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Piracy Games Apple

App Store Piracy Losses Estimated At $459 Million 202

Posted by Soulskill
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.
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App Store Piracy Losses Estimated At $459 Million

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  • by BadAnalogyGuy (945258) <BadAnalogyGuy@gmail.com> on Friday January 15, 2010 @09:38AM (#30778068)

    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.

    • by delinear (991444)

      The main issue with this as far as I can tell (as a user and an interested observer) is the massive number of available platforms. It seems when an app or game is written for mobile devices, it tends to officially support only a subset of the most current (and some of the more popular older) handsets, I don't know if this is a calculated move on the part of the developers to force users to buy new versions every 18 - 24 months when they switch phone, or if it's a result of the fast pace of handset evolution

      • Re: (Score:3, Insightful)

        by non0score (890022)
        You are totally correct. In addition, there's also the problem that the JVM (for Java devices) implementations on these phones are complete shit where the libs don't work accord to spec, even for the commonly used libs (think on the level of 1+1=3). Furthermore, the phones' computing power range in the orders of magnitude from each other. This results in code that can't run anywhere other than the target platform that the developer coded on. This is why there are huge porting houses, and why small time deve
  • 'Losses' (Score:5, Funny)

    by Spatial (1235392) on Friday January 15, 2010 @09:43AM (#30778108)
    I'm suffering massive losses too - nobody gave a billion dollars yesterday! That's a billion dollar loss in a single day!
    • Re: (Score:3, Funny)

      by sonnejw0 (1114901)
      That's called "opportunity costs", and it's a good way for businesses to cook their books, I mean lower their taxes.
    • by couchslug (175151)

      "I'm suffering massive losses too - nobody gave a billion dollars yesterday! That's a billion dollar loss in a single day!"

      I'm being deprived of sex because other people are getting laid.

    • AND they Pirated my Wife!

    • Lets assume I have sex with a different woman each day, then that means I am so good, I can charge for it. Say, a thousand euro per bonk. That makes 5000 euro per evening. But because I instead posted on slashdot to comment on your post, I missed tonights income. You owe me 5000 euro.

      Check is acceptable. Thank you.\

      Anyone bothered to read the article when the second sentence of the summary starts the argument with "lets assume". Lets assume the moon is made of gold, why is NASA then not rich?

  • looking around (Score:5, Insightful)

    by jonpublic (676412) on Friday January 15, 2010 @09:45AM (#30778124)

    Looking around I have yet to see a single friend of mine with pirated apps. I'm just saying.

    • Re: (Score:3, Interesting)

      by xtracto (837672)

      Looking around I have yet to see a single friend of mine with a paid app... Just saying.

      Where I am from, nobody pays for Microsoft/Adobe/EA/Sony and others' software. Being it games or applications. Geez, the *first* time I saw a registered version of WinRar (not registered through a crack that is) was at my new job where I am now at (out of Mexico that is).

    • by jandrese (485)
      I'm still wondering who the heck is going to the trouble to pirate all of these iPhone apps. Most of them are 1 or 2 dollars. It's not like it's Autocad or Maya or something where the pricing is clearly out of the league of the dabbling hobbyist. The online store is ridiculously easy to use too. I have no desire at all to even consider pirating apps on my phone.

      The thing that's really annoying is that Apple is using this as an excuse to crack down on jailbreaking on the iPhone, which is really annoyin
  • How much is that from non apple stores that you can buy apps from?

  • by Anonymusing (1450747) on Friday January 15, 2010 @09:47AM (#30778148)

    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...

    • by tepples (727027) <tepples&gmail,com> on Friday January 15, 2010 @10:04AM (#30778324) Homepage Journal
      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".
    • Re: (Score:3, Insightful)

      It could be that pirates have significantly more apps installed than anyone else - not an unreasonable possibility, as they won't be wondering if they *really* want to spend their money on, for example, fifteen almost identical clones of the same miniclip game.
    • by sonnejw0 (1114901)
      And honestly, I refuse to pay any amount of money for a stupid iPhone/Touch application. It's a goddamn PHONE/TOY. I'd only use the app as a novelty a FEW TIMES and then forget I have it. There is absolutely NO application I would be willing to pay any amount of money for. And I highly doubt anybody that has pirated an iPhone/Touch app would have actually purchased it otherwise. These developers should just be happy that they sneak GoogleAds into all of their apps so they get revenue from the "pirated"
      • I have an iPhone. I've downloaded dozens of free "trial" apps. I purchased three of them, and use them several times a week. Example: although there are some free apps that do essentially the same thing, I find TideGraph to be better at reporting tides... same data, sure, but much better interface. Worth the two bucks.

