Over $450m lost to iPhone piracy

Over $450m lost to iPhone piracy
Will Freeman

By Will Freeman

January 15th 2010 at 10:55AM

But is the report based on unreliable data?

According to a report posted on 24/7 Wall St, together Apple and App developers have so far lost out on over $450m lost to iPhone piracy.

The huge figure will send a shudder down the spine of many developers, but delving a little deeper, it seems that the report may be somewhat unreliable.

Here's 24/7 Wall St's logic, which, while it strives to be rational, is based on a number of debatable estimates and assumptions.

    * Over three billion apps have been downloaded from the App Store. According to analyst firm Bernstein around 13 per cent and 21 per cent of those are paid downloads.

  * 24/7 Wall St has taken the mid-point of the Bernstein estimate. So, if some 17 per cent of downloads were paid, that means around 510 million.

    * The website's own research is then inputed, which suggests that for every legal paid download from the App Store, three pirated downloads take place. That, says 24/7 Wall St, means 1.53 billion illegal downloads.

    *  $3 is proposed as the average price of an App, which has made 24/7 Wall St estimate that there have been $4.59 billion of lost revenues

    * 24/7 Wall St has then theorised that as 10 per cent of those users would have paid for the legit apps, a final figure of $459 million reflects actual lost revenues.

While it's clear 24/7 Wall St has made an earnest attempt at creating a realistic figure, some of its data is rather questionable. For example, the website claims there is a piracy rate on paid apps of 75 per cent. From the data presented in the article, it seems that the percentage is taken from a handful of developers reporting on their experience of individual titles fitted with 'call back' technology that informs them when their App has found a home on a jailbroken device.

As Mashable points out, the danger of piracy statistics based on uncertain figures is that it makes the issue easy to dismiss; something that could harm both developers, customers and the industry as a whole.