April 20, 2014

Rethinking Android App Piracy

Every couple of weeks, somebody posts a link to some site that offers free pirated downloads of paid Android apps. Hacking a handful of phones to automatically slurp down the latest stuff on the Market is almost trivial, so this sort of thing will happen regularly.

The question is, what should the average developer do about it?

First, think about it with a level head. Yes, finding your stuff pirated raises emotions. No, being emotional when making business decisions is not a good idea — and dealing with piracy needs to be first and foremost a business decision.

I would start by ensuring you have a handle on the problem. Assuming your application needs or can justify the INTERNET permission, hook up with Flurry or some other analytics provider and start collecting data on the use of your app. I suspect that few pirated copies somehow attempt to disable such logging. Comparing the number of unique users reported via analytics and the number of unique users you get from the Android Market and other channels will give you a sense for how many pirated copies of your app are in use.

For the sake of argument, let’s say you have determined there are ~10,000 active users of pirated copies of your app. Considering there are only a few million Android devices in use, 10,000 would be substantial.

Next, you need to make an estimate of how many of those users would have found your application through traditional channels and elected to pay for it. Each of those is a significant hurdle, as there is no assurance that users of pirated apps are going to meander the Market much to find legitimate apps, let alone buy them.

Let’s say that there’s a 30% chance that a pirated-app user would have found your app in a legit channel and another 30% chance that those who find it would pay. Both of those percentages feel generous to me, as app “findability” is a big-time problem in mobile and paying anything for an app is a non-trivial barrier. But, with those odds, you have actually “lost” 900 sales (10,000 x 30% x 30%). And, let’s say you are netting 0.65 USD per sale after Market fees and such.

That means, for all those pirates, you’re really out $585, regardless of how many legit sales you have. Obviously, you will need to tailor all of these numbers for your own price and so on.

So, the question then becomes: what is the best use of your time? If closing down piracy is super-easy for you, such that you can take care of it just a few hours, it’s probably worth doing. If, on the other hand, trying to stop piracy of your app will take a lot of time and effort, you might consider whether you will do better devoting that time toward more marketing (increasing exposure and, therefore, legitimate sales) or towards an improved app (increasing the odds of purchases and, therefore, legitimate sales) or towards a business model that lets you distribute the app for free, so piracy is no longer an issue and might even be beneficial.

What you do not want to do is just jump into a long drawn-out battle against the pirates based on pure emotion instead of the facts of your business. Every hour you spend fighting piracy is an hour you lose for things that, hopefully, matter more to you, such as family, friends, or football (of the round or oblong variety).

Similarly, re-check your analysis from time to time. As Android grows, piracy may grow, and there may come a time when it becomes fruitful for you to invest the time, even if it does not make much sense today.

If you are interested in a more substantial analysis of why the effective price of your app will head to zero over time, I heartily recommend Mike Masnick’s posts on the Grand Unified Theory of the Economics of Free, also collected in his limited-edition book Approaching Infinity.

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