmers and staff members and sees a very bright future for the company as a whole. The game releases into the US and is a huge hit right out of the gate. People everywhere want their game. It becomes very popular and sells extremely well, so well the company decides to start production on a few other projects, and even a sequel to their first game.

They hire more programmers and expand to a larger building to house everyone comfortably while they work. Six months later, the company produces another big hit computer game called "Death and Destruction on the Freeway". This is a racing game where players race across the US freeways and destroy each other and cities along the way. It takes right off, just like their first title.

Sales are good and profit is even better. The company expands again, hiring more programmers and they even get a second building. Now with 6 full programming teams producing top notch programs, they can release more than one title at a time and time each title release to target specific markets, right when they need it the most. Nevertheless, the AIO Company has made it big and fast.

Two years go by since their first release. The AIO Company is starting to notice sales dropping on their old and new software. They check the programmer's work, but their reviews are great and the company pushes on, thinking it's just a small consumer drop in spending. Six months later, the second big drop in sales hits AIO. The CEO holds an emergency meeting, trying to find out why sales are falling on all products under AIO.

After days of meetings and sales numbers still dropping, they cut several projects to put more team members behind larger target projects. They release a few larger software titles; three out of the four flop, and sales are way below average. The industry is experiencing the same drop in sales nationwide and other good friends of AIO's are reporting the same problems.

"What is happening to our sales?" the CEO of AIO says.

Soon after, AIO cuts back production of its software. They cut 30% of their programmers and a few walk off after that due to lower salaries. The next few titles suffer poor programming code and are very buggy, killing sales all together for those titles. Six months later, AIO reports its last title to be released ever - they are going under.

The title releases, it sells very well, but it is only enough to pay for half of AIO's total debts. AIO folds and goes bankrupt in only 2 to 3 years since their first title released. WHY?

This is a very sad story and has many other parts I purposefully left out. What you did not know was that while sales were sky rocketing, so was the illegal piracy of their software. It was being copied and sent around the world on the net. People in Asia were playing a US game, only stolen from a FTP server site for free and cracked by pirates.

This practice has grown right along with AIO Software. After their first release, pirates wanted the software but didn't want to pay for it, so they copied it and pushed it to the web. After a year, the web was saturated with software and AIO's was right their with the rest.

Freeloaders would log onto a private FTP server site, mask their IP from detection and download several hundred dollars in software for free. Jump onto sites like Warez and other crack sites, locate a much needed CD key or serial number and they had in their hands a full version of the game, fully playable on their machine.

It is a growing trend in software today. Piracy is the toughest thing to stop at the end user level because so many are doing it, and files transfer to several people and get lost in the World Wide Web. This makes it very hard for the FBI to track software piracy to the source. When the masses are all doing it, how are the FBI agents to stop everyone?

FTP servers have grown over the past years to large public servers that everyone knows about and frequents often. These sites make software from one user available to another user. FTP sites have their problems and fears of viruses, but in general they are the easiest way to get the software - and fast. Since these sites are not run by any large business, but by the end user, it becomes even harder to pinpoint servers used to pirate software.

These servers house all sorts of hackers, criminals, and pirates. Some are out to steal software, some just want to check it out, and others want to do serious harm to you while you're in the room. Private FTP servers are the cream of the crop because these servers are closed to the public. They house a deeply committed group of pirates working together to steal everything from software titles, movies only in the theater, to bank and credit card account information.

These are the most dangerous, since they protect their friends and connections and rule out unauthorized users. Several FBI agents have met their match when trying to get into these tight rings and have been shut out many times. It takes time and money to combat these groups and there are never any guarantees when you do get inside.

These Servers and web sites all work together to make it publicly easy to steal software. But as much as they are at the top of everyone's list, they are not the only reason companies like AIO lose hard. The economy and consumer spending take a huge hit in the industry's pocket book. When consumers do not spend, the economy loses its flow of money in and out, thus flooding one side of the market, causing the economy to swing hard in one direction.

With the recent terrorist attacks, Americans have seen this happen first hand. Recession is not a fun topic on any economist's mind. Recession happens when Americans stop spending and this causes business to cut back employees & work and raise prices even further to make up for lost ground. Thus the swing stays stuck to one side and it takes time and money to get the swing moving again. These factors plague every business including software companies.

