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Last November, Microsoft launched its amnesty campaign for unlicensed software with assistance from attorneys, law enforcement, stiff fines, software discount incentives and heavy advertising. The campaign was promulgated by an advertisement depicting handcuffs for unlicensed software users. For businesses that came forward to legally license their software, Microsoft offered large discounts, the largest of which were only valid the first four months of its aptly titled "Catch the Last Train" campaign.
So far, it has paid off. Microsoft has claimed a 500 percent increase in software sales since November, and boasts that the program is working far better in Lithuania and Estonia than all over Europe.
Daiga Jace in Microsoft's Baltic regional office in Riga claims that software piracy dropped 11 percent in Lithuania and 14 percent in Estonia. "The only less-successful program was in Latvia where piracy dropped five percent," Jace said. "If we are running such campaigns in Eastern and Western Europe the piracy rate dropped just one to three percent per year. But this campaign is just four months old. This is an extremely good result."
How did Microsoft measure its success? "Basically we are taking the same period of time from last year and comparing it with this current year. It's very hard to calculate because we were giving big discounts, but it's for sure that we increased sales by at least 5 times. When they started this campaign in Lithuania there were 65 Microsoft sellers, by the end of the campaign we already had 275 Microsoft sellers," Jace said.
However, software piracy in the Baltics still hovers above 80 percent. Microsoft and its affiliates are continuing strong-arm tactics to cut the number even lower. The small business community, strapped with high taxes, high insurance and a staggering economy, is shell-shocked.
Saulius, a small businessman based in Kaunas, said that Microsoft's amnesty campaign was not enough for small companies that are struggling to meet rent and payrolls. "With salaries as low as they are in this country, it's almost cheaper for me to get a secretary to do correspondence and invoicing on a manual typewriter than outfit my three PCs with versions of Windows 98 and MS Office," Saulius said. In his view, any aggressive attempt by Microsoft to control illegal use of their products by small businesses will simply result in people moving their PCs from their offices to their homes and doing their accounts there.
"In my opinion, the responsibility for making sure that a product is authentic lies with the manufacturer and not the purchaser. Why should I be liable if I unwittingly buy motor oil or car parts that have a fraudulent label on them? I found Microsoft's recent ad campaign depicting handcuffs for illegal users of their software in Lithuania insulting. A company should be advertising the benefits of using their products, not using scare tactics," he said.
He's also been keeping an eye on the user-friendly Linux Red Hat operating system that has been making headlines in the United States for its liberal licensing policies and grass-roots origins (enthusiastic programmers share code freely). "All that's keeping me from using it is that it doesn't support Lithuanian characters just yet," said Saulius.
He said that Microsoft is a "monopolistic dictator" for not trying to accommodate users in less prosperous countries by coming out with cheaper, scaled-down versions of their programs. "Intel did this with their Celeron processors. They're not as powerful but much more affordable and they still get the job done," he said.
He feels that unlicensed products will be extremely difficult to outlaw. "For a minimal investment a software pirate can get a CD-ROM burner and 1,000 blank CDs and he's in business. It's just too easy," he said.
Just how easy it is is revealed by Pergale, a dance hall-cum-illegal CD market located ironically across the street from Penki Kontinentai, a licensed Microsoft software dealer.
Pergale has been operating by word-of-mouth on the second floor of this downtrodden former Soviet-era movie theatre for several months on Saturdays and Sundays. Eight vendors with crates of illegal music and software CDs display their wares as dozens of buyers of all ages mill about sorting through their offerings.
One vendor had numerous unlicensed computer games and software products spread out on the wall behind his stand including Microsoft's Age of Empires and Encarta electronic encyclopaedia. When asked if he had Windows 98, he pulled a box with English and Russian versions from beneath the table. The price - 30 Litas ($7.50). It also included products from other major software manufacturers such as Norton and Adobe. He was eager to offer discounts for multiple purchases and offered his business card with a first-name, cell phone number and a couple of cryptic E-mail addresses.
Jolanta Prancekeviciene of the Business Software Alliance, reports that Pergale has already been raided by the police two times. The BSA sent demand letters to those arrested and has reached negotiated settlements, she said, "but illegal activities are still being perpetrated in those places." Raids will continue on a regular basis, she added.
The focus is now shifting on end users, and the fines can be devastating for a small business. "If somebody gets caught infringing author's rights, according to administrative code they have to pay a fine of $250 to $750," Prancekeviciene said. "Or, police can start a criminal case, and that comes with a fine or two years of compulsory labor, and then the rights holders can start a civil case, and ask for compensation which is now 200 to 300 percent of the retail price of illegal software."
Several cases prosecuted by the BSA have been settled out of court and some businesses have had to pay up to 30,000 litas in compensation.
Throughout this campaign criticisms have proliferated that Microsoft has been characteristically unsympathetic to end-users with deep pockets. When asked about this Microsoft sticks to the party line. "Microsoft has invested millions of dollars to invent and develop its products," said Jace. "I would assume that every company is taking care of its intellectual property. Can your company survive if 95 percent of its output is pirated?" And then there is hyperbole.