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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.
Look at the bigger picture. There are hundreds of thousands upon millions of smartphone users out there who want applications for their phones.
Who is next to set up a viable store? Microsoft? Google? A carrier?
Piracy is a minor problem. Monetizing users is the major problem. Can you interest users into buying your phone? What sales model can you use to get them to part with their money?
Who cares about Apple? They are just another player.
I'm suffering massive losses too - nobody gave a billion dollars yesterday! That's a billion dollar loss in a single day!
Looking around I have yet to see a single friend of mine with pirated apps. I'm just saying.
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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Big made up number is still made up.
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.
--------- I have no signature
That's exactly how it works. Unfortunately, the article makes a few (ok, a lot) of very bad assumptions (how many times can you use Assume and Estimate in a story?). They used a very popular app that 'phones home' as their yardstick, and then applied that yardstick to every app purchased in the store, all the way down to the dregs like the fart apps. Although copyright infringement on popular apps may indeed be that high, I find it very hard to give this credibility that every app in the store would have an 75% infringement rate.
"Assuming the proportion of those that are paid falls in the middle of the Bernstein estimate"
Do they even realize how ridiculous this sounds?
The statistics in a lot of these stories are such that if a pirated app is used once and thrown away, it's been "used".
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.
These losses from piracy are always talked about in terms of the damage they do to the economy, but I have to take issue with this; that money that isn't spent on pirated apps doesn't just vanish, it's still there to be spent on other things. Now, you might argue that maybe it won't be spent or will be spent on things that transfer money out of the economy (such as overseas businesses), but if you're spending money on the App store and don't live in the US then that's really the case anyway.
If I pirate a $10 app, that's $10 I can spend on a CD or going to the cinema or getting a takeaway or whatever, it's not $10 that magically disappears from circulation.
So if I download a torrent .zip of 10,000 paid apps, $3 each on the average, AppStore just lost $30,000 in sales?
Like, I would purchase them all otherwise?
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Works just fine.
- Raynet --> .
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.
-Billco, Fnarg.com