App Store Piracy Losses Estimated At $459 Million

An anonymous reader passes along this quote from a report at 24/7 Wall St.: "There have been over 3 billion downloads since the inception of the App Store. Assuming the proportion of those that are paid apps falls in the middle of the Bernstein estimate, 17% or 510 million of these were paid applications. Based on our review of current information, paid applications have a piracy rate of around 75%. That supports the figure that for every paid download, there have been 3 pirated downloads. That puts the number of pirate downloads at 1.53 billion. If the average price of a paid application is $3, that is $4.59 billion dollars in losses split between Apple and the application developers. That is, of course, assuming that all of those pirates would have made purchases had the application not been available to them for free. This is almost certainly not the case. A fair estimate of the proportion of people who would have used the App Store if they did not use pirated applications is about 10%. This estimate yields about $459 million in lost revenue for Apple and application developers." A response posted at Mashable takes issue with some of the figures, particularly the 75% piracy rate. While such rates have been seen with game apps, it's unclear whether non-game apps suffer the same fate.

Comments

Techdirt: Bogus Analysis. Rebuttal, with xkcd!

[mmurphy000]

Techdirt did a nice deconstruction of the 24/7 Wall Street analysis. In a nutshell, 24/7 Wall Street applied the Drake Equation to iPhone apps, piling on layers of hand-waving to come up with their figure.

And, to show off his geek cred, Techdirt's Mike Masnick included the xkcd Drake Equation comic.

Apple changed the rules to cut down on piracy

[alen]

Few months ago Apple changed the rules and they now allow in app purchasing from free apps. before you had to charge for an app to so in-app purchasing. This allows companies to give away stripped down demo type apps with limited functionality and charge for features, new levels, weapons or whatever. And from what i'm reading on the internet it's very easy to detect jailbroken iphones and not allow them to do in app purchasing. pretty much all the piracy that was out there was on jailbroken iphones because it was easy to rip out the app DRM. the solution is to not allow any jailbroken iphone to purchase in app content

Re:Apple changed the rules to cut down on piracy

[tlhIngan]

Few months ago Apple changed the rules and they now allow in app purchasing from free apps. before you had to charge for an app to so in-app purchasing. This allows companies to give away stripped down demo type apps with limited functionality and charge for features, new levels, weapons or whatever. And from what i'm reading on the internet it's very easy to detect jailbroken iphones and not allow them to do in app purchasing. pretty much all the piracy that was out there was on jailbroken iphones because it was easy to rip out the app DRM. the solution is to not allow any jailbroken iphone to purchase in app content

The problem with that solution is that you exclude the people who jailbreak their phones for legitimate reasons as well - such as wanting a different provider, or wanting apps not in the app store. Theoretically there are more of those than the type of jailbreak strictly to pirate.

Does the iphone have anything like BlackBerry's PIN, which is a non-private unique number assigned to each blackberry? The software I'm developing for BB will be tied to a specific PIN (which the user can change an unlimited number of times on the web site) in order to access the features of the purchased version. The app will do a 'call home' at startup to check for updates and to confirm available features for the given PIN. If network isn't available but it previously authorized, it will continue to run in full-featured mode for a limited amount of time. Otherwise it will run in limited/trial mode. (Side note: if I ever cease support/updates, I'll push out a version that no longer dials home...)

Anyway, is there such a unique ID for iPhones?

Actually, due to the way the iPhone works, there is a guaranteed way to find out if your app has been pirated, and that's because the info.plist file must be modified in order to run the DRM-free app properly. The extra key you add tells the OS that the binary isn't signed. Without the key, the DRM-free app fails the sign check and doesn't run. There are other methods too, but aren't as foolproof (one involves seeing where you are installed, and another is to try poking around the filesystem - properly installed apps (DRM-free or not) can only access a couple of areas of the filesystem.).

Now, granted, there are lame apps out there that detect "jailbroken device == PIRATE!", but most have been replaced with the modified plist check so jailbroken devices aren't falsely accused, and the plist check is guaranteed to work unless Apple modifies the whole architecture, or the app is patched.

Finally, YES there is a device ID, called the UUID. (You can see yours - connect your device to iTunes, and shift or option (can't remember which) click "serial number". It'll change into UUID, so you can copy and paste that value. It's primarily used to authorize devices for beta testing (you send Apple a list of UUIDs, they'll send back a signed file those users can install that says "you can use these apps with these UUIDs".

