I’d like to draw your attention to The huge success of an AppStore failure by Luís Fonseca of GAMEized. It’s the sad story of a mobile-game developer running into the reality that there’s a lot of pirated software out there. I think the obvious conclusions are wrong, mostly.

(GAMEized had perhaps the worst possible outcome, observing piracy rates on the order of 90%. They got unlucky, having been prominently featured on one of the biggest steal-apps-here sites.)

Let me start by saying that this isn’t an Apple-specific problem; there are pirates on the Android side, too. It’s not even a mobile-apps problem, per se, but a monetizing-bags-of-bits problem.

Countermeasures are the conventional response: Keep the pirates from getting their hands on the bits, stop ’em getting the warez to their customers, and prevent the customers from using these ill-gotten goods. What GAMEized in their blog calls “functional counter-piracy safeguards”.

What I Don’t Believe · Let me call out two quotes from that post:

It’s reasonable to assume that many if not most of the 16,000 users playing FingerKicks on Apple’s Game Center probably wouldn’t be playing a pirated version if it weren’t so readily available

The game’s popularity was skyrocketing but the losses from piracy were mounting

The first quote sort of makes sense: if you could stop piracy, fewer people would play pirated games. But consider the second, in particular the phrase “losses from piracy”. It presupposes that there was a ton of potential revenue out there that GAMEized would have taken home, but for the pirates.

Why on earth would anyone believe that? This postulates that there are a significant number of people who could pay for software if they wanted to, would have paid $0.99 for this game, and thus GAMEized lost that money.

I don’t buy it. The pirates’ customers are people who go to the trouble of signing up with flagrantly-illegal warez sites, either because they’re penniless teenagers or just sleazy; people whose time is worth so little they’re willing to skulk around the dark side to save a buck. Once again, let me borrow words from the blog: “people who willingly crack existing apps just to save — or steal — 99¢”. Well, yeah; and you seriously think that you’re going to make money on one-time sales of bags-of-bits to this flavor of pond scum? On what planet?

Fortunately, the planet contains huge numbers of people who will cough up a buck for a nifty-looking app. Enough to have taken this market from zero to billions since 2007. There’s business out there for smart, creative people. But let’s draw the right lessons.

Choose Your Business Model · I’m still convinced that free downloads followed up by in-app revenue is an immensely better approach than a one-time charge for access to a bag of bits.

Yes, the banditos can sometimes hack the in-app buying transaction, but it’s a lot more work so the economics are against them.

Competing With “Free” · Apple, with the iTunes store and its successors, proved that you can do this; “easy and convenient” can win.

So maybe the single best thing the app retailers can do is to make the buying experience increasingly quick, lightweight, friction-free, and delightfully entertaining. After all, most people like to shop sometimes.

It’s still worthwhile for the Apple and Android communities to whack the pirate moles whenever our hammers have a target in reach.

But still, the best antipiracy tactic isn’t a negative countermeasure, it’s being proactively and positively delightful.



Contributions

Comment feed for ongoing:Comments feed

From: Torben Nielsen (Jul 18 2011, at 23:02)

I agree complete that you cannot assume that all (or even most) pirate downloads would have been a sale if no pirated version was available - I've been saying this for years - and it's been a fundamental flaw in the RIAA and MPAA's antipiracy crusades, but that's for another post. I think you are missing at least two reasons for piracy in your post:

1) availability; for better or worse, products of all kinds are often region restricted, incl. apps. This may be most appropriate when discussing piracy of movies or tv shows, but there are definitely quite a few apps that I can't get through th Danish app store.

2) try-before-you-buy; even for 99c, people like to know what they are buying. And these people are pretty easily catered to, either with a demo or "lite" version or by going with a fermium business model.

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From: DP Henderson (Jul 19 2011, at 00:03)

Thanks Tim, your post hits a lot of points that I've been making in conversations about software "piracy". Particularly, the ideas surrounding lost revenue and how that is an egregiously outrageous conceit for the very reasons you give.

That said, I have to disagree about the in-app purchasing model given the on-going acts of "piracy" by patent trolls like Lodsys.

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From: tim (Jul 19 2011, at 00:37)

Superdistribution means spreading the word far-and-wide - so turn the negative of piracy into an accelerating brand / word-of-mouth piece.

Response should have been : make this game app free, add some value to it, then launch an 'HD' paid-for version.

Of course if they were in debt up to their eyeballs and counting on revenues from that first game launch then ... they had a painful distribution/strategy lesson.

