The antecedents of mobile app piracy and its impact on the mobile app market: an empirical study

The mobile application (hereafter app) market, which has been growing exponentially, is not free from digital piracy and rather, suffers from more piracy than the other conventional digital markets. However, app piracy has not been thoroughly investigated in the prior literature. In order to fill this gap, this research creates a model of app piracy using factors derived from theoretical frameworks such as the free sample effect, network externalities, expected utility theory, and hedonic / utilitarian consumption motivation. The results of the analysis demonstrate the positive relationship between app piracy and the market performance of legitimate apps, supporting the expansion effect of digital piracy on legitimate digital products. Differing from our expectations based on network externalities, the networking features of apps are found to have insignificant impact on the relationship between piracy and market performance. With regard to the antecedents of app piracy, the results show that while offering a free version has a negative impact on app piracy, a large user base, availability of in-app purchase options, and price have a positive impact on the magnitude of app piracy. In addition, the positive impact of price is found to be more significant for hedonic apps (i.e., game apps). This dissertation provides implications for practitioners in the mobile app industry, which can be used in developing their business strategies. It consolidates conventional beliefs in the industry, illustrating the positive impacts of price and the size of the user base on the magnitude of app piracy and the negative impact of the availability of free apps on piracy. Particularly, it shows that the impact of price is more substantial for utility apps than game apps. In contrast to the dominant belief in the industry, the number of downloads of pirated apps is found to have a positive relationship with the sales of legitimate versions. In addition, the availability of in-app purchase options is found to have a positive impact on the number of downloads of pirated apps, suggesting that the options would not be an effective way to prevent app piracy, and may even increase app piracy.