Report: App Store Lost $450 Million To Piracy

Software piracy has long been a problem, and nowhere is it more apparent than in the mobile app ecosystem that’s growing larger everyday.  A new report published by 24/7 Wall St. has estimated that Apple’s App Store alone has lost $450 million to piracy since...

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Software piracy has long been a problem, and nowhere is it more apparent than in the mobile app ecosystem that’s growing larger everyday.  A new report published by 24/7 Wall St. has estimated that Apple’s App Store alone has lost $450 million to piracy since its inception a few short years ago.

While some are questioning the methods used to arrive at such a high figure, the problem of mobile app piracy is apparent nonetheless.  Justifying it’s figures, 24/7 Wall St. estimates that 17 percent of the 3 billion apps downloaded from the App Store were paid apps, or roughly 510 million.  They then multiply that by three and assume that 1.53 billion apps have been pirated.

Multiplying that figure by $3, which is the average price of a paid app, equates to $4.59 billion.  Assuming that 10 percent of app pirates would have actually purchased the app in question, that’s how they arrived at the $459 million in lost revenue estimate.  Whether you agree with their reasoning or not, the numbers are impressive.

Reports like this raise the question of what’s the best way to monetize mobile apps in the first place- via in-app advertising or the traditional one-time cost model.  Utilizing a one-time cost structure makes you as a developer vulnerable to piracy and the subsequent lost of revenue it brings, but maintaining an in-app monetization model via relevant advertising takes most, if not all of the risk away.  As the problem of piracy grows larger, we’ll undoubtedly see a shift to in-app advertising, which has always seemed to make more sense in the first place.

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