Internet piracy is a wide-ranged problem in the software industry; Games producer Ubisoft revealed in an interview with GamesIndustry International that about 93-95% of all PC-games software has been acquired through illegitimate channels. Not only established software markets, such as gaming or office software, are confronted with such astronomical abuse statistics. Also newer product categories such as smartphone applications start to face the music. 

To maintain momentum in the rat race against piracy, the software sector is very actively developing innovative strategies and instruments to battle (online) piracy. It is interesting to see how diverse approaches coexist. Whereas some companies seem to prefer stricter enforcement of their intellectual property rights, others search for alternative methods to generate income from their products. 

Yesterday, the U.S. Department of Justice commissioned the FBI to co-operate with police forces from France and the Netherlands in seizing the domains of three websites offering pirated Android applications. The websites involved were applanet.net, appbucket.net and snappzmarket.com. This is the first time law enforcement authorities engage in domain name seizure with regard to sites offering questionable mobile applications. These websites offered pirated apps for Android devices. According to FBI Special Agent Brian Lamkin, online piracy of applications is a growing problem and can no longer be ignored. This type of online piracy costs companies millions of dollars and can inhibit the development and implementation of new ideas and application, he says. 

Meanwhile, games producer Ubisoft announced they amend their business model in order to try to secure revenues from a piracy-riddled market. 
Ubisoft introduced ‘free to play’ (F2P) as a new distribution model for their games. This model is based on advertising revenues and allows games to be played without charge. "On PC it's only around five to seven per cent of the players who pay for F2P, but normally on PC it's only about five to seven per cent who pay anyway, the rest is pirated,” says Yves Guillemot, CEO at Ubisoft. According to Guillemot, F2P has great advantages for the PC-market. By introducing F2P, Ubisoft generated income from countries in which they did not before. This revenue is long term, which enables companies to continue to invest in new content. Additionally, F2P is generally cheaper to produce and distribute, which adds to the advantages of the model. 

Whether the F2P business model is applicable to other sectors of the software industry is questionable. Games enjoy a long-term commitment from their players, which creates investment opportunities for producers. Although introducing the game to a customer for free, revenues can still be found in a later stadium of the business-customer relationship. For example by showing advertising or selling additional content. Mobile applications on the other hand are bought once, without tying the customer to the company for the long term. Therefore they do not have the advantages of a long-term relationship between the business and the customer.
However, mobile applications could create additional revenues. According to a research done by ABI, mobile application revenues will reach up to $46 billion (€36.6 billion) in 2016 against $8.5 billion (€6.7 billion) last year. Especially in-app purchases could be a profitable revenue model according to Mark Beccye, ABI Researcher senior analyst. 

Still, whether software producers and authorities will prefer stricter enforcement, alternative business models or a combination of both, is uncertain. Nevertheless, both parties are debating the future of the software market and solutions to online piracy. 

Read more about software piracy on Future of Copyright:

• Piracy on Android devices disrupt market for paid games, says Madfinger
• Anti-piracy efforts of gaming industry have been very successful last year
• Software piracy on the rise

Sources: nu.nl, GamesIndustry, TorrentFreak, U.S. Justice Department, cnet.com

Written by: Nathalie Falot