As the mobile application space becomes larger and larger, cracked software and piracy — problems that have plagued the desktop software market for years — become more prevalent and a larger concern for app developers.
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The website 24/7 Wall St. is estimating that the iPhone App Store has lost $450 million to piracy and cracked downloads. Although we’re not denying that App Store piracy is a very real concern, we do take issue with the methodology and estimated numbers in this report.
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Mobile App Piracy: A Quick Primer
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As iPhone detractors are always keen to point out, mobile applications, and, in turn, mobile application piracy, is not a new issue. The Symbian and Windows Mobile platforms have been battling the problem for the better part of a decade, and the Palm Classic- and JDK-compatible platforms even longer than that.
However, with the big push to acquire newer smartphone platforms like the iPhone and Android, plus the industry shift to platform-specific app stores, mobile application piracy has started to take on a new face.
In February of last year, one-click cracking tools and an over-the-air cracked app store were developed for the iPhone and iPod touch. While only available on jailbroken iPhone or iPod touch devices, this type of software showcased the trivialities of cracking and distributing paid mobile applications.
Lest you think this phenomenon is just limited to the iPhone, Android app developers have been complaining about the effect the Android Market return policy has had on app piracy for months.
The bottom line is that this is a real issue and it does impact developers, which in turn impacts the development ecosystem as a whole, including users. But how big is the problem?
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The Report
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24/7 Wall St. is claiming $450 million has been lost to piracy in the iTunes App Store alone, but we have some very real problems with the way that figure was determined.
The biggest red flag is that 24/7 Wall St. assumes that paid iPhone applications have a piracy rate of 75 percent. How did they come to this conclusion? Using some past piracy usage examples from apps from Fishlabs and other developers, they came to the conclusion that for every app purchased, three more were downloaded from cracked sources.
Now, this might be true for games like iCombat and others from Fishlabs — but this certainly isn’t going to be the case across the board. It might be more fair to say that the piracy rate for games in the App Store is 75 percent, but even then you would need a much larger sample size and various tracking methods if you wanted to be accurate.
Additionally, 24/7 Wall St. is estimating that 17 percent of the 3 billion apps downloaded from the App Store were paid apps — or 510 million. They then multiply that by three (using the previous ratio) and assume that 1.53 billion apps have been pirated. Then, the report multiples that figure by $3 (the average price of a paid app) and gets $4.59 billion. Assuming that 10 percent of app pirates would have actually purchased the app in question, that’s how you get $459 million in lost revenue.
I’m not a statistician, but even I can see that that’s really, really reaching.
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Over-inflating Figures Doesn’t Help
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Here’s the biggest problem I have with throwing around figures like “$450 million lost in piracy” — it doesn’t help the situation at all. Most people take piracy statistics with a grain of salt, anyway, and when they dissect the nature in which those figures were calculated, are more likely to write-off the entire issue. That certainly doesn’t help the game developer who sees that X percent of her usage statistics are coming form people who didn’t even pay for the app.
Instead of inflating figures, why not talk about what could be done to help curb (not solve, you can’t solve piracy in the digital age) the problem?
Both Google and Apple have policies in place that make it difficult for developers to fight against app piracy. Google’s return policy for the Android Market is a particularly wide loophole; there has to be a middle ground between letting users return an app within 24 hours and just using the system as a “buy/request refund/restore from backup” scheme.
Because Apple so tightly controls its developer ecosystem, developers are in a sense beholden to Apple to make sure that the encryption linking apps to specific devices is stronger. Because only jailbroken phones can use cracked apps, an obvious solution would be making the devices harder to jailbreak. That’s easier said than done, of course, but the fact remains that the onus really shouldn’t be on developers who have no control over how to sell their apps and have limited options in securing them.
What do you think about this report and mobile app piracy in general?
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Tags: android, app store, iphone, money, piracy
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February 10th, 2010 
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