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App Store piracy has led to $450 million in losses

Written by Andre Yoskowitz (Google+) @ 14 Jan 2010 13:36 User comments (17)

App Store piracy has led to $450 million in losses According to a report from 24/7 Wall St., App Store app piracy has led to $450 million in losses for developers and Apple since the market's open in July 2008.
It is estimated that about 17 percent of all downloads from the App Store (currently over 3 billion) are paid applications, with over 100,000 paid applications available.

However, the jailbreaking of iPhones and iPod Touches continues to grow, especially as the process has gotten simpler. The process has become as easy as one-click, using a software such as redsn0w, and unlocking the phone for use on GSM providers outside of AT&T has become as easy as one-click as well. Jailbroken phones can use pirated apps, and it is estimated that there are 7.5-10 million current devices jailbroken.

The report then does a bit of math to come up with the headline figure. Putting paid application piracy at 75 percent (3-to-1), and 17 percent of 3 billion at 510 million, pirated downloads of paid applications can be as high as 1.53 billion. The average app price is $2.99 so the math turns to about $450 billion. Of course that number is not an accurate representation of how many users would have actually purchased the apps had they not had the ability to pirate them, so the report puts that number at 10 percent, or about $450 million USD.

Apple takes a 30 percent cut of revenue, putting their losses at $135 million, however the $315 million loss seen by the developers is the bigger problem and may be a reason why only a handful of developers have been extremely successful through the App Store.

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17 user comments

114.1.2010 13:43

rrriiiiigghhhhhhttttttttttttttttttttttt.............................

214.1.2010 14:03

It seems that 7.5 to 10 million people would like to have an open platform, but Jobs & Co. would rather keep the training wheels attached and the blinders on.

314.1.2010 14:21

Quote:
... however the $315 million loss seen by the developers is the bigger problem and may be a reason why only a handful of developers have been extremely successful through the App Store.
Right, so every developer, no matter how retarded their application is, should be successful...that's bull.Maybe the reason why only a handful of developers were successful is because the same handful were good...Is the same reasoning with the "movie pirating" and "potential losses"...,have a good, useful apps and you will see success...or put something up like "Baby Shaker", and then cry over "potential" spilled milk...

414.1.2010 15:35

Losses? LOL

They should take the "losses" out of the 30% Graft that Apple gets on everything... and out of the 50% markup on the premium Data Plan required by Iphones.
Should come out about even.

515.1.2010 2:29

It's another one of thos "think of a number and double it" statements

615.1.2010 8:21

Ya its got to do with penis size they have 4 to 5 inches so they say 8 to 9.
And i wanted to pick a profesion of either a rock star or a race car driver when i was younger but that didnt pan out maybe i can claim a loss of a few million that i could have possibly made? HMM......

715.1.2010 8:40

Quote:
The average app price is $2.99 so the math turns to about $450 billion.
ohhh my!.... Gee whiz batman! Do you think they factored in th profit the are raping people with on replacing those batteries.

Seems to me they are getting what they deserve bc they are trying there best to stick it to the consmers. I wonder what percentage of phones actually have built in memory and battery. Hahaaaaa!! ....I've got u exactly where I want you joker. Grab him robin.

Buying a Iphone?....................$99-$199
Want a app?...........................$2.99-$99.00
Owning a jailbroken Iphone.....Priceless!
With free apps and ringtones?

815.1.2010 10:21

The only downside to this story are that the losses aren't in the billions.

915.1.2010 11:03

I would LOVE to know how they arrived at $450 million. There is NO WAY POSSIBLE that they can tell.

1015.1.2010 13:40

Originally posted by XdjxedxdX:

And i wanted to pick a profesion of either a rock star or a race car driver when i was younger but that didnt pan out maybe i can claim a loss of a few million that i could have possibly made? HMM......

That's actually not such a bad idea. :) With the boneheaded charges that the courts have seen over the past few years, this one actually has enough "ring of truth" to it that you might recover "damages."

1115.1.2010 14:32

There aren't $450 million in losses, as those that don't buy them wouldn't anyway.

1215.1.2010 16:41

Originally posted by dave817:
There aren't $450 million in losses, as those that don't buy them wouldn't anyway.
That is right. So they get ripped off.

Apple is the one crying over lost revenue. I suspect the developers are happy to be making what they are. They would want to make more but they haven't gotten fat and greedy yet. If they did they wouldn't be selling anything!

1315.1.2010 21:37
llongtheD
Inactive

Maybe they can use this as an excuse to add even more DRM to their already DRM laden products. Would that even be possible?

1417.1.2010 12:36

uh huh...

so, this is assuming, of course, that if people didnt jailbrake their iphones, the still woulda bought the apps?

i dont see proof that these apps woulda been bought and would have brought apple $$$. I just think they wouldnt have been dled at all, and apple woulda been in the same boat.

1517.1.2010 12:43
scum101
Inactive

I wonder if there was a sudden spike in sales of hardware once it was hacked. I would guess.. and it's only a guess.. that a lot of people who wouldn't buy one and have to pay for everything saw the possibility to unlock the thing and put whatever apps you want to try on it without paying as the deciding factor in choosing a new phone.. especially such a poor and continual expense device like this.
They aren't even great phones.. their coverage area is nothing like as good as my samsung on the same network.


1620.1.2010 1:43

It always makes me laugh how they calculate losses due to piracy. Most of the people who download pirated stuff would have never paid for it anyway. If buying the darn thing was the only way to get it, they would probably look for a free alternative or just skip it. I believe most people (myself included) will pay for something if it's useful and the price is right (except when I was a broke student). Good games like Modern Warfare II or any other good product (music, software, movies, etc.) will still sell and make a decent profit despite piracy. There's something about owning the original, and I'm not talking about personal values, that makes sense. Just my two cents.

1720.1.2010 23:47

Originally posted by Matt555:
uh huh...

so, this is assuming, of course, that if people didnt jailbrake their iphones, the still woulda bought the apps?

i dont see proof that these apps woulda been bought and would have brought apple $$$. I just think they wouldnt have been dled at all, and apple woulda been in the same boat.
As per the article, they assumed 10 percent of pirates would have actually bought the apps. I would have put the figure at less, maybe 5-7 percent tho.

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