iPhone App Piracy Rate: As High as 75%?

Piracy is one of the biggest issues of our time. Many of us have used or heard of services such as KaZaa in the past. A few years ago P2P services were being used heavily to pirate music, movies, and even books. That is still going on today. But RIAA, MPAA, and other organizations are cracking down on that. iPhone is no different. It’s true that there are a lot of iPhone apps that don’t cost you more than a dollar, but some people would just refuse to pay even if they have all the money in the world. One of the biggest excuses used by pirates to justify their action is high prices. That certainly doesn’t apply to iPhone apps, considering the rate in which apps are getting pirated.

24/7 Wall St. has posted an analysis on the issue of piracy in the iPhone app market, and it has come to the conclusion that Apple App Store has lost $450M to piracy so far. That’s a huge amount even for Apple. Apple has done a bit to prevent people from stealing apps, but the company is unable to stop people from jailbreaking their phones. Apple has sent waves of updates and patches to stop jailbreakers in their tracks, but that doesn’t seem to be working out.

Apple may try to stop people from jailbreaking their phones, but the technical barrier is coming down fast. That means more people are going to take the chance and jailbreak their phones in the future. That means we could even see a higher rate of piracy in the future. But if the above-mentioned analysis is true, how high can the rate get?

There have been over 3 billion downloads since the inception of the App Store.  Assuming the proportion of those that are paid apps falls in the middle of the Bernstein estimate, 17% or 510 million of these were paid applications.  Based on our review of current information, paid applications have a piracy rate of around 75%.

I am not sure the rate is as high as it’s mentioned in the report. But it’s quite clear that there are people out there who would not pay for apps no matter how cheap they are. While it’s truly disgraceful to rub developers from the money they deserve for their efforts, what we don’t want to see is Apple implementing a tighter set of rules on apps. That seems to be the approach of many companies. Amazon and other companies are using DRM to protect their products. You can make the argument that eb00ks (in case of Amazon) and iPhone apps have a lot in common when it comes to dealing with online piracy. If anything, e-books may be easier to steal. Piracy is a big issue for Apple and its developers, but it has helped the company sell more units as well. So it may have had some positive effects. Just not for developers.

Is there any way to stop app piracy? It’s tough to say. Apple doesn’t want to compromise the “iPhone experience” by making dealing with apps less convenient. There are certain techniques that can be used to make users activate their apps, but it’s tough to say whether that can be implemented easily without annoying iPhone owners. At the end of the day, some people are going to steal apps no matter how cheap they are. Can Apple change the way some people are wired? Probably not.

Your take: how can Apple and app developers stop piracy?