        I also know doctors who have some rather expensive medical-related paid apps, but that's a niche category.

      • by Dog-Cow (21281)

        It's a good thing there are several thousand "smart" applications that are genuinely useful or entertaining.

        You are an asshole. And stupid.

      • by jo42 (227475)

        I refuse to pay any amount of money for a stupid iPhone/Touch application. It's a goddamn PHONE/TOY.

        This "stupid" "PHONE/TOY" has more computing power, features and graphics capability than a top of the line desktop did 10 years go. Fumbducktard.

    • Re: (Score:3, Insightful)

      by yabos (719499)
      The numbers are probably not close to the true value but I've read cases where 50% of the users of some apps are people who pirated the app within the first few weeks of it being released. Some apps rely on a back-end infrastructure and having to support the load of people who haven't paid for the app cuts into your profit.
  • by Anonymous Coward on Friday January 15, 2010 @09:48AM (#30778154)

    Big made up number is still made up.

  • by colin_n (50370) on Friday January 15, 2010 @09:50AM (#30778182) Homepage Journal

    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.

    • Re: (Score:3, Informative)

      by alen (225700)

      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

      • by MrCrassic (994046) <deprecated AT ema DOT il> on Friday January 15, 2010 @11:01AM (#30778976) Journal

        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.

  • by Speare (84249) on Friday January 15, 2010 @09:54AM (#30778222) Homepage Journal

    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.

    I think the 10% figure is completely and totally made up, pulled from the aether, with very little to back it up. However, I was floored to see that this concept was even addressed at all in the "loss" estimation process. You know that MPAA and RIAA don't acknowledge the phenomenon that if someone finds something on the sidewalk, they're more likely to pick it up than if they find the same thing for sale, even if the price is just a nickel. I hope that with repeated exposure to the concept, the whole industry will finally concede this point, but let's just say I'm not holding my breath.

  • by alexhs (877055) on Friday January 15, 2010 @09:57AM (#30778248) Homepage Journal

    I'm pretty sure that by tweaking a little their formula and figures, we can compute the probability of the article's authors to get laid with an alien life form.

  • Negative $459 million. Assuming that 10% of the pirated stuff is use by people who would choose to go without if they couldn't pirate and use value equals the price. And that doesn't include the lower prices that competition from piracy always seem to bring, which increases the number of potential users among those who don't pirate.

    Of course, I have made bullshit assumptions, but so did the article/story title, and my assumptions aren't really that far fetched. I could even be underestimating by a fair bit.

  • Lets assume the number was accurate to the cost of the all the pirated apps...how then can they assume, given the ability to not be able to jailbreak the phone, that the pirate would pay full price for the apps that they would have potentially pirated?

    The pirated market is grossly misrepresented. Most pirated movies/music/games are pirated because of availability. If it wasn't available, the pirate still wouldn't pay the original price for it. Recent success in said industries proves this.
    • One point as well is that many of these folks who would download a bunch of pirated apps for their phone would not purchase them in the first place. I think it is more accurate to say that the income was unrealized and not lost.

      If you put something on the market for $1000 and only two people think it is worth the price to pay for it but six hundred people would have purchased it for $100 then you have significantly overvalued your product and lose money. I think that the prices on the app store are all infl

  • by ofdan (609938) on Friday January 15, 2010 @10:00AM (#30778288) Homepage
    I have 2 iPhones on the same iTunes account. Apple legally lets me installs app's bought on my first iPhone for free on my second. My guess is this would trigger piracy flag, as they would now see 2 iPhone unique ids for one purchase.
  • by mmurphy000 (556983) on Friday January 15, 2010 @10:05AM (#30778338)

    Techdirt did a nice deconstruction [techdirt.com] 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 [xkcd.com].

  • "Losses" (Score:5, Insightful)

    by Spad (470073) <slashdot @ s p a d . c o.uk> on Friday January 15, 2010 @10:17AM (#30778462) Homepage

    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.