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From: Jay (Jul 19 2011, at 03:41)

Having an in-app buying experience is, perhaps, a better alternative. However, this triggers the possibility of running into a Lodsys-like patent troll. I'm not sure which is worse.

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From: Jeff (Jul 19 2011, at 06:21)

Your point is well taken and valid. Back in the days of DOS friends would offer me disks of unlicensed (pirated) software all the time. Sometimes I used it, most of the time I didn't.

But the point is that I would have never bought any of it in the first place.

To assume that a company is losing money because of piracy is one of the worst assumptions that can be made in the software business.

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From: Will G. (Jul 19 2011, at 07:51)

I don't think it's unreasonable for Apple to reject Game Center requests when the app doesn't show up in a user's purchase history. Then again it just becomes another game of cat and mouse.

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From: KO (Jul 19 2011, at 08:48)

Piracy isn't just "penniless teenagers" or sleazy people as you mention.

There are countries like Pakistan, consisting of 180 million people, where it is impossible to get hold of legal software, and piracy is the only alternative.

The rise of increasingly more user friendly Linux distributions is changing that, but a couple of decades on using pirated software has a firm hold on the computer users of the entire company. See my link for a blog post I wrote 7 years ago on the impossibility of acquiring a legal copy of Windows - that still stands today.

Most companies, like Autodesk or Adobe, two examples of software which are widely used in Pakistan, are impossible to get hold of legally, short of getting on a plane and flying somewhere else.

Even Google's very own android, doesn't sell any of it's app in the Pakistani market. So android users have to resort to either illegal circumventions on google's restrictions on their market or pirate the apps.

Which leads to the question - if software is such a great enabler - why not make it more widely available? And why fault those who try to get hold of it? And not just kids pirating games, but for every other use.

It's not just software - I have a kindle but can't buy ebooks in Pakistan, so again I have to resort to faking my address and using an american credit card to buy them - things most people here don't have access to.

You say make the buying process easy and more ppl will buy apps - in many countries for many apps the buying process doesn't even exist!

Another piracy example - any media produced outside of magazine is not legally available in the country, for whatever reason - the publishers don't want to sell, the prices too high, the market too small - so piracy is the only way to get hold of western movies, tv, books or just about anything else.

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From: Ben (Jul 19 2011, at 09:03)

Brad Colbow sums up why piracy often wins over commercial models: http://bradcolbow.com/archive/view/the_brads_why_drm_doesnt_work/?p=205

...and Randall Munroe captures the problems of DRM content nicely: http://xkcd.com/488/

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From: Mike (Jul 19 2011, at 09:15)

When I released my latest game a few months ago, I had fewer than 100 sales the first day, yet I saw over 500 players in gamecenter. Someone found a cracked copy that had 2000 downloads that same day. As a result, I don't plan to develop any more games. As for this one, I plan to make it free with premium features available for purchase.

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From: Thaddee Tyl (Jul 19 2011, at 09:28)

The fact that, indeed, free app with in-app purchase is a much better business model than that of selling bytes feels only right.

Furthermore, I feel like an outstanding right that humans have is being spit at. People, just like Hobbits, want to share what they possess. As a result, anything whose business model is presented as a "product" (in the sense of an object that can be acquired, bought, used and thrown away) will also be shared by those who felt they gained ownership.

That is why the strange smoke surrounding everything that is supposedly acquired, but that really is barely lent, only makes things even harder.

An iPad, for instance. An iPad is not this flat, metallic computer with a screen. It is the software that runs on it, and which prevents it from being shared (did you ever share your iPad, given that settings are always global, including passwords?)

This, again, is not iPhone-specific. Android has the same design flaws. The game and the music industry has them too. It isn't about technology, although competition in technology is clearly relevant to that subject; it is about the way people think. They think in terms of "This is mine."

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From: Okeke Emmanuel (Jul 19 2011, at 09:45)

I agree with everything @KO mentioned (although i'm not pakistani).

The truth is, most times users of pirated software products only use them because there are no means to get hold of them legally, or within their pockets limit.

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From: Daniel Grady (Jul 19 2011, at 09:53)

There's also this report from Wolfire Games on their experiences selling the DRM-free Humble Indie Bundle:

http://blog.wolfire.com/2010/05/Saving-a-penny----pirating-the-Humble-Indie-Bundle

They found that a large fraction of people are unwilling (or unable) to pay even 1 cent for a legitimate version of the bundle. This might support Tim's point about pirates not being a group of people that would ever pay for software, but it's also not clear if these people didn't want to pay, or couldn't pay.

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