Science: Russian piracy in a sea of software: Illegal copying of programs has long been accepted in Russia, but that may change with the growth of private business, says Robert Farish
Monday 14 June 1993
Software piracy was institutional in the Soviet Union. The Ministry of Radio Production decided to copy the IBM 360 range of mainframe computers in the late Sixties, partly because there was a wealth of ready-written Western software for it to plunder. With the advent of the IBM PC, the Soviet state established a modern software production plant in Kazan, Tatarstan, mainly to publish unlicensed versions of mainstream Western programs.
Today, entire government ministries use thousands of copies of unlicensed Western products. The Ministry of Railways recently signed an amnesty agreement with a Computer Associates agent over its use of a localised (Cyrillic) version of the company's spreadsheet product, Supercalc.
Copying software is second nature. One of the single most popular PC applications in Russia is a Symantec product called Norton Commander. So common are copies of the program that most users believe it comes with every computer. The computing departments of large state enterprises still freely incorporate pirated software in their systems.
Ural System, a systems programming house based in Ekaterinburg, supplies contract services to many of the enterprises in the Urals region in central Russia. Edward Nistratov, the general director, admits that his organisation provides computer services for factories based on pirated copies of text editors, spreadsheets and databases.
Most companies do not regard copying software as wrong, but few know what the laws are. In 1992 the Russian parliament passed a law on intellectual property with a section on computer programs that provides some copyright protection and allows for the registration of computer programs by their author. However, there have yet to be any significant test cases.
For Western software companies, selling in Russia is part opportunity, part endurance test. Although the Russian currency is becoming easier to exchange, there are still two economies: one based on the rouble and the other on the US dollar. Software vendors do not sell primarily to wealthy customers holding hard currency, which means they must form a Russian company and sell for roubles.
Lotus Development launched the Russian version of the spreadsheet Lotus 1-2-3 in January 1991. Since then the company has sold more than 6,000 copies; Lotus Russia is a self-sufficient, rouble-only, Russian business.
The company has made unlicensed copying a sackable offence. Unlike most other businesses, it also copy- protects its disks so users have only three attempts at installing the program. Jane Kitson, the company president, says the decision has been criticised, but usually not by dealers and normally on the grounds that users buy a legal copy in order to make illegal copies from it.
Of the 10,000 PCs now sold in Moscow every month, relatively few come without an operating system. Unlike in Europe, where a large proportion of software is bought in bulk or pre- loaded on machines, Western package software has yet to establish itself with these new buyers. This may be to the advantage of local software publishers. Realising that Russia will not be affecting the corporate balance sheet for a while, many of the world's largest software vendors put products in Russian a long way down their list of priorities. (More than 15 million people use Microsoft Windows, but until last April there was no Russian version.)
Microinform, based in Moscow, has made substantial progress with the Russian/English word processor Lexicon and the integrated package Master (which includes Lexicon). Lexicon is the most widely used (although not the most widely bought) word processor in the former Soviet Union. Last April the company signed an agreement with IBM Russia to preload Master on some of the company's PCs. Microinform has released a Ukrainian version of Lexicon, and versions for Windows will be ready by the end of 1993.
An even more striking example of Russian success is the software manufacturer and distributor 1C. It is the publisher of the country's best-selling bookkeeping product and is selling more business software than any other company in Russia, with average sales of about pounds 26,000 a month.
The head of 1C, Boris Nuraliev, says his company has capitalised on the boom in new small businesses that understand the value of supported, well-documented and virus- free products. 1C's most popular product, a bookkeeping application called 1C Bulgaltier, sells more than 2,000 copies a month.
Huge numbers of people in Russia are grappling with bookkeeping and business planning for the first time. As large state bodies disintegrate, hundreds of thousands of small ventures are being established inside them. By law, all must submit accounts and pay taxes.
So far the only Western package that is able to handle Russian bookkeeping procedures is Scala, a multilingual accounting system favoured by multinational companies and costing several thousand pounds. The mass market for bookkeeping products is the domain of Russian companies. Russian enterprises are now buying bookkeeping software because an important element in the sale of each copy is the support that comes with it.
When a customer decides to buy a copy of 1C Bulgaltier, they cross the important divide into the world of legal software. Having made this mental leap, Mr Nuraliev says, the customer is then offered 'instant legality' in a bargain office set that includes 1C Bulgaltier, Lotus 1-2-3, Lexicon and Norton Commander.
The company's other major application is also a peculiarly Russian one. As the state distribution systems collapsed, Russian producers found themselves without customers, and buyers had no idea where to turn for most products. To meet this need many companies operate database services listings of products offered for sale. 1C has developed a DIY on-line database for companies to set up themselves (a kind of start-your-own business kit). It is simple enough for anyone to convert an existing database and will run on a simple personal computer.
The incentive to buy it is that the product is just complex enough to need skilled installation and support. Additionally, 1C will administer a customer's database system for a small commission. Mr Nuraliev says that in the past year there has been progress in the attitudes of many Russian computer-users, related to the expansion in the number of private companies.
Many of these, however, are still experimenting. Unsure of the future, many employees divide their time between a new venture and their old state sector job. The turning point will come when the country fully accepts private business and these new companies start to generate revenue worth protecting. Suddenly there will be a financial risk attached to using corrupted or virus-infected copies. At that point, Russian users will stop making do and start paying up for software.
The writer is editor of 'Computer Business Russia', a monthly newsletter for suppliers of information technology to the former Soviet Union: Krasnokazarmennaya 9, PO Box 59, 111250 Moscow. Tel: (7095) 265 4214; Fax: (7095) 261 7910; e-mail: farish@glas. apc. org.
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