    • Good point (Score:4, Insightful)

      by langelgjm (860756) on Friday January 15, 2010 @10:47AM (#30778830) Journal

      That's an excellent point, and something that is often forgotten when talking about numbers surrounding piracy.

      So an iPhone user doesn't spend $20 on a couple apps because they pirate them. Apple and software developers lose out on $20. Then, the iPhone user buys four mochas at Starbucks with the $20 they didn't spend on apps. Net loss to economy = $0.

      Even if people "save" money instead of spending it, if that saving consists in investment, it's often providing capital for those who want it elsewhere in the economy. These "losses" are almost never actual "loss" to the economy as a whole, they simply result in a different distribution of the same amount of money.

      The same goes for all the piracy statistics thrown about for foreign countries. I was recently discussing this with a colleague; sure, maybe country X pirates $20 million worth of CAD/CAM software. Then, they turn around and spend $20 million purchasing CNC machines from US companies.

      • Re: (Score:3, Insightful)

        So an iPhone user doesn't spend $20 on a couple apps because they pirate them. Apple and software developers lose out on $20. Then, the iPhone user buys four mochas at Starbucks with the $20 they didn't spend on apps. Net loss to economy = $0.

        That assumes that software is fundamentally without value (unlike, I assume, lattes which would incur a net loss to the economy if they were stolen, even if the iPhone user gave the $20 to an illegal gun seller so he could hold up the coffee shop).

        Dev loses $20. That is $20 that he doesn't have to spend on latte's. Keep piling up these "Net loss to economy = $0"'s and Dev will be out of a job. Eventually, the whole industry is no longer viable. Where are the jobs going to come from now?

        Your logic is fin

        • Re: (Score:3, Insightful)

          by Wildclaw (15718)

          That assumes that software is fundamentally without value

          Copies of software are fundamentally without value. That is why we have copyright laws in the first place.

          Dev loses $20. That is $20 that he doesn't have to spend on latte's. Keep piling up these "Net loss to economy = $0"'s and Dev will be out of a job. Eventually, the whole industry is no longer viable. Where are the jobs going to come from now?

          Most development moves towards a service based way of receiving payment (which is already the case). There is less development of generic applications, but as we don't need 200 clones of every software application, the damage is minimal. If a specific type of software doesn't exist, but there is a real demand for it, someone will find a way to make money on it.

        • That assumes that software is fundamentally without value

          More precisely, it assumes that the marginal cost of producing software is zero.

          Dev loses $20. That is $20 that he doesn't have to spend on latte's. Keep piling up these "Net loss to economy = $0"'s and Dev will be out of a job. Eventually, the whole industry is no longer viable. Where are the jobs going to come from now?

          The only way the industry will no longer be viable is if everyone (or some critical mass of people) pirate. Clearly, enough people are paying for software to make the current industry viable.

          Second, if someone steals a latte, Starbucks has lost the marginal material and labor that went into producing that latte, which is a significant portion of its cost. If someone pirates software, the developer's lost marginal material and la

      • And before someone yells "broken window fallacy [wikipedia.org]", remember that pirating an app doesn't destroy anything (in fact, it creates something new: a copy).
    • by delinear (991444)

      You're forgetting pirates don't spend their loot, they store it in big chests in sea caves.

      Seriously though, if I had some points you'd get them - I'm constantly hearing how much piracy costs the UK economy and don't believe that figure (whatever it may actually be) is even close to quantifiable, since it only costs the economy if you then go on to purchase foreign goods/services with that same pot of cash.

  • by alen (225700) on Friday January 15, 2010 @10:20AM (#30778496)

    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

    • 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 nu

      • Re: (Score:3, Informative)

        by tlhIngan (30335)

        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

        • Thanks for the info! As we'll likely be targeting iphone later, this is very good to have.
        • by raynet (51803)

          It actually isn't a guaranteed way, perhaps I hate DRM so much that I will strip it off from all the iPhone apps I use. Though in most cases it will be enough to detect a illegally copied version, though if you have a good enough app, there will probably be someone that will strip out the apps plist-detection code too.

  • 10000 apps $3 each (Score:5, Insightful)

    by SharpFang (651121) on Friday January 15, 2010 @10:20AM (#30778502) Homepage Journal

    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?

