Has Apple Lost $450M to iPhone App Piracy?

Ed Sutherland ()

Has Apple Lost $450M to iPhone App Piracy?

Apple has lost more than $450 million from App Store piracy, according to a published report Wednesday. “A conservative estimate of the average piracy rate is that for every paid application developed and sold at the App Store, three more are pirated,” a financial blog claims.

The $7 game Rally Master Pro 3D has a 95 percent piracy rate, according to publishers Fish Labs. The $1.99 game Tap-Fu has a 90 percent piracy rate, says publisher’s Neptune Interactive and Smells Like Donkey. Even developers of applications costing less than $1 suffer piracy. The 99 cent iCombat has a 75 percent piracy rate, publisher Web Scout said.

The key to increased piracy is the ease of “jailbreaking” an iPhone. Once a technical challenge, now even “most Luddites” are joining experienced hackers in freeing the handset from limits, according to 24/7 Wall Street. Although Apple has produced several updates to the iPhone aimed at preventing jailbreaking, the focus has been mostly on preventing iPhones being used on carriers other than AT&T, which has an exclusive contract with the Cupertino, Calif. company.

Although some App Store developers decry piracy, others feel combatting the hacks should be left to larger publishers.

“I think the best solution is to create a version akin to a lite version of the app for pirates. It is no good to shut off access to your app completely, but it also doesn’t get you very far to give away the core value you are offering to the paying user,” said iCombat developer Miguel Sanchez-Grice.

Apple reportedly receives 30 percent of each app sold.

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[Via 24/7, Barron's and Mac Observer]

9 comments »

About the author

Ed Sutherland

Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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  • Jim

    Never seen a pirates app in my life, and how can they tell how many apps are pirated? with out checking every iPhone.

  • Mattzook

    Is it really Apple that “lost” the money from piracy? If Apple only receives 30% of profits, then the majority of profits go to the Devs. It’s the devs and programmers who are the biggest losers, no?

  • John Brownlee

    Those numbers are now widely being criticized as bullshit, for good reason: when you break it down, it basically says that each jailbroken iPhone is pirating hundreds of games.

  • http://islate-review.co.uk Marco

    My phone’s JailBroken and I’ve not pirated anything!

  • John Brownlee

    Also, I wish people would stop saying that a pirated game is equal to a loss sale. That’s just magical thinking.

  • Steve White

    I don’t buy it for a minute.

    For games with a ’95% piracy rate’, this means one of two things: either 95% of iPhones are jailbroken, or a small number of people are pirating everything they can, AND the sales of the game in question are really small.

    The first possibility: what’s the proportion of jailbroken iPhones out there? 1%? 5%? It sure isn’t 95%. Most iPhone users don’t care and wouldn’t ‘break’ their phones; they’re happy with the way their phones are.

    The first possibility would mean that the sales of the pirated games are evenly distributed across the iPhone world. That also likely isn’t true; people who play a lot of games on their iPhones are likely a relatively small sub-set of iPhone users.

    So the second possibility might be real, but for it to happen, the sub-set of gamers have to have a disproportionate number of jailbroken iPhones in their hands. That might be and if so would reflect the PC world: PC gamers are generally much more likely to hack/pirate games than are corporate PC users.

    So if 95% of game X users pirated on their jailbroken iPhones, that means that a) the sales are low to begin with and b) the developers are trying to market to people who are unwilling to pay for the product in the first place.

    That’s the same problem PC game vendors have. If you’re a game producer, you either accept it and market/charge accordingly or you find something else to do.

    But there is no way the proportion of jailbroken iPhones is anything high — I bet it is under 1% of all iPhones.

    Mr. Sutherland’s ‘analysis’ is all wet. I don’t buy it for a minute. It doesn’t pass the smell test.

  • Subhash

    Get over the blinder-folded view, my fellow Americans. Not really fellow Americans, but fellow iPhone users. I’m from India, and the pieces here are, very realistically, jailbroken, 99% of the time. No shitting. And i’m sure so many other markets are just TEEMING with jailbroken iPhones.
    And there’s just so many repositories and add-ons that Cydia gives you to get free apps. I’m sure everyone knows Appulo.us and Installous exist. So while that 450$ mil figure sounds ludicrous. It might not be too far from the truth on a global scale.

  • bubbakush

    it would take a guy a real f-ing loong time to dl- 515 apps off the installous app.the server that indexes them is soo slow you can only get a few things.
    maybye it shows the server is constantly busy. but still my buddies that pirate apps heavy only got 20 – 30 topps i call bullshit.

  • Subhash

    ^^ Or you can just sit on Google and sneak the ipa files out yourself instead of waiting for the Appulo.us server. At the end of the day, the files are out there on file-hosting wesbites and Appulo.us just gives you links :)