Dejan Diklic is the CTO at Attributor. He plays an integral role in the strategy, development and implementation of Attributor’s research, which has brought international attention to the depth of content piracy across the Internet.

Throughout the past three weeks, I have devoted a lot of time into researching mobile piracy and the financial ramifications of such pirated material. The findings have been pretty stunning, and I wanted to summarize the issue for those interested in mobile content. My research focused specifically on iPhone Apps. (For the time being, I have not researched the piracy of Android Apps.)

What I found regarding iPhone piracy is trivially simple:

1. Jailbreak your phone

2. Install Cydia (package manager)

3. Add a list of repositories that contain apps

4. Install whatever you want

Various websites currently provide repository lists, while additional sites purely contain free apps. One such site that has received a lot of public attention is App Store Free – a site requiring some form of payment. The site was “attacked” by the rest of the piracy community, which resulted in the development of piracy sites like Appulo.us (now dead), Hackulo.us and Grabuolo.us – all of which allow users to install apps for free. Torrent sites and cyberlockers also provided popular apps, including the well-known TomTom GPS app, which was listed in the top 100 on Isohunt for a long period of time.

In January 2010, a post explaining Apple’s loss of $450 million (thanks to app piracy) drew a large amount of public attention. However, the number was completely inaccurate because of piracy loss estimating problems. Their thinking was rather simple: The $450 million figure was based on an average piracy rate equaling three pirated copies for every app purchased. With 510 million paid app downloads, the number equated to 1.53 billion. With an average price of $3 per app, that would lead to $4.59 billion in losses for both developers and Apple combined.

With a substitution factor of 10 percent, the loss is estimated at $459 million. Plenty of other blogs jumped on this number, pointing out that the substitution factor is probably closer to one percent than 10 percent. In addition, the number of devices on which pirated apps can be installed is continuously changing. The iPhone, iPad and iPod must be jail broken in order to install pirated apps; and according to many sources, the total number of jail broken phones nears four million. The rate of jail broken phones oscillates between five-to-ten percent of the total number.

When Apple releases a new software update, the percentage drops, only to slowly increase again. According to additional blog posts, 38 percent of jail broken iPhones have at least one pirated app on them.

So, the consensus appears to hint that the more realistic loss number is likely closer to $30 million. To clarify, this is the total loss since opening the app store, while the total earnings (for Apple) from the app store is currently around $100 million per quarter.

A common reason for using pirated content is that it enables users the opportunity to try the app for free before purchasing. However, the field numbers do not correspond to this claim. Among the piracy community, the conversion rate from pirated to purchased is less than 0.43 percent.

Many of the top app developers selling very expensive apps ($50-$80) are aware of the problem, but don’t seem to be doing much about it. Apple is clearly aware of the issue and has introduced a system by which app developers are able to sell services or add-ons from within their apps. This enables paid apps to extend their profitability, while in-app purchases are effectively impossible to pirate. An example can be found in game development company Ngmoco, which adopted this approach after seeing substantial piracy rates (up to 90 percent). Now, all of Ngmoco’s apps use the in-app purchase system.

So, lessons have been learned, but mobile piracy is still rampant. The future of app piracy is uncertain, but our work in the mobile space has only just begun.

Today, Dejan Diklic, chief crawling architect at Attributor, contributes his second post about online gaming piracy. Dejan manages the text, image and video crawling team and is responsible for the company’s crawling architecture, algorithms and operations.

Most recently, Dejan began researching online gaming piracy, and shares new insight again today.

In a recent post, we talked a bit about online game piracy and our first set of numbers as they relate to Wii games. We searched for 15 games and found each game on the web and roughly 16 different pages that provided us with links to each game hosted on multiple different file hosting sites (sometimes also called cyberlockers).

