I'm not a developer, but I am an Economics professor studying the iPhone phenomenon. I feel compelled to contribute a thought to this conversation.
I'm not buying into Fleshman03's arguments. I take exception to two items:
1 - There are many applications on iTunes that have a trial version of their game. For example: iShoot. The developer, Ethan Nicholas, offers the consumer an opportunity to buy without any risk or cost. Yet, the pirates still feel compelled to put his full application on their websites.
2 - The 1% of the total apps downloaded comparison is misleading. That is 1% of ALL applications downloaded. Although the ratio of free apps to paid apps available on the App Store is 1:3.5, the download ratio of free apps to paid apps downloaded is over 100:1 (Heard in an Apple interview last month.) This places the total number of downloaded paid apps around 100M and sets the total percentage of downloads of pirated apps to paid apps to about 10%. Is 10% a big enough problem? Consider that the App Store had a 4-5 month head start before the pirates started to pop-up and their popularity to the masses is less than four months old.
The problem is growing and the ratio of pirated to paid apps is increasing:
http://macdailynews.com/index.php/weblog/comments/20627/
Since you're actually doing some academic work, I want to share a few points with you.
I do agree that illegally downloading Apps is wrong and should be frowned upon. We currently have laws to handle such situations. (I'd argue that are too strict.) However -- I do want to make some small points.
The whole point of Copyright protections is to "promote science and the useful arts." There can be a case made that these hackers are promoting science and art. They are pushing the boundaries that Apple limits the community to. (I.e., video recording, Jailbreaking) Once the hacking community does something and is successful at it, Apple rips off that idea to implement it themselves. I wonder if those who created the installer.app would have a good infringement suit against Apple for "Pirating" that idea and turning it into the AppStore...
Since the AppStore came out, I would put forth the idea that the jailbreak community wanted to find a way to remain relevant.
Also worthy of note is that the "loss" to developers is decently less than 10%. (Apple takes 30% off the gross anyway.)
Additionally, if the music model holds true to Apps then these "pirates" would
constitute a large percentage of sales anyway. As an Econ Professor, is alienating your customer base a good idea for business?
With respect to your first point, many does not equal all. Even with gimped/limited demos, with no refund policy or no trial period for
all Apps, there will always be a place for "try before you buy" technologies. Not everyone is willing to plop down money on the word of the salesmen/dev. I would argue that in light of the music industry study linked to earlier, some of these people are simply looking for a proper demo.
Finally, I want to make a solid point. We all know that if something is free, more people are going to want it. Once a price becomes involved, that same number of people would not be interested in purchasing. Therefore, we should all be very hesitant to call that 10% (as you put it) as a loss. I'd reckon that to be more along the lines of 3-5%. (Additionally subtracting Apple's take.)
I'm very interested to hear your point of view on my comments. It really is nice to have another academic to discuss these points with. I would recommend adding a few books to your literature review.
Pirate's Dilemma (Free download under CC)
Free Culture (Free download under CC)
The Public Domain (Free download under CC)