“Apple and the companies that sell software for the iPhone and iPod touch at the App Store have lost over $450 million to piracy since the store opened in July 2008 according to an analysis by 24/7 Wall St. There have been over 3 billion applications downloaded since the App program began. Bernstein analyst, Toni Sacconaghi, estimated that between 13% and 21% of those downloads are from paid applications. According to this analysis, the average price of an application purchased at the App Store is $3. Sacconaghi estimated that Apple’s revenue from the App Store is between $60 million and $110 million per quarter. That amount has certainly increased since this research report was published because of the rapid growth of the number of applications,” Garrett W. McIntyre and Phil MacDonald write for 24/7 Wall St.
“However, behind all this success lies an insidious force that has plagued the music, software, and movie industry for decades. Developers of iPhone applications have reported alarming piracy rates for their software, and the ease with which users may obtain pirated versions of paid applications for free is only increasing. The total number of applications available at the store, including those which are free and those which require payment, is in excess of 100,000,” McIntyre and MacDonald write.
McIntyre and MacDonald write, “Apple, which takes 30% of the revenue generated by downloads at the App Store has lost about $140 million from piracy.”
Full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
…..and Al Gore invented the internet.
so are we supposed to shed a tear for all these rich bastards in silicon valley?
Hey…the Headline reads “$450 Million due to Piracy” and then the quote from the article reads “about $140 million from piracy”.
MDN headline mistake or Article Mistake??????
Don’t Sound right ya’ll!
Some apps are more difficult to pirate, app developers need to try harder to protect their apps
24/7 Wall St are hit-whores, who hate Apple. Read anything by Doug McIntyre. This article is clearly by Doug’s brother Gerald McIntyre.
They make no comment that most people who pirate, would NEVER BUY the product anyway. It’s rather pointless to count money that would never have been paid, and most developers know that.
Companies never “lose” that money. They just don’t make it, but it’s based on a MASSIVE “if” that is never factually supported. These numbers always assume that if illegal means of getting these products were not available that all the people who took it for free would have otherwise PAID to get it, even though the price was greater. History shows that even minor changes in price can massively affect sales, and who’s to say that those who took the apps even have enough money to have EVER paid for all the apps they took.
If the illegal means were not there, The companies involved would have only recouped an infinitessimal portion of that $450 million. They’d never have gotten close to that whole amount EVER. Thus calling it an actual loss is inaccurate. They lost some sales, sure, but my no means is it even near $450 million. Don’t deceive yourself. Faced with actually paying for something, consumers make much more discerning choices. I’d be surprised if they’d even “lost” a quarter of that amount!
You can’t eliminate piracy. All you can do is make it difficult and socially unacceptable. A co-worker got his children iPod touches for Christmas. He explained how one of their friends modded his touch so he could install pirated apps. The process involved breaking open the iPod and modifying the insides. So when it comes to pirating apps versus buying them legitimately, the legitimate option is by far the simplest. (As opposed to music piracy, where for a long time pirating music was far more convenient then buying a CD.)
My co-worker also said he made it clear to his kids that they would not be following in this other’s kid’s footsteps. So, at least in this case, the socially unacceptable angle worked as well.
In short, I don’t think Apple has anything to worry about. Sure, $450,000,000 is a big number, but as others have pointed out, the origin of the number is debatable, and what fraction of total app sales is that number anyway?
As long as App piracy doesn’t go original-Napster-style mainstream, Apple is just fine.
——RM
@KenC,
I think you got it right. I read the article and it smells of hit-whore junk. After all, isn’t the iPhone just like a PC running windoz???
“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. “
Please, there are just not that many tech talented users that will go to all that work for a 99 cent program. And if your a professional using a $199.00 program, the company is paying for it.
Anal — yst puck is my impression.
Just a thought,
en
They have no consciences; they’re just “takers”, and their thefts do NOT represent “lost sales”.
There’s a word for that – sociopaths. A lot of them are working on Wall Street!
There is NO justification for piracy. All you blow-hards who make the claim that it’s not money “lost” but, rather, money not “realized” are just talking out your asses. What good is it to a developer to have ANY dipshit using their app illegally? Piracty and its “justification” must end…and one day it will.
Spudly, I agree, and Macromancer, I’m totally with you about the hard groin kick.
However, I read the article and I felt like he was making a mildly compelling argument.
But that all changed when I read the last paragraph, and this sentence;
“…Apple has been mute on the subject and done nothing to prevent acts of piracy, which is not unlike the stance it has taken on illegal music downloads to iPods. “
Ah yes, the old, “iPod users are all thieves!” chestnut.
This article was conceived and written to cast aspersions on Apple and their hardware, and their customers. Nothing more.
The sentence about illegal music on iPods came directly from Ballmer’s teleprompter.
This article should have come with a Think Before You Click warning.
Pirated Apps can only work on jailbroken iPhones.
That’s only what? 5%
How can anyone lose money on a replicated digital file? If someone who never pays anything for the stuff they use, picks up that file, where is the lost sale?
Cheap bastards do not change their stripes.
It lost $0 dollars. I doubt that anybody who pirated software on iPod or iPhone would have ever spend any money on that software.
as several people have pointed out, as far as i know you can only pirate apps to jailbroken phones.
…so someone who is willing to break a contract and a software agreement is willing to steal apps? who could have guessed!
So please Spudly, explain how you thought jailbreakers were going to pay for apps and the money really is lost and not realized.
I understand that your upset that people are stealing, and they are, but the money is still not lost because the sale would most certainly have not been made. likewise microsoft could, if they wanted to, have claimed that as a mac user i am a lost sale, but even if Apple didn’t exist, i wouldn’t buy windows, so they are wrong.
If only about 5% of iPhones/Touches are jailbroken, how can they possibly be consuming 75% of all downloaded applications? That means that the other 95% of the possible users are running only 25% of the paid application copies in existence.
Apple takes a cut of all app sales, so apple feels the pinch too. But on the flip side. The fact that the iPhone can be jailbroken, opening that extra door has more then likely boost sales of the iPhone in general.