Net losses for software pirates

By Dan Simmons Reporter, BBC Click

Software piracy is big business. Billions are lost every year by software makers as the codes they use to protect software are cracked. But now, manufacturers are trying a new system which could change things for all of us.

The fight against piracy continues

Asia is the main battleground against the pirate gangs.

China has been criticised by the US and EU for failing to control illegal copying. And many of the pirated discs reaching the UK come from Malaysia, where the knock-off culture thrives.

Click took a trip to Kuala Lumpur where, as in many other markets across Asia, it was easy to pick up fake designer goods. Click found counterfeit handbags, watches, and DVDs.

In Malaysia in particular, they are pretty big on copying computer software, and it has not taken the locals long to crack the codes to Windows Vista and stamp out their own copies.

Click joined the local police as it raided a lock-up garage with the help of its two newest recruits - Labradors called Lucky and Flo. The dogs have been drafted in from Northern Ireland to sniff out DVDs.

The dogs have proven so successful at finding hidden stock that the authorities say the pirates have put a price on their heads.

Serial cracks

Computer software tries to make it more difficult to use pirated software by asking a user to type in an authorisation code when the program is installed.

The serial code is normally encrypted on the disc

The lengthy code of letters and numbers is usually found on the original box or CD sleeve.

The software you are installing uses a secret algorithm to work out if the code you type in is legitimate. If it is, then the software activates.

Pirates have worked hard to reverse engineer the algorithm to generate their own codes or keys which, effectively, grants them the ability to create endless copies of those programs.

Automated key generators are sometimes included with pirated software but they can also be found online.

Some of them work, some do not, and some are riddled with malware or viruses. But if you are determined enough it is only a matter of time before the defences can be brought down.

Time delay

Microsoft's Windows Vista was supposed to be different.

It also needs a serial number, but the catch is it is only good for 30 days, after which you have to go online and contact Microsoft to activate it.

Will encouraging people to use legitimate software reduce piracy?

Microsoft says that when you do the online check it will be able to detect whether or not you have got a dodgy copy.

One way round this is to "stop the clock" so the 30-day trial period never ends.

Again the crack is not difficult to find for the tech savvy, and some pirated discs even include it.

Microsoft says it can track down these types of copies when the buyer goes online. It adds that most copies of Vista are genuine and pre-installed so the customer need not worry about the 30 day trial period, as the software is already activated.

The hi-tech industry group that campaigns against piracy, the Business Software Alliance (BSA), admits protective measures will not always work. The BSA's Roland Chan says: "Building a security portion of your software to try to protect it is a type of way to try to address piracy but it is not the answer to all.

"In fact the BSA believes that there needs to be good policy, good laws, in place, and good enforcement and really great efforts to build awareness amongst users of the virtues of using original and licensed software."

Once you go online the software company has the chance to detect you're running a fake

That was the thinking behind Microsoft Windows Genuine Advantage Programme. It warns users if they are using an unlicensed copy and, over time, disrupts the user experience.

Software for 'rent'

Cars need regular servicing and operating systems and other software need updating over time.

This is where hacked versions can come a cropper. By using online updates, software companies get the chance to detect fakes.

It is an idea that could lead to a sea change in how we use software, and how it is secured in the future. Instead of buying the programs we want to use, we rent them.

"You can see that the software manufacturers are trying to move away from a CD key and activation based method to a remote distribution based method, where all the applications and all the software are sitting on a server that they control and you buy time to access that application and you need the credentials to log in," says Dhillon Andrew Kannabhiran, founder of security company Hack in the Box.

"As such there's no longer any software that's sitting on your computer," he adds. "There's nothing for you to download, everything is sitting on their server and they control the mechanism by which you interact with those applications.

"Because the software manufacturers are going to control the distribution method there won't be anything left for you to pirate."

A migration away from discs to online services could thwart the pirates, but legitimate users will want to be reassured it is secure and convenient before they jump onboard.

If it works the software giants hope to out-manoeuvre the copycats once and for all.