Last May, 49-year-old Bai Hua in northern Shaanxi Province bought a Dell desktop computer for 10 times her monthly salary to stay connected through Internet chats with her two children in college 400 kilometres away in Xi'an.

The first two months were a nightmare. Within several days of connecting to the Internet, her computer was overrun with Trojans and viruses. As a first-time computer user, Bai had no idea what to do.

Some neighbours helped her install a pirated copy of anti-virus software, but she did not know how to upgrade the virus database. Buying a genuine copy would have involved a trip to a major computer marketplace 75 kilometres away in northern Shaanxi's Yan'an City.

When Bai's 21-year-old son came home from university in July, they finally figured out a way to clean up the computer. They downloaded a genuine copy of the Russian anti-virus software Kaspersky from the website of leading Chinese Internet portal sina.com for 128 yuan (US$16), about one-fifth the price of packaged Kaspersky software. Now Bai can just click the upgrade button in the software to get the latest version of the software for one year.

While the Internet has been considered a primary channel for widespread piracy, some Chinese companies believe the Internet can also help software vendors distribute their products at a lower cost.

"After two years of educating the market, distribution of genuine software through the Internet is just entering the take-off phase," says Xiao Lei, CEO of the software distribution website 8844.com.

The online distribution arm of China's largest software distributor, Beijing Federal Software Co Ltd, started providing online distribution services last year. Customers can buy products including Microsoft Office 2003, Symantec's Norton Anti-virus, or Electronic Arts' car racing game Need for Speed from the website.

Xiao believes that the demand for genuine copies of software is growing as the Chinese Government has intensified efforts to curb pirated software.

In April, the government announced that starting this year, all computers headed for market must have genuine operating systems such as Microsoft Windows or the much cheaper Linux systems.

Cost has been regarded as the primary reason many companies and individuals download pirated software or buy pirated discs. But as upgrades and technical support become increasingly important, service gains more weight in people's choice of software.

Not just enterprises and sophisticated individual consumers but computer users like Bai in rural locations want to have genuine copies of software and technical service at affordable prices.

In September, 8844.com launched a nationwide call centre in co-operation with its parent company, Federal Software. Call centre customers can get on-site service from engineers with Federal Software's 500 outlets nationwide.

Besides the demand for service, lower prices remain the fundamental stimulus turning users of pirated software to genuine copies.

Last Thursday, PC Stars, which worked with Kaspersky to offer anti-virus software downloads this year, launched an online game downloading service with the French game developer Ubisoft.

Game players can play Ubisoft's popular Heroes of Might and Magic V for one week for 19.99 yuan (US$2.50) and download a full copy at 54.99 yuan (US$7), much cheaper than the packaged version priced at 69 yuan (US$8.80).

The downloaded games are also embedded with the digitally copyrighted management system from Sony DADC, so that use of the software is strictly within the licensing period on an authorized computer.

"Most players can finish a game in a couple of days, so if we can offer the game for 19.99 yuan (US$2.5), it can be hugely attractive," says Liu Jianhua, CEO of PC Stars. The company was founded by some former Federal Software executives with support from a US venture capitalist.

The service is expected to be more popular among game fans in small cities and rural areas without professional software distributors.

When the online auction giant eBay came into China in 2002, it thought the biggest market would be major cities like Shanghai and Beijing. But eBay found that a bigger buyer population came from small cities. The reason is simple: consumers in Shanghai have many choices for clothes, computers or mobile phones, but the choice for young people in rural areas is quite limited.

"That is the charm of the Internet: It narrows the gap between the haves and have-nots," says Liu.

In addition to attracting customers with cost and service, online distributors are also working to stop piracy downloading at its source.

This year, Xiao's company persuaded 12,000 software download websites to join a program initiated by 8844.com and some software vendors.

These downloading websites get authorization from software developers documenting that they are distributing genuine copies of software. They also get advertising on their websites. The limitation is that users can only have the software for a limited time. They then need to buy upgrades or a complete version.

"If we can increase the difficulty of getting access to pirated software, while offering genuine copies at a good price and with quality service, customers' attitudes will change," says Xiao.

(China Daily 11/20/2006 page9)