There is also a jailbroken device app to change the UUID (naturally).

And there's an API to retrieve the UUID at the application level, so nasty drm-free apps can go and "phone home" to report the issue.

And I call it "DRM-free" because that's what the apps are - the Apple DRM was stripped. Whether you did this yourself out of some principle, or you pirated it, it has the same effect. Like how I can find iTunes+ music on P2P with the owner's full account info still in the files.

The only issue with blocking pirated apps that the developer may encounter are those who pirated the app, got banned, and bought it outright.

Re:Based on how much I pirate...

[alen]

any app that requires a server for functionality the developers built in the ability to detect piracy. i've read it's pretty easy. in some instances there was a 4 to 1 ratio of devices hitting the server compared to the amount of purchases

Re:Based on how much I pirate...

[MrCrassic]

It's pretty easy for applications that don't have any anti-piracy measures in place, but applications that do, like BeeJive, find and, subsequently, lock out any apps that are detected to have been pirated. Thus, cracking some more popular applications is kind of a moving target. Additionally, one has to install some extra background application that disables the signing check that allows these pirated apps to install.

Lastly, finding a pirated app can be a bitch sometimes. From my experience, it usually consists of finding a cracked version (which is pretty risky, since it's the express route to getting your phone hacked), substituting the real version with the cracked one and hoping it will run after that. Considering the difficulty I had in finding a cracked version of a relatively popular jailbroken application, I highly doubt that pirating is popular.

Re:How does it work?

[xch13fx]

from a youtube video i watched it appears you...

1)jailbreak
1)install cydia
2)add all repositories
3)find and install installous
4)you now have access to pretty much every app, browses very similar to app store just a whole lot slower

you can also download them to your pc, and sync with itunes

Re:How does it work?

[PsyciatricHelp]

There are many torrent that offer many DRM free or cracked ipa files. You just drop them into itunes and they copy over like a regular app. I for one use a few that I have purchased in the past but for one crash or another no longer have. Though if you could get the full version of most apps on a trial basis I would be more inclined to buy some. I hate the fact that about 90% of the apps I download turn out to be utter crap.

Re:How does it work?

[billcopc]

You hit the nail right on the head. How many times have I looked at an App's description, then turned away because I was "on the fence" ? What I would love is a 48 hour refund window. Buy the app, try it out, and if it is absolute shite (like most are), get your $2.99 back. You might be saying "three bucks is nothing", and you're right, but I am quite vehemently opposed to giving those three bucks to some asshat who can deliver a great writeup for a shitty app. The store ratings are also useless, because it's a well known fact that 99% of users are clueless idiots, so unless I am a also a clueless idiot, those ratings won't apply to me.

Prime example: RDP and VNC clients. There's about a dozen or so out there, and I've tried them all. All but one of them suck ass, whether it's sluggish performance, lack of configurability, or in one case I was expected to register all my usernames and passwords to a 3rd party so the app could sign in to their web service, just to give me back my logins. They also don't come cheap, $9.99 up to $24.99 for some of these stinkers. Am I really expected to spend $100 trying all these things, just to settle on the one that is indeed everything I want it to be ? Is it fair to the one good app, that all the others got paid anyway ? I think not. That one great developer deserves compensation and praise, the other 10 deserve a kick in the nuts and a chargeback fee.

Re:How do you pirate?

[Anonymous Coward]

The piracy detection has nothing to do with the user or the iPhone. It's all about the app itself. A purchased app as delivered by Apple has encrypted code, attached signing resources, etc. A cracked app has these things stripped. Piracy detection is a matter of checking to see if your app binary is still encrypted and signed, which is why the multiple device scenario is not an issue for false positives.

Apps can report by pinging out to a server in some way, although outbound firewall software installed on jailbroken iPhones makes this much less reliable unless it can be done over the primary communication port used by the app. Pinch Media, Flurry analytics, etc., all report 0 pirated copies for me for example, but this is because the Pinch and Flurry packets are being intercepted by the firewall software, not because no one has pirated the application. This is how jailbroken phones stop things like admob from working, so even free ad-supported app developers are getting screwed.