Apple App Store Loses 450 Million in Revenue

Since the launch of the App Store in July 2008, over 3 billion apps, both free and paid, have been downloaded.  While that  number seems high, and it is, only a mere 13-21% of these  downloads are from purchased applications (Toni  Sacconaghi).  Despite  these percentages, Apple still brings in  about $110 million per quarter from sales at the App store.  Yes,  the App Store and iTunes in general has been enormously successful since its launch, but beneath the prosperous facade lies a slowly dying retail center that I’d imagine looking something like a dingy thrift store, where things can be easily stolen and the robber gets away with it.

If you have been on the internet in the past 4 years, then you would be well aware of the widely available pirated media littering the web.  Whether you’re a savvy media collector attempting to download every song ever or just a thrifty teenager with an empty piggy bank, everybody has downloaded a piece of pirated content from a media giant such as Ninjavideo or LimeWire.  Such discounted, actually, free, content is obviously more appealing than paying iTunes $1.29 for one two-minute song.  All this cyber black market talk raises the question: What is to become of iTunes and the App Store???

Well, getting back to my original points, as of recent, developers such as NASDAQ have “reported alarming piracy rates for their software, . . . and the ease with which users may obtain pirated versions of paid applications for free is only increasing,” (24/7 Wall Street) thus robbing the App Store of hundreds of thousands of sales!  Since the App Store’s launch in 2008, analysts have estimated Apple and its developers together have lost about 450 million dollars to piracy.  So, to answer the question about the future of iTunes and its App store, it is safe to say that iTunes and the App store may see a decline in sales with years to come, but will ultimately remain a strong leader in the business.  As for Apple, they choose to ignore the current increase of pirated applications and will stay focused on the tens of billions of dollars generated by its sales in hardware.

What do you think?  Leave a comment!


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