In this post, we’ll examine a rather interesting popularity question: “Who is the most pirated one of all?” To do so, we used the list of top 10 games from gamespot.com for each of the 3 top consoles (Wii, Xbox, PS3). We also used the top 10 games for the PC market. We then crawled the web to find links to these games on the top 25 file hosting sites. As a disclaimer, a problem with this method arises from the fact that not all games exist on all four platforms and one of the platforms might have more popular games than the others. Since we are looking at the top 10 most popular games for each platform, this problem is largely marginalized, though not entirely eliminated.

As in the previous study, we dumped the pages from the production system for each platform and then verified them. The results were really interesting:

As far as the consoles go, Wii games resulted in most pages with links to games. We found 220 pages with links to Wii games. Xbox and PS3 have much lower rates of piracy as we found only 59 and 22 pages respectively. The PC games were the absolute winner in terms of piracy. We found 50% more pages for the top 10 PC games than for Wii. The most popular copied game out there is “Battlefield: Bad Company 2” for PCs with 82 pages linking to ISO files. It is followed immediately by “Sonic & SEGA All-Stars Racing” for Wii with 79 pages linking to ISOs.

My hunch is that these numbers can be explained through ease of piracy for a given console. Piracy for PC and Wii games require pretty much just copying the CDs. PS3 and Xbox require a bit more effort in hardware.

In conducting this research, I came across an interesting post on Shack News about the most pirated Japanese DS and PSP games. The claim is that the top two games on Nintendo DS and PSP were downloaded 2 million and 5 million times, respectively. While we didn’t look at piracy for those two consoles, the numbers of downloads are staggering. With average game price of around $30 the potential loss to developers is huge.

To top these numbers, CESA came out with a report saying total piracy loss from 2004 to 2009 was around $41B. While this report needs to be taken with a grain of salt, the numbers are again huge.

In the next post, we will take a peek at game copying on P2P networks and attempt to quantify the value there as well.

Today’s post comes from Dejan Diklic, chief crawling architect at Attributor. Dejan manages the text, image and video crawling team and is responsible for the company’s crawling architecture, algorithms and operations. He plays an integral role in the strategy, development and implementation of Attributor’s research, which has brought international attention to the depth of content piracy across the Internet.

Most recently, Dejan began researching online gaming piracy, and shares his insight for the first time today.

As Chief Crawler here at Attributor, I spend a lot of time seeing what’s on the Web. Recently, computer game software piracy caught my attention and I thought I’d take a first look at what’s happening in this industry. When I started the research, I expected the game piracy to be a well-established “trade” concentrated on just a few sites. But as it turns out, online games are being pirated even more then expected and they are available everywhere.

Since Wii is my personal favorite, I chose this as the segment of the industry to examine. For this blog post, I looked at a total of 15 games on 20 of the largest hosting sites (most of which we identified in previous research for books and magazines). The system crunched through our 40-billion-page index and found several hundreds of thousands of pages that might be relevant for these games. A page is considered relevant if it is classified as being “game related,” meaning it has a lot of keywords that are normally associated with games, has links to known hosting sites and talks about the specific game we searched for.

After the system processed all the pages, the algorithm ranked several thousand pages as almost 100% likely to contain the games in our search. During a one-day period in June 2010, Attributor professional services reviewed 300 pages from that list and found 250 pages linking to desired content, which resulted in roughly 3,200 links leading to copies of the games. We found a copy of every game we looked for. As usual, most infringements were found on rapidshare. The top 5 domains — are rapidshare, hotfile, megaupload, x7 and mediafire — were responsible for 85% of the infringements.

If we take a rather unscientific average of these numbers, we get more than 200 links found for each game and 16 pages referring to valid links for each game (keep in mind these are numbers for just one day of processing). This simply means that anybody looking for any particular Wii game can find it on 16 different sites, on average. These results show that the current state of piracy control on hosting sites is non-existent since anybody can go to a search engine and find any pirated game they want.

The distribution of hosting sites is also rather interesting, as now there is a new domain in the top 5 that we haven’t seen as prominently before, x7.to.

The next step in my project will be to look at game piracy across different platforms and see who is the most pirated out there. Stay tuned!