Monday, August 23, 2010

iPhone App Piracy - a direct noticeable affect on niche market app sales

I've had a niche market app, called Artificial Life, for sale in the iTunes app store for over a year now. As the name implies, it's a simulation of artificial life. Given the subject matter of the app, I never expected to make a lot of money from it. There's a limited audience of the type of people who find the topic interesting (mainly tech people), and a smaller number who own iPhones and would enjoy watching such a sim on their phone.

But, there was a small niche market, and those who used the app tended to use it on average for about 45 minutes per day! The app had been slowly gaining sales over the past year increasing from single digit daily sales to over 20 sales per day. Then, back on April 18th, the app was cracked by pirates and was posted on a web site for jailbreak users to download for free.

I discovered this piracy when a saw a huge spike in app usage (via Google Analytics stats). The stats showed an increase in app usage by about 13 times the normal usage in just one day (over 3200 daily users vs. the previous days average of about 250).

At first, I assumed this would have a negligible effect on my daily apps sales - I was only selling 20+ copies a day and general wisdom say says the piracy numbers are people who would never buy your app in the first place anyhow. Well, sad to say, several months later I can say this general wisdom appears to be wrong, at least for my market.

Here's the graph of daily sales for the past year (you can click on the image for a larger view):

The red line denotes when the app was first cracked and posted on a pirate website. As can be seen, app sales had been steadily climbing, however shortly after the app was cracked app sales began to decline and now are back to single digits for daily sales. It could be coincidence, but it does seem fairly compelling that a couple weeks after the app was pirated, the sales for the app were more than cut in half.

One other interesting point that can be observed from the graph: Up until early April, the app included anti-piracy code to try to make the app a bit more difficult to crack. When I published an app update in early April, I discovered I had introduced a critical bug which was causing a false positive for the piracy detection on some devices. I immediately pulled the app from the store to prevent any existing customers from getting the new update and I was able to get Apple to push through an emergency bug fix the next day. This can be seen in the graph when there was one day in early April with zero sales. Because I wanted to get the bug fix out as quickly as possible, I simply disabled the piracy detection.

Much to my dismay, it only took a week for someone to then pirate this new app update since it no longer included any anti-piracy measures. And then a few more weeks and daily sales were cut in half. And the rest is history.

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