    • Re: (Score:3, Insightful)

      by arkenian (1560563)
      RTFS. They suggest that if you do that you MIGHT have paid for as many as a hundred of them, so the app store lost $300. I actually admire this examination of piracy insofar as its the first one trying to figure out 'losses due to piracy' that puts a number in for 'percentage of people who would've bought the app otherwise'. That percentage may be low, it may be high (actually 10% sounds like a good number to plug in to what is essentially a pile of guesses) but at least they're trying.
      • by Eil (82413)

        but at least they're trying.

        And therein lies the problem, particularly when almost every shred of evidence was made up.

    • $30,000 in potential sales was lost, yes. Even if the potential was slim.

      More importantly, though, if the app uses bandwidth from a server, or if you get support, you have caused real monitary damage by using things you haven't paid for. I have an app on the app store, and people who pirate cause significant amounts of damage by steal our bandwidth from our partners that we paid a lot of money for, and we pay per access.

      If there was a way we could lock out those services to paying customers only, we would,

      • by BitZtream (692029)

        Your doing it wrong then.

        If you're providing a service which costs you money on a monthly basis as a feature of your app, and you aren't requiring the users to sign-in/log-on in some way then you kind of deserve what you get.

        You can make it paying customers only. You require paying customers to use a login. Give the app away, require a login that they pay for. If the login gets leaked, you kill it.

        Were you born yesterday?

  • Simply put, no money was lost due to piracy. Stop putting these retarded articles on slashdot, all you do is justify the morons who write this crap.

    Statistics have shown that I've lost about 30 billion dollars while reading retarded articles about piracy. Interestingly enough, another set of statistics shows that both myself and the guys writing about how much money is lost to piracy have about the same ability to talk out our asses and lie through our teeth. I have a slightly higher amount of sarcasm.

  • Do you even know anyone who rips or trades cracked software?

    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%.

    My experience with people who do this is that your estimate is at least a factor of 100 higher than reality. I mean, these guys have everything from ten buck games up to Maya, Photoshop CXSDwhatever, Windows Server Ultimate with Oracle Everything. And they don't buy *any* software. Their whole thing is getting the goo

  • Since when was failing to gain something the same as losing it?

    No-one has actually lost $459 million (= had it once, don't have it now), they just haven't gained it. If they've lost anything, it's the opportunity to gain the money, which is a rather different thing...

  • ... like a writer who launches into an article about the "App Store" without specifying which app store or whose app store. After all, there's only one App Store in the world, right?

    I'm sure a person with such a mindset would always offer a calm discussion of the facts without using inflammatory language, weasel words, or unsubstantiated facts.

    Erik

    • by BitZtream (692029)

      Yea, because any of the other possible 'App Stores' that exist are the first thing that comes to mind when someone says 'App Store'.

      Reading sometimes requires that you have at least a quarter of a clue because authors assume that you know SOMETHING about the subject matter being discussed before starting.

      Android may HAVE an appstore, but no one gives a shit. RIM may have one, no one gives a shit, Nokia may have one and STILL no one cares.

      Do you act this retarded when someone says 'I run Windows' as well, o

      • Okay, that was actually funny.

        It may come as a surprise to you, but there are actually many other "App Stores" that people care about, some of them a whole lot more than your favorite one. In fact there are other app stores not even associated with mobile devices... you are aware that other computing devices exist, right?

        I just love the fact that you speak for the entire community of people who read this article: ("no one gives a shit" about other app stores).

        Thanks for proving my point in spades.

  • There are only so many apps to go round and the overhead costs of storage are going to drive developers and businesses alike to the poor house.
    I guess they will have to plant more application bushes and wait till harvest or the bank will foreclose on the farm. Then there will be no applications for all the phones. That'll make 'em sorry.
    I guess they could start making cases to protect fragile apps or sell polish to shine them up but the thieving pirates will probably walk

  • There are counterfeit pirates (CP's), and then there are those who are the lone individual pirates (IP's). IP's are not lost sales because THEY'RE NOT CUSTOMERS or are they even potential customers. If they could and wanted to buy the stuff, they would of paid for it. And from a business science perspective, you CANNOT count them as lost revenue. Lost revenue can only be truly counted if CP sell you items at and keep all the profits, either passing it off as the real McCoy or a cut-throat street-corner p
  • I do occasional consulting, and people are pirating my services with free online support forums. Based on my estimates, I'm losing hundreds of millions in consulting fees every year. I wonder why these pirates aren't shut down? Oh, that's right, I forgot to buy a government official. My bad.

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