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App Store Piracy Losses Estimated At $459 Million

Posted by Soulskill on from the arrr-me-hearties dept.

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.

4 of 202 comments (clear)

  1. Is there an app for bullshit? by Anonymusing · · Score: 4, Interesting

    I call bullshit. There's no way that the tiny percentage of jailbroken iPhones could account for 75% of the apps in use.

    If this isn't through jailbroken phones, then how are people pirating it? It's not like anyone has built a homebrew iPhone...

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  2. Based on how much I pirate... by colin_n · · Score: 4, Interesting

    I have an jailbroken and unlocked iPhone, but I haven't even tried to pirate apps from the app store. Frankly, I didn't know it was possible. In the past I have pirated almost everything. I just dont see the benefit of piracy to save $5 especially since it's probably a p.i.t.a to pirate an app store app. These figures look like hot air to me.

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  3. Curiousity or piracy? by copponex · · Score: 5, Interesting

    First of all, all of the numbers they have are pulled out of their ass. Second, there is no recognition of the fact that curiosity is not the same thing as a lost sale in the digital realm.

    For me, I know that when I was younger I pirated all kinds of software, just because I wanted to see what it did. As I got older, I paid for it when I could afford it. This was the only option for those of us who didn't have an edu e-mail address to get the "taste" that the companies provide at ridiculously low prices.

    I sincerely hope that Microsoft, Adobe, and Autodesk get together and create an unbreakable DRM scheme. Open source projects would immediately improve as the user base started to explode. Their marketshare would begin to reflect what everyone else already knows - that "piracy" is a vital part of their product cycle. It allows people to learn their software without burdening their support team, and hooks them into that workflow. When that person begins depending on the workflow, or begins work for a company, they are very likely to buy that product.

    If they really wanted to see sales improve, they would charge according to the age of the user. If the price steadily increased from $50 to $1000 or whatever, with no upgrades unless you paid full price, and flattened once you hit age 30, there would be constant pressure to buy each year before your birthday. Companies would get thousands of curious new users every year to resell to, and they would get money, and the whippersnappers wouldn't have to worry about going to jail over the greed of some fat men feeding in Silicon Valley.

  4. Re:'Losses' by Cruciform · · Score: 4, Interesting

    A few thousand people pirated our game after it was released.
    Did we lose any money? No.
    It pissed me off, but I didn't really lose anything because the people who rush out and pirate your game the second the crack is available are not the type of people who buy your game. There's the odd few that will pay for a game after they've pirated it (I used to do that when I was a kid), so they're not a loss either.

    The app store price point is low enough that the people who would have bought the app/game otherwise... actually DO buy the game.
    We're not dealing in 70 dollar console/PC games.