This last week has seen quite a bit of public discussion concerning the effect of software piracy on compromise rates, based upon Monday's release of a report titled "Software Piracy on the Internet: A Threat To Your Security"by the Business Software Alliance (BSA) - pages 6-12 are definitely worth a read (the rest is a little too self-serving of the BSA).
I don't believe the report actually holds any surprises for most security professionals, but it's always handy to have some independent (and current) validation.
I can remember back to the old 1980's BBS days where piracy was just as rampant with online games and even the base BBS software being backdoored by folks looking to make a quick buck through their leeched warez. The only thing that has changed has been the channels for distribution.
In the past I've conducted a number of studies related to pirate distribution channels - looking at both the exploits and malware being embedded in the content. For example, back in 2001-2002 when image file exploits were all the rage (e.g. JPEG/PNG/GIF/etc. file parsing vulnerabilities) I set up an experiment to analyze the content of several popular binary newsgroup channels (ranging from some of the heavily trafficked porn groups through to celebrity and disney image groups) and found that upwards of 5% of the copyrighted images being distributed contained exploit material (one popular vector was for the bad actors behind the attacks to respond to Repost Requests and Fills for missing images of popular collections).
A couple of years ago I repeated part of the experiment - but instead focusing on binary files (mostly games, Windows applications and keygens) and found almost two-thirds of the newsgroup content was backdoored with malware. I'm pretty sure that if I was to run the experiment again today I'd find the malicious file percentage to be higher. And thats just the newsgroup distribution channel. The P2P networks tend to be worse because its so much easier for others (potential victims) to stumble upon a malicious version of the pirated software - largely because it's a more efficient channel for criminals to operate under and they have a greater chance of enticing their victims (i.e. using faster P2P servers, constantly monitoring what's hot in file sharing, exploiting their own reputation systems, using botnets to saturate/influence, etc.).
What does this all mean? Well, it can probably be best summed up as "you get what you pay for" in most instances. While the motivations behind the BSA releasing this specific report are pretty obvious, so too is the fact that software piracy has, and always will be, a viable vector for criminals to make money both directly and indirectly through their pirated warez - i.e. selling "discounted" software, and through the use of the botnet infected hosts of their victims.
Dancho Danchev over at ZDNet has an interesting view on the problem by taking a look at the patching perspective - which I wholeheartedly agree with too. I covered the angle of patching (specifically Web browsers) in a whitepaper mid-2008 - Understanding the Web Browser Threat - that still applies today.