So what does this mean to us? To end users right in the middle of this industry, it means some really scary stuff will happen. We as Americans enjoy our privacy, right? I know I do, but what happens when our privacy is no longer allowed? How would you feel knowing someone is monitoring your computer use, watching and seeing every web site you visit, tracking all your software programs installed and uninstalled on your computer, and even seeing all your computer information?

That would make some people very scared. Well, I hate to cause a panic but, my friends, this is already being done today. Several companies are now monitoring web sites visited and tracking web site patterns a consumer has for marketing purposes. This is not new, but what is new is the fact that software companies, such as Microsoft, will soon be able to track customer software uses, and be able to limit or control how their software is used and when it's used.

Don't believe me? Better take a closer look at the new Microsoft Licensing Program they are rolling out for the New Year.

Under Microsoft, business usually license several copies of Microsoft software because it is much cheaper to license it than just buy boxed product. Under the current license, they get a few CD's and an e-mail with an authorization number allowing them to use and own however many licenses they bought. These authorization numbers are easy to track and make spotting pirates very easy, since there is no software CD to copy with a specific CD key code.

Instead, the CD is a general CD and any code will work - that is why it sells for only $22. But the authorization numbers are needed to unlock the CD and software behind the CD. Once these CD keys are entered, the software will install. So how does Microsoft know I have installed the software on all 30 of my business machines instead of buying 30 licenses?

Simple; connect to the web, update the software, register it, or hit a Microsoft web site, and they have the info. The law right now is very limited as to what companies can do to gather info on customers, but that is changing due to new legislation for software piracy, and new laws to combat it are coming.

Microsoft's new licensing program has thrown out the upgrades. No longer can you just get an upgrade - now you have to buy a full version; even end users will see this effect. Businesses have even less choices. They must purchase a full license for the software they want, and add on top of that what is called Software Assurance. This is like a 2-year subscription to any and all upgrades and version changes to that software title.

They will get it free of charge during the 2-year plan. If businesses do not buy the SA (as I call it), they will end up paying almost double or triple over 5 years for the software just to upgrade. So Microsoft has forced businesses to get into the 2 year SA program and, at the end of the 2 years, the company just has to renew the SA program which costs much less than a full license.

So businesses are getting rocked into a subscription plan for 2 years and they have to upgrade at the end of the plan before they can get renewed. But to the rest of us - what does this mean? Well, soon after, Microsoft will try to pass legislation making the tracking and monitoring of software much easier to combat piracy.

They will eventually forgo selling businesses and end users a box with a CD in it and opt out for a License number. This number, which a business, or end user buys at a store, will be used at home or in the IT office to log onto Microsoft's web site and enter the authorization number. Once entered, you will download the software right to the machines which need it and that's that - yeah, right!

What Microsoft does not make openly known is the fact that without a CD in your hand, You Do Not Own The Software Any More!

If you don't own it, your rent it, and the rules have now changed. Now the law can be bent and Microsoft can legally monitor usage, and at any time cut the use of the software remotely from the web. If after 2 years you are still using their older Windows program, Microsoft may say, "Hey, time to upgrade, you get 14 days to do so, or we are shutting your OS down until you do!" They can do that folks, it's heading into law.

Now they can force the end user to upgrade when they want and how they want. They have taken piracy right out of the pirate's hands. By forcing the end user to change to a new program such as this, Microsoft can now start to weed out the pirates using stolen CD Keys and they can direct FBI agents right to the location of the machine used. This is a reality folks, believe it or not, but as an end user working in this industry and right at the front lines, Microsoft is doing it.

So next time you think to look into pirating a software title for free, think about what you have read here and remember - what you get for free now in life you will pay for twenty times over later. Pirates beware - times are changing and we are a dying breed.

Time to learn some new tricks and watch our backs. What, you thought all this inside info was just from an end user? Give me a break - I am as guilty as the rest, but times are changing and it's time to look down the right path. Warez your Software Licenses? I know where mine are, do you?

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