No Surprise: $450M App Piracy Figure Is Highly Based On Speculation

Yesterday we covered a report which claimed that iPhone app piracy has cost the App Store $450 million in revenues since it opened in July 2008. Shocking as that number may be, it’s based highly on speculation. Ars Technica broke down the data which brought 24/7 Wall Street to the $470M conclusion and found that two of their assumptions aren’t based in reality.

The first (potentially) wacky assumption they make is that, for every time an app is purchased on the App Store, it’s pirated three times! From this number, the report assumes that 1.53 billion apps have been pirated, and at an average of $3 per app, you get $4.59 billion in potentially lost sales.

24/7 Wall Street does admit that most pirates wouldn’t have purchased the app if it wasn’t available, so they assume that 10% would. That’s where the $450 million figure.

The second assumption they make is that 10% of pirates would have purchased the apps had they not been free. App pirates do tend to download lots of apps, but data suggests that many of the apps are thrown out after several uses.

The bottom line; money has definitely been lost due to app piracy, but $450M probably isn’t the real amount.

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