App Store losses greatly exaggerated
The notion that the Apple App Store has lost $450 million to app piracy is not supported by the facts, the methodology or common sense, though losses are undoubtedly significant.
There is a study floating around cyberspace that the Apple App Store has lost $450 million to the iPhone app piracy. There is a much older truism in the world, credited to Benjamin Disraeli and popularized by Mark Twain: “There are three kinds of lies: lies, damned lies, and statistics.” Part of this somewhat curmudgeonly view of number sciences is due to the mathematical chicanery often used by people to support their own claims. A larger part is due to assumptions made by the statisticians.
This particular notion of app store losses is being supported by the Web site 24/7 Wall Street, independent financial analysts. As reported by PCWorld and others, the way this study has been done influences the result obtained more than do the facts in the real world. An excellent example of the likely truth of the matter is presented quite well by Christina warren of Mashable, who notes:
The biggest red flag is that 24/7 Wall St. assumes that paid iPhone applications have a piracy rate of 75 percent. How did they come to this conclusion? Using some past piracy usage examples from apps from Fishlabs and other developers, they came to the conclusion that for every app purchased, three more were downloaded from cracked sources.
The 24/7 article admits in their piece that hard numbers are harder yet to come by, yet still trumpets that $450 million number in the headline. They are using worst case scenarios, though not quite outlier statistics, and applying them to the norm, which is not very good practice. Though it is certain that piracy exists, it is far from certain that it exists in the staggering quantities that 24/7 is saying that it does. Perhaps a little less hype and a little more common sense is called for.
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